TCRLA_Public/050819.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, August 19, 2005, Vol. 6, Issue 164



AGUAS PROVINCIALES: Government Reviews Emgasud's New Proposal
ANTONIO ANNICCHIARICO: Deadline for General Report Approaches
ASOCIACION MUTUAL: General Report to be Presented Aug. 22
CRESUD: Gladstein Appointed as Regular Director
DUQUE SEGURIDAD: Individual Reports Due August 22

HOSTAL DE ARECO: Court to Oversee Reorganization
KEY ENERGY: Issues Business Report, Restatement Update
MULTICANAL: Reports 1H05 Revenue Improvements
PROMOTORA DE COMUNICACIONES: Trustee to Submit General Report
SANATORIO EZEIZA: Court Grants Reorganization Plea

SYCON ARGENTINA: Court Authorizes Plan, Concludes Reorganization


* BARBADOS: IMF Concludes 2005 Article IV Consultation


OCEANUS MUTUAL: Creditors to Approve Scheme of Arrangement


BANCO BRADESCO: Board to Propose Stock Dividend Payment
BANCO BRADESCO: Discloses 3M Registered Share Acquisition
BANCO ITAU: S&P Affirms Strong Ratings Despite Risks
TCP: Board Approves Restructuring Proposal, Recapitalization
VARIG: Adds Flights from New York, Miami to Brazil on 12/15


AES GENER: Registers 62% Profit Drop, EBITDA Cut in 1H05

E L   S A L V A D O R

BANCO CUSCATLAN: S&P Reviews, Afirms 'BB/B' Ratings


ASARCO: Court Authorizes Jordan Hyden Local Counsel Retention
CINTRA: Pilots Union Wants Stake in Two Airlines
EMPRESAS ICA: Trumpets Ps. 1,259M Civil Construction Contracts
GRUPO MEXICO: Stoppages Fail to Cripple Copper Mines' Ops
HYLSAMEX: Techint Completes Public Tender Offer for Shares


CORPORACION UBC: S&P Affirms 'BB-/B' Ratings


SIDOR: Makes $57M Dividend Payment to CVG
PDVSA: To Halt Oil Shipments to US if Aggression Continues

     - - - - - - - - - -


AGUAS PROVINCIALES: Government Reviews Emgasud's New Proposal
The government of the Argentine province of Santa Fe is now
studying gas distribution firm Emgasud's new proposal to buy
French firm Suez's stake in water utility Aguas Provinciales de
Santa Fe, reports Business News Americas.

Emgasud had to present a new proposal because the Santa Fe
government said the information contained in the documentation
submitted earlier was lacking in technical, financial and
economic terms.

The government had given Emgasud until August 15 to provide a
copy of the purchase-sale contract, present new guarantees and a
different plan of investments.

"We are studying Emgasud's counterproposal, after it presented
new guarantees and a new investment plan," Santa Fe water
minister Alberto Joaquin said, adding that the new guarantor of
Emgasud was Macro Bansud.

If the new terms are not accepted by the provincial government
and Suez is willing to talk to other potential operators, "the
offer presented by another economic group interested in
operating in the province will be studied," Mr. Joaquin said.

"The new bidder is formed with Argentine capital," added Mr.
Joaquin, without disclosing the name of the bidder.

ANTONIO ANNICCHIARICO: Deadline for General Report Approaches
The deadline for the submission of the general report on the
Antonio Annicchiarico S.R.L. bankruptcy is on Monday, Aug. 22,
2005. Court-appointed trustee Graciela Esther Palma will include
in the report an audit of the Company's accounting and business

Ms. Palma submitted on June 20, 2005 the individual reports on
the validated claims of the Company's creditors. These claims
were authenticated on May 9.

Court No. 10 of Buenos Aires' civil and commercial tribunal
declared Antonio Annicchiarico S.R.L. bankrupt after the Company
defaulted on its debt payments. Clerk No. 19 assists the court
on this case that will end with the disposal of the Company's

CONTACT: Ms. Graciela Esther Palma, Trustee
         Alicia Moreau de Justo 846
         Buenos Aires

ASOCIACION MUTUAL: General Report to be Presented Aug. 22
The general report on the Asociacion Mutual del Personal de
Limpieza y Afines liquidation case will be presented to court on
Monday, Aug. 22, 2005.

Mr. Felipe Florio, the court-appointed trustee, stopped
accepting claims from the Company's creditors on May 10, 2005
and submitted the authenticated claims to court on June 24,

Court No. 2 of Buenos Aires' civil and commercial tribunal
declared the Company bankrupt after the company defaulted on its
debt payments. Clerk No. 3 assists the court on this case
that will end with the sale of the company's assets. Proceeds
from the sale will be used to repay its debts.

CONTACT: Asociacion Mutual del Personal de Limpieza y Afines
         Mendoza 2779
         Buenos Aires

         Mr. Felipe Florio, Trustee
         Uruguay 618
         Buenos Aires

CRESUD: Gladstein Appointed as Regular Director
Cresud S.A.C.I.F. y A announced in a letter sent to the Comision
Nacional de Valores the resolutions taken in the general
ordinary shareholders' meeting held on August 2, 2005. One of
the resolutions taken was the appointment of Mr. Gary Gladstein
as regular director for the statutory term.

The letter dated August 4, 2005 revealed:

1) "Appointment of two shareholders to approve and sign the
shareholders' meeting minutes." The appointment of the
representatives of shareholders Bank of New York and The
Northern Trust Co. (AVFC), to approve and sign the Shareholders'
Meeting' minutes was approved by unanimous vote.

2) "Review of the U.S. regulations applicable to the Company on
account of the listing of its securities on such market.
Consideration of the exemptions applicable to foreign companies.
If relevant, reorganization of the board of directors and
election of regular members pursuant to the aforementioned
regulatory requirements. Authorizations."

These resolutions were unanimously taken:

1) The Board of Directors' performance concerning compliance
with both domestic and foreign regulations;

2) Delegation to the Board of Directors and the Supervisory
Committee of the necessary powers to comply with the regulations
in force;

3) To fix the number of regular directors at ten (10) pursuant
to the provisions of section twelve of the corporate by-laws;

4) Appointment of Mr. Gary Gladstein as regular director for the
statutory term, who qualifies as an independent member pursuant
to the provisions of CNV's resolution No. 400 and the applicable
foreign regulations."

          Gabriel Blasi, CFO
          Phone: 011-54-11-4323-7449

DUQUE SEGURIDAD: Individual Reports Due August 22
The verified claims of creditors of bankrupt company Duque
Seguridad S.A. will be presented as individual reports in court
on Monday, Aug. 22, 2005. Mr. Guillermo Alejandro Torres, the
court-appointed trustee, stopped verifying claims on June 23,
2005. Mr. Torres will also submit the general report on Oct. 3,

Court No. 5 of Buenos Aires' civil and commercial tribunal
declared Duque Seguridad S.A. bankrupt after the company
defaulted on its debt payments. Clerk No. 9 assists the court on
this case.

CONTACT: Mr. Guillermo Alejandro Torres, Trustee
         Avda Corrientes 922
         Buenos Aires

HOSTAL DE ARECO: Court to Oversee Reorganization
Hostal de Areco S.A. will begin reorganization following the
approval of its petition by Court No. 11 of Buenos Aires' civil
and commercial tribunal. The opening of the reorganization will
allow the Company to negotiate a settlement with its creditors
in order to avoid a straight liquidation.

Liliana Maria Montoro will oversee the reorganization
proceedings as the court-appointed trustee. She will verify
creditors' claims until Oct. 7, 2005. The validated claims will
be presented in court as individual reports on Nov. 21, 2005.

Ms. Montoro is also required by the court to submit a general
report essentially auditing the Company's accounting and
business records as well as summarizing important events
pertaining to the reorganization. The report will be presented
in court on Feb. 3, 2006.

An Informative Assembly, the final stage of a reorganization
where the settlement proposal is presented to the Company's
creditors for approval, is scheduled on July 4, 2006.

Clerk No. 22 assists the court on this case.

CONTACT: Ms. Liliana Maria Montoro, Trustee
         Sarmiento 517
         Buenos Aires

KEY ENERGY: Issues Business Report, Restatement Update
Key Energy Services, Inc. (OTC Pink Sheets: KEGS) announced
Wednesday rig hours for the month of July 2005, provided an
activity update and select financial data for the quarter ended
June 30, 2005, and provided a restatement update.

                     ACTIVITY UPDATE

Market conditions remain strong in all segments. Customer demand
for services continues to increase, necessitating the need for
the Company to increase its capital expenditure plans. The
Company now anticipates that capital expenditures for 2005 will
total up to $150 million, an increase of approximately $20
million over our previous expectation. In addition, the Company
has established a preliminary 2006 capital expenditure budget of
$150 million. The capital expenditure plan for 2006 includes the
remanufacturing of up to 60 well service rigs and the purchase
of new pressure pumping, fluid management and rental equipment.
In addition, the 2006 budget contemplates the purchase of new
well service rigs, the opening of a new pressure pumping
facility and the expansion of its electric wireline business.
The Company anticipates that the majority of both the
remanufactured rigs and new rigs will be used to replace
existing capacity. The Company believes that these expenditures
will be made with operating cash flow.

Commenting on recent activity, Dick Alario, Chairman and Chief
Executive Officer, stated, "Market conditions remain very
favorable. Strong commodity prices and increased capital
spending by our customers give us confidence that activity
levels should remain favorable for the balance of this year and
into 2006."

Mr. Alario continued, "Our increased capital expenditure plans
are a reflection of the higher demand for our services as
evidenced by the increasing utilization of our fleet.  In light
of the increased investment in our fleet and our people, we
believe that additional pricing measures are necessary."

                  ACTIVITY LEVELS

                                 Month Ending
                   7/31/2005       6/30/2005          7/31/2004
    Working Days       21              22                 21
    Rig Hours       212,802         227,150            206,211
    Trucking Hours  192,204         207,028            230,125

The Company calculates working days as total weekdays for the
month less any company holidays that fall in that month.  For
the month of August 2005, there are 23 working days.

                    SENIOR NOTES STATUS

As previously reported, due to the Company's failure to file its
Annual Report on Form 10-K for the year-ended December 31, 2003
by May 31, 2005, the holders of the Company's 6 3/8% senior
notes and 8 3/8% senior notes, respectively, instructed the
trustee to send the Company a notice of default, which was
received on June 7, 2005. Under the terms of the notice, the
Company had until August 6, 2005 to cure the default by filing
its 2003 Form 10-K. As a result of its failure to file the Form
10-K by such date, the noteholders have the right to accelerate
the notes at any time. As of today, the Company has not received
any notice of acceleration from the noteholders or the trustee.
On July 29, 2005, the Company entered into a new credit
facility, which provides the Company with the ability to repay
the senior notes, if necessary.

                  RESTATEMENT UPDATE

The Company continues to make progress on the restatement and
believes that it has substantially completed its financial
statements for the fiscal year ending December 31, 2003 and
prior periods covered by the restatement. The Company and its
auditors are currently reviewing the financial statements for
accuracy and completeness. While the auditors are completing
their work, the Company will, among other things, finalize its
income tax computations for the restatement periods and finalize
supporting documentation for a number of the accounting
treatments in the restatement. The Company cannot estimate how
long it will take its auditors to complete their review of the
Company's financial statements and for the Company to file its
Annual Report on Form 10-K for 2003. The timing for filing could
be affected by adjustments resulting from the work of the
Company's auditors.


Set forth below is certain financial information for the Company
for the quarter ended June 30, 2005. The information provided
has been prepared by management in accordance with generally
accepted accounting principles but is unaudited and has not been
reviewed by the Company's independent accountants. The table
does not contain all the information or notes that would be
included in the Company's financial statements.

                            Quarter Ended      Quarter Ended
                               6/30/05           6/30/04
                           (In thousands -   (In thousands -
                              Unaudited)        Unaudited)
    Select Operating Data:
      Well servicing (A)       $238,672          $201,968
      Pressure Pumping           36,246            22,680
      Fishing and Rental
        Services                 19,959            18,863
      Other (B)                   2,191                22
    Total revenues             $297,068          $243,533

    Costs and Expenses
      Well servicing           $154,862          $141,485
      Pressure Pumping           22,430            17,675
      Fishing and Rental
        Services                 13,624            12,121
      General and
        administrative           35,005            50,933
      Interest (C)               16,547             9,769

                                 6/30/05          12/31/04
                             (In thousands -   (In thousands -
                               Unaudited)        Unaudited)
    Select Balance Sheet Data:
    Current Assets
      Cash and cash
        equivalents (D), (E)     $91,258           $19,261
      Accounts receivable,
        net of allowance
        for doubtful accounts    199,207           212,351
      Inventories                 21,184            18,500
      Prepaid expenses and
        other current assets      21,354            20,197
    Total current assets        $333,003          $270,309

    Current Liabilities
      Accounts payable            59,364            59,872
      Other accrued liabilities   80,764            71,304
      Accrued interest            10,362             9,729
      Current portion of
        long-term debt and
        capital lease
        obligations                4,612             4,326
    Total current liabilities   $155,102          $145,231

    Long-term debt, less
      current portion (F)       $425,752          $473,878
    Capital lease obligations,
      less current portion         9,225             8,677
    Deferred Revenue                 447               557
    Non-current accrued
      Expenses                    39,379            40,258


     (A) The Well Servicing category includes the financial
results of the Company's remaining contract drilling assets,
which are located in Argentina, Appalachia and the Powder River
Basin of Wyoming.

     (B) Other revenue includes income of approximately
$5,391,000 associated with the termination of a non-compete
agreement and an estimated loss on the sale of Michigan assets
of approximately $3,992,000. The estimated loss for the Michigan
asset sale is subject to the ongoing restatement process and,
therefore, may be reflected in 2003 or prior years upon
completion of the restatement process.

     (C) Interest expense includes amortization of deferred debt
issue costs, discount and premium of approximately $496,000 and
$522,000 for the quarters ended June 30, 2005 and 2004,

     (D) Cash and short term investments at August 16, 2005
totaled approximately $102,384,000.

     (E) Capital expenditures were approximately $36,484,000 and
$22,316,000 for the quarters ended June 30, 2005 and 2004,

     (F) There were no outstanding borrowings under the
Company's revolving credit facility at August 16, 2005.

The information herein represents the results for only one
quarter and prior period; and the information herein is not
necessarily indicative of the results that may be reported for
the fiscal year ended December 31,2005. The information herein
is select financial data and does not represent a complete set
of financial statements, which would include additional
financial data and notes to financial statements. Until the
restatement of the Company's prior year financial statements is
completed, the unaudited information herein may differ from its
restated financial statements. It is possible that the process
of restating the prior year financial statements could require
additional changes to the Company's financial statements for
2005 that individually or in the aggregate could be material to
the Company's financial position, results of operations or

Key Energy Services, Inc. is the world's largest rig-based well
service company. The Company provides oilfield services
including well servicing, contract drilling, pressure pumping,
fishing and rental tools 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.

          John Daniel
          (713) 651-4300

MULTICANAL: Reports 1H05 Revenue Improvements
Argentine cable operator Multicanal S.A. ("we" "our" the
"Company") reported six-month periods ended June 30, 2005 and


Net revenues were Ps. 306.6 million for the six-month period
ended June 30, 2005. This figure represents an increase of 15.2%
compared to net revenues of Ps. 266.2 million for the six-month
period ended June 30, 2004. The increase in net revenues in this
period as compared to the six-month period ended June 30, 2004
is attributable to the higher number of subscribers in the first
half of 2005 compared to the first half of 2004 and an increase
in the basic fees for our services (together representing an
increase in revenues from subscriptions of Ps. 34.3 million), as
well as an increase in revenues from the provision of high-speed
Internet access (cable modem) of Ps. 2.3 million, revenues from
advertising of Ps. 1.2 million and other sales of Ps. 2.5

Our revenues are presented net of charges for the allowance for
doubtful accounts.

Direct Operating Expenses and Cost of Goods Sold. Our direct
operating expenses and cost of goods sold were Ps. 155.3 million
for the six-month period ended June 30, 2005. This figure
represents an increase of 23.5% over our direct operating
expenses and cost of goods sold of Ps. 125.7 million in the six-
month period ended June 30, 2004, which is mainly attributable
to increases in programming expenses of Ps. 9.1 million, sundry
of Ps. 10.3 million (driven by higher costs related to repair
and maintenance activities), payroll and social security
expenses of Ps. 6.0 million, rentals of Ps. 1.5 million, and
cost of goods sold of Ps. 2.5 million.

Direct operating expenses and cost of goods sold consist
principally of:

  - signal delivery fees paid to programming suppliers;

  - wages, benefits and fees paid to employees and subcontracted
    service firms for the repair and maintenance of cable
    networks and customer disconnections owned by us;

  - the cost of modems that are delivered to Internet customers;

  - to a lesser extent, the costs of related materials consumed
in repair and maintenance activities (primarily in foreign
currency, since these inputs are imported), costs associated
with pole rental and the printing cost for our monthly

Selling, General, Administrative and Marketing Expenses. Our
selling, general, administrative and marketing expenses were Ps.
63.0 million for the six-month period ended June 30, 2005. This
figure represents an increase of 21.9% from Ps. 51.7 million for
the six-month period ended June 30, 2004, which is attributable
principally to an increase in payroll and social security
expenses of Ps. 4.7 million, taxes, rates and contributions of
Ps. 1.6 million, fees and compensation for services of Ps. 1.4
million, commissions of Ps. 1.2 million, personnel expenses of
Ps. 1.0 million and building expenses of Ps. 0.6 million.

Our selling, general, administrative and marketing expenses
consist of:

  - professional fees;
  - wages and benefits of non-technical employees;
  - sales commissions;
  - advertising;
  - insurance;
  - rental of office space;
  - other office related expenses; and
  - various direct taxes.

Depreciation and Amortization. Depreciation and amortization
expenses were Ps. 51.1 million in the six-month period ended
June 30, 2005. This figure represents a decrease of 14.5%
compared to depreciation and amortization expenses of Ps. 59.8
million in the six-month period ended June 30, 2004. This
decrease in our depreciation and amortization expenses was
mainly due to some of our property and equipment becoming fully

Financial (Income) Expenses and Holding Losses Net. Our net
financial expenses and holding losses were Ps. 66.4 million in
the six-month period ended June 30, 2005, compared with
financial losses, net, of Ps. 135.2 million in the six-month
period ended June 30, 2004. The decrease in net financial
expenses and holding losses for the six-month period ended June
30, 2005 compared to the same period of 2004 is attributable
principally to the impact of the appreciation of the peso in
relation to the U.S. dollar on our U.S. dollar-denominated
assets and debt during the six-month period ended June 30, 2005
(Ps. 58.5 million), and a decrease in commissions and other
expenses of Ps. 10.3 million, which was partially offset by an
increase in interest expenses of Ps. 9.0 million.

Other Non-Operating Income (Expenses), Net. Other non-operating
expenses, net, were Ps. 3.8 million in the six-month period
ended June 30, 2005, compared to other non-operating expenses,
net, of Ps. 3.6 million in the six-month period ended June 30,
2004. Other non-operating expenses net, in the six-month period
ended June 30, 2005 was mainly attributable to provisions for
lawsuits and contingencies of Ps. 5.5 million, partially offset
by a gain on the sale of property of Ps. 1.4 million and a
recovery of other receivables of Ps. 0.9 million.

Income Taxes and/or Tax on Minimum Notional Income. We recorded
a gain in income taxes for the six-month period ended June 30,
2005 of Ps. 1.8 million compared to a gain of Ps. 29.9 million
for the six-month period ended June 30, 2004. The decrease in
the gain in income taxes for the six-month period ended June 30,
2005 as compared to the same period of 2004 is mainly due to a
lower loss before income taxes.

Net Gain/Loss. We recorded a net loss of Ps. 31.3 million for
the six-month period ended June 30, 2005, as compared to a net
loss of Ps. 80.0 million for the six-month period ended June 30,
2004, as a result of the factors described above.

Liquidity and Capital Resources

We operate in a capital intensive industry which requires
significant investments. In the past, our growth strategy has
involved the acquisition of other cable television companies and
the active improvement and expansion of our existing and
acquired networks and equipment. We have historically relied on
four main sources of funds:

  - equity contributions from our shareholders;

  - borrowings under bank facilities or debt security issuances;

  - cash flow from operations; and

  - financing by sellers of cable systems we acquire.

The conditions affecting the Argentine economy since 1998 and
the uncertainties as to future developments prevented us from
raising the funds required to discharge our debt obligations as
they became due in 2002, 2003, 2004 and are coming due in 2005.
As result, we have defaulted on all payments on our Existing
Notes that have come due, and all principal payments and a
substantial portion of our interest payments on our Bank Debt
since February 2002. See "Continuation of Operations." Since
February 2002, we have devoted our cash flow from operations
primarily to ensure the continuation of our operations.

As of June 30, 2005, our accumulated losses exceeded 50% of our
capital and 100% of our reserves. Section 206 of the Argentine
Companies Law establishes mandatory capital reduction in such
situations. On June 1, 2005 the Argentine government suspended
the application of that provision until December 10, 2005
through Decree No. 540/05. This situation will be remedied when
we consummate the transactions contemplated in our APE.

During the first half of 2005 we applied a portion of our cash
flows from operations to upgrade part of our network to
facilitate the provision of broadband services. We spent Ps.
37.9 million on property and equipment in the first half of 2005
compared to Ps. 23.1 million in the first half of 2004.

Proposal for the restructuring of the financial debt

In 2003, the Company submitted to its creditors a proposal for
restructuring its financial debts. The restructuring proposal
was set forth in an APE and comprises three options: a cash
buyback option at 30 cents per U.S.$1, a ten-year bond exchange
option and a combined exchange option (including a seven-year
bond and common stock), each subject to a ceiling. Based on the
approvals obtained at the bondholders' meeting of all series of
Existing Notes held on December 10, 2003 and the support
provided by commercial bank creditors, the Company announced
that the requisite majority of affected creditors had consented
to the restructuring set forth in the APE. On December 16, 2003
the Company filed its APE together with evidence of the consents
and approvals obtained from its creditors with the Commercial
Court No. 4 of Buenos Aires (the "Argentine Court") seeking
judicial confirmation thereof. The Company published the
statutory notices as ordered by the Argentine Court on December
17, 2003, and the creditors had a right to file objections to
the APE confirmation until February 13, 2004. Several objections
were filed, including an objection by State Street Bank, on
behalf of the U.S.-based investment group known as W.R. Huff
("Huff"). The Company answered each of the objections filed. On
April 14, 2004, the Argentine Court rejected the objections
presented and confirmed the APE. Holding that all affected
creditors should be treated equally, the Argentine Court ordered
that the three options contemplated in the APE should be offered
to those that in the meeting held on December 10, 2003 had voted
against the APE or had abstained from voting, as well as to
those creditors that did not attend to the meeting, giving such
elections the same treatment as those made by the creditors
accepting the proposal. On October 4, 2004, the Cámara de
Apelaciones en lo Comercial (Court of Appeals on Commercial
Matters), Chamber "A" (the "Court of Appeals") rendered a
decision affirming the April 14, 2004 decision of the Argentine
Court. On December 14, 2004, the Court of Appeals dismissed an
extraordinary appeal filed by Huff against its decision of
October 2004, affirming the lower court's confirmation of the
APE. Huff subsequently filed a recurso de queja (petition in
error) with the Supreme Court, seeking to reverse the decision
rendered by the Court of Appeals, which was dismissed in April
2005 by the Supreme Court. In the meantime, Huff made several
filings with the Argentine Court in order to delay the
publication of the official notices (edictos) contemplated in
the resolution of April 14, 2004, which were also rejected on
May 16, 2005. On May 26, 2005 the Argentine Court dismissed an
appeal taken by Huff on the same date against the May 16, 2005
decision. To the Company's knowledge, Huff did not seek to
reverse the rejection of the appeal dated May 26, 2005. The
Company has been advised that Argentine law affords no further
appeal against the April 14, 2004 decision.

The board of directors of the Company is trying to obtain
acknowledgment of its APE in the United States subject to the
compliance with certain measures that are currently being
litigated in the United States.

If the Company consummates the transactions contemplated in the
APE, under the terms approved by the courts, each holder of
Existing Debt shall receive:

(a) a cash payment of U.S.$300 per U.S.$1,000 of principal
amount of Existing Debt that is repurchased by the Company under
the APE (the "Cash Option");

(b) U.S.$1,050 principal amount of the 10-Year Step-Up Notes
(the "10-Year Notes") per U.S.$1,000 of principal amount of
Existing Debt exchanged under the APE (the "Par Option"); or

(c) 641 Class C shares of common stock and U.S.$440 principal
amount of either (i) 7% 7-Year Notes (the "7-Year Fixed Rate
Notes"), or (ii) 7-Year Floating Rate Notes (the "7-Year FRNs",
together with the 7-Year Fixed Rate Notes, the "7-Year Notes")
per U.S.$1,000 of principal of the Existing Debt exchanged
pursuant to the APE (the "Combined Option").

The Company will not pay any accrued and unpaid interest
(including default interest and additional amounts, if any) on
the Existing Debt repurchased or exchanged under the APE.
Interest will accrue on the 10-Year Notes and on the 7-Year
Notes from December 10, 2003, and the first interest payment
date will occur on the date of delivery under the APE.

The Company plans to (i) repurchase approximately U.S.$125
million of the principal amount of Existing Debt with an
aggregate cash payment of U.S.$37.5 million, (ii) exchange
approximately U.S.$76.5 million principal amount of Existing
Debt for U.S.$80.3 million of 10-Year Notes, (iii) exchange
approximately U.S.$143.0 million principal amount of Existing
Debt for U.S.$143.0 million principal amount of 7-Year Notes and
(iv) exchange approximately U.S.$181.9 million principal amount
of Existing Debt for Class C common shares representing
approximately 35% of the Company's total capital stock. In
accordance with the terms of the APE, the maximum aggregate
principal amount of Existing Debt that may be exchanged for the
Par Option is U.S.$76.5 million; for the Combined Option,
U.S.$324.9 million; and for the Cash Option, U.S.$131 million.
Any principal amount of Existing Debt electing the Par Option
exceeding U.S.$76.5 million will be prorated and reallocated to
the Combined Option, and if the maximum amount available under
the Combined Option has been fully subscribed, on a pro-rata
basis to the Cash Option pursuant to the APE. As of December
2003, when the Company accepted the Existing Debt that holders
had agreed to exchange pursuant to the APE, holders of Existing
Debt in an aggregate principal amount exceeding U.S.$76.5
million had elected the Par Option. Accordingly, although under
the APE any principal amount of Existing Debt electing the
Combined Option exceeding U.S.$324.9 million shall be prorated
and reallocated to the Par Option, because the maximum amount of
the Par Option has been exceeded as results of the elections by
holders, any excess amounts as electing the Combined Option
shall be allocated ratably to the Cash Option together with any
amount of principal of Existing Debt which elected the Par
Option. Any principal amount of Existing Debt electing the Cash
Option that exceeds U.S.$131 million will be prorated and
reallocated to the Combined Option and the Par Option pursuant
to the APE. The allocation will be made after giving effect to
any election made in accordance with the decisions of the
Argentine and U.S. courts. The Existing Debt in respect of which
holders make no election shall be allocated ratably to the
Combined Option or to the Cash Option, as the case may be,
outstanding after giving effect to the allocation mentioned


(a) Acquisition and sale of cable systems

(i) Acquisition of cable systems in Paraguay

On December 12, 1997, the Company entered into two agreements
for the acquisition of 14 cable systems (13 in Paraguay and 1 in
Clorinda, Argentina). The closing of the transaction was
scheduled for November 15, 1997, which was subject to the
seller's compliance with certain conditions, including obtaining
various regulatory approvals from the government of Paraguay,
which were ultimately not obtained. The Company made advance
payment of US$ 2,300,000 on account of the total price and the
seller issued a promissory note for the amount received, i.e.
US$ 2,300,000 and pledged the shares corresponding to certain TV
systems in favor of the Company to guarantee compliance with the
conditions for the closing of the transaction.

As a result of the seller's failure to meet its obligations the
final agreement was not signed. As a result of the seller's non-
compliance, the Company demanded payment of the promissory note,
but the seller brought a claim demanding compliance with the
agreement signed on December 12, 1997, reserving the right to
determine the amount of damages, and an injunction which was
resolved by the Paraguayan court in favor of the plaintiff. This
measure preventing collection by the Company of the promissory
note amounting to US$ 2,300,000.

The Company asked the intervening judge to demand payment of
court fees on the amount of the contract from the plaintiff,
after the Court accepted the petition and suspended the
procedural terms. In view of the plaintiff's failure to pay
court fees after having been demanded payment, the Company
requested lifting of the preliminary injunction, ending of the
lawsuit and filing of the case. The judge did not end the case
but accepted the lifting of the preliminary injunction, a ruling
that was confirmed by the Court of Appeals on Civil and
Commercial matters, Room 4. Confirmation by the Court is firm.

The file was sent back to the original Court, where the
proceeding will be continued. The Company cannot assure that
following the lifting of the preliminary injunction it will be
able to collect the sum due.

(ii) Tres Arroyos Televisora Color S.A. trusts

On September 7, 2001, a Trust Agreement was signed under which
the minority shareholders transferred all of their equity
interests in Tres Arroyos Televisora Color S.A., representing
38.58% of the stock capital, in favor of the trustee, Mr. José
María Sáenz Valiente (h). The Company was appointed the trust
beneficiary so that the stock in trust is gradually transferred
to it provided it pays Ps. 42,876 per month to the trustee over
a 10-year period. The trust will be revoked if the Company were
to fail to pay the consecutive monthly installments.

Additionally, on the same date, a beneficial interest on the
mentioned shares, was set up in favor of the Company, for the
earlier of 10 years or the Trust life.

In accordance with the minutes of the shareholders' meeting of
Tres Arroyos Televisora Color S.A. dated April 27, 2005, the
Company resolved to capitalize irrevocable capital
contributions, thus increasing its capital stock from the amount
of Ps.$24,000 to Ps.$3,121,153 represented by 3,121,153 common
shares of nominal value Ps.$1 each and carrying one vote per

On June 9, 2005 an Addendum to the Trust Agreement was executed,
amending the clauses referring to the transfer of shares in
accordance with the resolved capital increase.

Under the terms of the Trust Agreement and its Addendum, as of
June 30, 2005 the Trustee has made the stock transfers, and
consequently Multicanal is the holder of 2,398,605 shares
representing 76.85% of the voting capital stock of the company
and the Trustee is the legal owner of the remaining 722,548
shares representing 23.15% of the remaining voting capital stock
of the company.

(iii) Setting up of Hazen Limited.

On November 4, 2004 Hazen Limited, a wholly-owned subsidiary of
Multicanal, was set up abroad.

(b) Litigation

The Company is involved in litigation from time to time in the
ordinary course of business. In Management's opinion, the
lawsuits in which the Company is currently involved,
individually and in the aggregate, are not expected to be
resolved for amounts that would be material to the Company's
financial condition or results of operations.

(c) Operating licenses

Broadcasting licenses are granted for a 15-year term, renewable
for one additional ten year-term. Applicable regulations
establish that Comité Federal de Radiodifusión (Federal
Broadcasting Committee or "COMFER") must grant an extension if
it is verified that the licensee has complied with applicable
regulations, the bidding terms and conditions and the
obligations undertaken in its proposals during the original term
of the license. The Company estimates that it will obtain all
requested extensions of existing licenses. The extension of the
licenses is subject to approval by COMFER. Although management
considers that the risk that the Company will be unable to renew
its licenses in the future remote, it cannot provide assurance
that the Company will obtain any such extensions. Since cable TV
is a service not requiring award through a public bidding
process and licenses are granted directly, if COMFER verifies
that during the 25-year term of the license the Company has
complied with applicable laws, the bidding terms and conditions
and obligations assumed in its proposals, it may award a new
license. However, pursuant to the terms of Decree No. 527/05,
the expiration of broadcasting licenses in effect on May 24,
2005 has been suspended for a period of ten years. As a result
of the Decree, such licenses continue to be valid during the 10-
year suspension period and remain valid following the 10-year
suspension period for the number of years that were remaining as
of May 24, 2005. Decree No. 527/05 requires that broadcasting
companies like Multicanal with licenses to which it would apply
submit to COMFER within two years for its approval proposals
that would make broadcasting time available for programming that
contributes to the protection of the national culture and the
education of the population.

(d) Pending approvals

The Company has applied for COMFER approval of several
transactions, including the various corporate reorganizations in
which several operating subsidiaries were merged into the
Company, certain transfers and other acquisitions of cable
television companies. In addition, the Company has requested
that COMFER approve the elimination of certain headends.
Although most of these approval petitions are pending, the
Company expects to receive all such approvals in due course.

(e) Claims by COMFER

(i) Administrative proceedings

The Company has sought participation in various installment
plans in order to pay fines for breach of broadcasting
regulations. As a result of those requests, the COMFER has
assessed amounts totaling $ 479,829.50, payable in their
entirety through the granting of advertising seconds in favor of
the Communications Media

Secretariat of the Presidency of the Nation and the COMFER,
which will be applied to the promotion of general interest
campaigns conducted by the National State.

(ii) Demand for payment from Vidycom S.A.

COMFER filed a claim whereby it demanded payment from Vidycom
S.A. ("Vidycom"), a company absorbed by Multicanal in 1995, of
all the differences in its favor as a result of its
participation in the tax exemption established by Resolutions
No. 393/93 and 790/93.

The tax authorities based their rejection of the mentioned tax
exemption on the following grounds: (a) Vidycom was asked to
make payment on several occasions, but did not comply with
COMFER's requirements, (b) no documentation supporting the
investments committed by the company was provided and (c) no
evidence was provided of the weather phenomenon as a result of
which the previous shareholders had requested the tax exemption.

On May 17, 2005, the Company appeared before COMFER to avail
itself of the moratorium established under Resolution N°
1316/CFR/03 to pay the unpaid and due amounts owed to COMFER.

The moratorium provides for a 50% reduction of interest rates
applicable to the calculation of debts on account of radio
broadcasting fees for the benefit of those who execute a payment
agreement with COMFER regarding fees due, bearing payment of
litigation costs and expenses incurred.

On account of the above, the amount payable as of the date
hereof as unpaid amounts, discounting interest due, totals
Ps.$364,088.99. The Company shall execute a payment agreement
with COMFER.

(iii) Demand for payment due to rejection of requests for

COMFER issued various resolutions announcing the rejection of
the request for exemptions filed under the terms of Resolution
No. 393/93 to the holders of broadcasting licenses absorbed by
the Company and to demand payment of sums due plus interest.

The Company considers that there are allegations of fact and
questions of law in its favor that would require COMFER to
review its position, but the Company cannot provide any
assurance that the authorities will rule in favor of the

(f) Other regulatory aspects

In February 1995, the City of Buenos Aires issued a municipal
ordinance regulating the authorization for the installation of
TV cable networks. Such ordinance establishes several
alternatives for cable installation on the street, namely: by
underground laying, center of city block or posting. The
ordinance established a maximum term of 7 years for cable
operators to adapt their wiring networks according to the
requirements of the ordinance. The municipality of the City of
Mar del Plata issued an ordinance to regulate the installation
of cable TV networks.

Although the Company has been adapting its network, it has had
difficulties making its network fully compliant as a result of
the economic crisis in Argentina, the current lack of financial
stability and the successive tax charges, which have forced the
Company to apply its resources and income to ensuring the
continuity of its business and greatly reduce its capital
expenditures. On September 30, 2002 the Company requested
suspension of the terms established by ordinance 48,899.

According to applicable regulations, 5% of the year's profit
must be applied to the legal reserves until it equals 20% of
Company equity.

g) Commitments to make contributions to Fintelco S.A.

Fintelco S.A. had a negative shareholders' equity as of March
31, 2005. Under the Argentine Commercial Companies Law, this
could bring its dissolution, unless its capital is restored. The
Company and Cablevisión S.A. each hold 50% of the equity of
Fintelco S.A. and, in that proportion, the Company has
undertaken to make the contributions required to pay the
liabilities of Fintelco S.A. and of its subsidiaries when due.

(h) Complaints against the Supercanal Group

The Company brought various claims against Supercanal Holding
S.A. and its subsidiaries (the "Supercanal Group"), including an
action to declare resolutions adopted during the Extraordinary
Shareholders' Meeting of Supercanal Holding S.A. on January 25,
2000 to reduce capital stock of Supercanal Holding S.A. to Ps.
12,000 and subsequently increase capital to Ps. 83,012,000 null
and void. The Court issued an injunction requested by the
Company but required that the Company post bond for Ps.
22,000,000 for potential damages that could be assessed against
the defendant, should the complaint be dismissed. The remedy was
granted against the issue of a surety bond. The Court of Appeals
revoked the injunction. The Company filed an extraordinary
appeal against that resolution, claiming it is both "arbitrary"
and "damaging to the institution". On October 1, 2004, the
Company was notified of the dismissal of its extraordinary

Other legal actions were initiated, claiming the suspension of:
i) the last five Ordinary Shareholders' Meetings of Supercanal
Holding S.A. and ii) the guarantees granted by Supercanal S.A.
on bank loans exclusively in favor of the group controlling
Supercanal Holding S.A. (Grupo Uno S.A. and affiliated
companies). In addition, a claim for dissolution and liquidation
of Supercanal Holding S.A. was brought jointly with the action
for removal of all the members of the Board of Directors and the
Surveillance Committee, and the dissolution of Supercanal
Capital N.V.

Supercanal Holding S.A. and other companies of the Supercanal
Group filed for bankruptcy proceedings with the National Court
of First Instance on Commercial Matters No. 20, Secretariat No.
40. and the procedures began on April 19, 2000.

As a result of the revocation of the preliminary injunction
mentioned above, on December 12, 2001 the Company was notified
of the filing of a claim by Supercanal Holding S.A. for damages
caused by the granting of the preliminary injunction that was
subsequently revoked. It has been claimed that the suspension of
the effects of the meeting held on January 25, 2000 resulted in
the cessation of payments to Supercanal Holding S.A.

The Company answered the complaint and rejected the liability
attributed to it based on the fact that the cessation of payment
had taken place before the date of the meeting that was
suspended by the preliminary injunction, according to
documentation provided by the plaintiff itself. Furthermore, the
suspension of the meeting did not prevent capitalization of the
Company through other means. Based on the record of the case,
the Company considers that the claim filed should be rejected in
its entirety, and the legal costs should be borne by the

No assurance can be provided that the Company will obtain an
economic or financial gain as a result of these actions.
Presently, as a result of the ancillary jurisdiction of the
bankruptcy proceedings of Supercanal Holding S.A., all the
claims are brought in the abovementioned Court.

(i) Restrictions on the distribution of profits

There are certain restrictions on the distribution of dividends
by the Company due to the limitations and conditions contained
in the APE.


As of these consolidated financial statements the Company has
been served with process on 34 petitions for bankruptcy against
it as a result of the Company's deferral of payments of
principal and interest on its negotiable obligations. The
Company filed its response in all cases, and deposited in
escrow, the amount claimed in pesos at the rate of exchange of
US$ 1 = $ 1 plus CER plus 8% per annum for interest and 5% to
cover possible expenses relating to lawsuits. The judge: i)
considered it sufficient at this time in order to disregard the
credit invoked as "revealing factor" of suspension of payment of
debts, the deposit made by the Company, dismissing 33 petitions
for declaration of bankruptcy, (the court of appeals having
ratified the lower court decisions in those cases where
plaintiffs appealed such decisions); ii) the filing of the APE
suspended the other bankruptcy petition.

One additional petition was filed but not served on the Company
and was suspended.

The Company argued in its response to the bankruptcy petitions
that its foreign currency obligations had been converted to
pesos as established by Section 1 of Decree No. 214/02, because
the provisions of Section 1, subsection e) of Decree No. 410/02
(establishing that "the obligations of the public and private
sectors denominated in foreign currency, compliance with which
is subject to foreign laws, are not subject to the conversion to
pesos") do not apply in this case.

In the offer to restructure its financial debt (see Note 7) the
Company calculated Existing Debt to be restructured in US
dollars, to reflect more clearly the reduction of the debt and
the exchange ratio for the new securities that would be issued
if its restructuring transactions are consummated. The fact that
its debt has been denominated in US dollars exclusively for such
purposes does not mean that the Company has changed its position
of considering those obligations to have been pesified, as this
approach was taken only to achieve a rapid and effective
conclusion to the negotiation of the APE, in order to obtain
creditors' acceptance of the proposal without having to waive
any valid rights. This approach, which does not address the
definition of the scope of the Decree on Conversion to Pesos
referred to above, has been the most appropriate one to overcome
financial difficulties for the benefit of the Company, its
creditors and the public in general, but should not be construed
as a waiver by the Company of its right to sustain that its the
debt incurred prior to the issuance of Decree N° 410/02 is
subject to pesification.

In view of this, in the submission filed to request approval of
the reorganization plan from the court, the Company reserved its
right to file a motion for the pesification of all financial
debts incurred in the issuance of outstanding negotiable
obligations if the out-of-court reorganization plan were not to
be approved and insolvency proceedings were to be filed against

On January 28, 2004, affiliates of the U.S.-based investment
group known as W.R. Huff and a certain Willard Alexander
(together, the "Involuntary Petitioners"), claiming to be
holders of debt securities issued by Multicanal, filed against
Multicanal an involuntary petition in a reorganization
proceeding under Chapter 11 of the U.S. Bankruptcy Code in the
United States Bankruptcy Court for the Southern District of New
York (the "U.S. Bankruptcy Court").

On January 30, 2004, at the request of the Board of Directors of
Multicanal under a proceeding brought on January 16, 2004
pursuant to Section 304 of the U.S. Bankruptcy Code, in order to
counteract legal actions initiated by Huff before the courts of
the State of New York in December 2003, the U.S. Bankruptcy
Court entered an order allowing (a) Multicanal to take all
actions to participate in, conduct, or take any action in
furtherance of, Multicanal's APE under the jurisdiction of the
Argentine Court (the "APE Proceedings") to the fullest extent
permitted under Argentine law, (b) any creditor, equity holder,
party in interest or other person, entity, court or governmental
unit (including, without limitation, the Involuntary
Petitioners) to take all actions to participate in, conduct, or
take any action in furtherance of, Multicanal's APE and its APE
Proceedings to the fullest extent permitted under Argentine law,
and (c) any creditor, equity holder, party in interest or any
other person, entity, court or governmental unit (including,
without limitation, the Involuntary Petitioners) to take all
actions in the Argentine court presiding over the APE
Proceedings (and any right to appeal any decision of such
Argentine court) to oppose Multicanal's APE or its APE
Proceedings to the fullest extent permitted under Argentine law.

The order of the U.S. Bankruptcy Court ensures that the filing
by the Involuntary Petitioners does not interfere with
participation by creditors of Multicanal or any other person in
the APE Proceedings. This order makes clear that any person's or
party's participation in the APE or the APE Proceedings in
Argentina is not prohibited or limited by application of
automatic stay provisions of the United States Bankruptcy Code.

On August 27, 2004 the Company was notified of a preliminary
decision issued by the US Bankruptcy Court in the proceeding
initiated by the Company's Board of Directors as envisaged in
Section 304 of the U.S. Bankruptcy Code. The decision called for
additional proceedings with respect to two matters prior to the
Company obtaining a final favorable decision in the United

After making the filings required by the U.S. Bankruptcy Court
with respect to those additional proceedings, on December 2,
2004 the Court issued a ruling stating that as a result of the
clarifications made by Multicanal S.A in its filings it would
issue a final ruling dismissing the involuntary proceeding, and
subject to the compliance with certain conditions, grant the
motion filed by the board of directors of the Company under
Section 304 of the U.S. Bankruptcy Code. On January 6, 2005 the
U.S. Bankruptcy Court issued an order on the matters in its
earlier order. The January 6, 2005 order of the U.S. Bankruptcy
Code was appealed by Huff before the U.S. District Court for the
Southern District of New York (the "U.S. District Court") in
January 2005. On April 5, 2005 the U.S. Bankruptcy Court issued
an order affirming the U.S. Bankruptcy Court's dismissal of the
involuntary petition filed against the Company and the rejection
of Huff's motion regarding its alleged rights under the federal
securities law that was invoked to seek dismissal of the motion
filed by the board of directors under Section 304, but reserved
judgment on the issues relating to the compliance with the
conditions imposed by the U.S. Bankruptcy Court until May 31,
2005. In May 2005, additional presentations were filed with the
U.S. District Court and on May 31, 2005 a hearing was held where
the U.S. District Court stated its intention to affirm the
decisions of the U.S. Bankruptcy Court regarding several issues
related to the Section 304 proceeding and remanding the
proceedings back to the U.S. Bankruptcy Court instructing such
Court to determine whether, as argued by the Company, the
measures proposed to comply with the conditions imposed by the
U.S. Bankruptcy Court may be legally carried out on the basis of
an exemption from registration under the Securities Act. In its
May 16, 2005 the Argentine Court determined that the compliance
with the conditions imposed by the U.S. Bankruptcy Court in the
manner proposed by the Company did not require further
proceedings in Argentina.

In turn, in April 2005 Huff appealed the April 5, 2005 U.S.
District Court order to the U.S. Appellate Court for the Second
Circuit. The Company has sought dismissal of such appeal. No
decision has been issued in the context of such appellate

          Avalos 2057
          (1431) Buenos Aires, Argentina

PROMOTORA DE COMUNICACIONES: Trustee to Submit General Report
Ms. Magdalena de la Quintana, the trustee selected by the court
for the Promotora de Comunicaciones Colonia S.A. reorganization,
will submit the general report on Monday, Aug. 22, 2005.

The trustee presented the individual reports in court for
approval on June 27, 2005. These reports were based on the
creditors' claims, which Ms. Quintana verified until May 13,

The Company will endorse the settlement proposal, drafted from
the submitted claims, for approval by the creditors during the
informative assembly scheduled on February 16 next year.

Promotora de Comunicaciones Colonia S.A. successfully petitioned
for reorganization after Court No. 1 of Buenos Aires' civil and
commercial tribunal issued a resolution opening the Company's
insolvency proceedings.

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

SANATORIO EZEIZA: Court Grants Reorganization Plea
Sanatorio Ezeiza S.A. successfully petitioned for reorganization
after Court No. 2 of Buenos Aires' civil and commercial tribunal
issued a ruling which effectively opens the Company's insolvency
proceedings. 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

Infobae relates that Mr. Ricardo Felix Fernandez will serve as
trustee during the course of the reorganization. The trustee
will be accepting creditors' proofs of claim for verification
until Oct. 3, 2005.

After verifications, the trustee will prepare the individual
reports and submit it in court on Nov. 18, 2005. He will also
present a general report for court review on Dec. 29, 2005.

The Company will endorse the settlement proposal, drafted from
the submitted claims, for approval by the creditors during the
informative assembly scheduled on July 7, 2006.

CONTACT: Mr. Ricardo Felix Fernandez, Trustee
         Tucuman 1567
         Buenos Aires

SYCON ARGENTINA: Court Authorizes Plan, Concludes Reorganization
Buenos Aires-based company Sycon Argentina S.A. has concluded
its reorganization process, according to data released by
Infobae on its Web site. The conclusion came after the city's
civil and commercial Court No. 15, with assistance from Clerk
No. 30, homologated the debt plan signed between the Company and
its creditors.

CONTACT: Sycon Argentina S.A.
         Buenos Aires


* BARBADOS: IMF Concludes 2005 Article IV Consultation
The Executive Board of the International Monetary Fund (IMF)
concluded on August 5, 2005, the Article IV consultation with


Barbados compares favorably with other Caribbean countries on
economic and social indicators. The economy is heavily dependent
on tourism and financial services. The population is about
272,000, and per capita income (on a PPP basis) is about
US$15,700. Poverty rates are the lowest in the Caribbean. Social
indicators compare favorably in both a regional and global
context; in 2004, for example, Barbados was ranked 29th among
177 countries on the United Nations Development Program's Human
Development Index.

Barbados was one of the better-performing economies in the
Caribbean in the 1990s. During 1993-2000, Barbados grew at 3
percent, inflation was less than 2 percent, and public sector
deficits were maintained at less than 3 percent of GDP.

The economy-especially the tourism and financial services
sectors-suffered a sharp recession in 2001-02 following the
September 11th attacks and the global slowdown. In response to
the deterioration in the external environment, the government
implemented a public investment program to help revive economic
activity. Combined with public sector wage increases, this
contributed to a widening of the overall non-financial public
sector fiscal deficit from about 2 percent of GDP in FY 2000/01
to about 13 percent of GDP in FY 2002/03. As a result, the
public sector debt-to-GDP ratio rose from 74 percent in March
2001 to 87 percent in March 2003. The external current account
deficit remained at around 6 percent of GDP over 2001-03.

A strong economic recovery appears to have taken hold in 2004.
Real GDP growth in 2004 is estimated at 4.4 percent, led by a
recovery in tourism, construction, and communications. The
public sector deficit fell to 6½ percent of GDP in FY 2003/04
and 6 percent of GDP in FY 2004/05 as capital expenditures
declined from their high levels of the previous years. Following
the rebound in economic activity and a reduction in mortgage
lending rates, growth in credit to the private sector-especially
to households-accelerated in 2004. Private sector credit grew by
almost 17 percent during 2004, reflecting strong demand for
mortgages. Higher personal incomes of households also spurred
private credit growth. Base money declined, however, owing to
the resulting from the decline in commercial banks excess
reserves. The banking sector appears to be sound and financial
sector indicators have improved with the pickup in economic

The external current account deficit rose from 7 percent of GDP
in 2003 to 10½ percent of GDP in 2004, reflecting a broad-based
import surge related to the rapid increase in private sector
credit and the expansion in economic activity. Capital inflows
also declined with the cessation of privatization receipts from
abroad. As a result, the balance of payments moved from a
surplus to a deficit of 5½ percent of GDP in 2004, with gross
international reserves (GIR) falling to 3¾ months of imported
goods and non-factor services.

Structural reforms have advanced in taxation,
telecommunications, and the public enterprise sector. Corporate
and personal tax rates have been further lowered, in line with
the multiyear reduction in these rates initiated in FY 2002/03.
In telecommunications, the final phase of reform began in early
2005, and will involve the liberalization of external
telecommunications and the issuance of new licenses for fixed
telephone lines on a competitive basis. Legislation to
corporatize the Airport Authority was also recently approved.

Executive Board Assessment

Executive Directors observed that based on a recovery in
tourism, construction, and communications, Barbados recorded
stronger economic activity and low inflation in 2004. Directors
noted that growth prospects for the next three years remain
favorable, reflecting the positive global environment and the
boost to growth from the buildup to the 2007 World Cup cricket
games. At the same time, Directors underscored that a key
challenge in maintaining and sustaining strong economic growth
going forward will be to address macroeconomic imbalances,
including a high level of public debt, large fiscal and external
current account deficits, and declining international reserves.

Directors observed that the expansionary public investment
program, implemented to revive the economy after the recession
of 2001-02, contributed to raising Barbados' public debt to a
level far exceeding the average for Latin America and the
Caribbean. While welcoming the efforts to reduce the public
sector deficit over the past two years, they noted with concern
that the primary deficit remains among the highest in the region
and that public debt will rise steadily in the absence of fiscal
consolidation. Against this background, they cautioned that the
injection of fiscal stimulus in FY 2005/06, in the midst of a
robust private sector led recovery, could make the path to debt
reduction more difficult. Directors therefore urged the
authorities to seize the opportunity provided by the external
economic environment to reduce the fiscal deficit decisively,
thereby placing public debt on a firmly declining path and
building a fiscal cushion in the event of negative shocks.
Directors noted that faster fiscal consolidation will also help
strengthen the external reserve position, without overburdening
monetary policy, while allowing credit to be channeled to the
private sector to support growth.

Directors welcomed the government's plan to reduce public
expenditure over the medium term. Most Directors recommended
that the authorities complement these efforts with revenue
measures, as well as a rationalization of the tariffs of major
public enterprises, with a view to reducing subsidies to these
entities. Directors were encouraged by the authorities'
preparation for the implementation of output-based budgeting
within a medium-term framework, which is expected to improve
budget formulation. While welcoming the authorities' efforts to
promote private-sector participation in the provision of
economic infrastructure and services, Directors cautioned that
expenditure commitments associated with these activities should
be carefully monitored and accounted for in budget documents. To
assist their efforts to improve fiscal transparency, a few
Directors recommended that the authorities consider requesting a
fiscal Report on the Observance of Standards and Codes.

Directors supported preserving Barbados' fixed exchange rate
regime, noting its positive role as an anchor for price
stability and investor confidence. They emphasized, however,
that going forward, the exchange rate peg will need to be
supported by sound policies aimed at addressing the recent
macroeconomic imbalances. Directors also stressed the need to
strengthen competitiveness by tightening the link between wage
increases and developments in labor productivity, as well as
accelerating productivity growth through structural reform.

Directors welcomed the recent steps to slow the growth of
credit, and recommended further tightening to help arrest the
decline in foreign reserves. Directors encouraged the
authorities to make greater use of indirect monetary policy
instruments and enhance competition in the banking system. They
noted that this would facilitate the gradual phasing out of the
minimum deposit rate and improve the efficiency of financial
intermediation. Directors noted that while the banking sector
appears well poised to absorb shocks, risks related to the large
share of public debt held by domestic financial institutions
will need to be monitored carefully. Directors were encouraged
by the progress made in addressing the outstanding issues from
the Financial Sector Assessment Program report of 2002, and
called for strengthened efforts to curb money laundering and the
financing of terrorism.

Directors underlined the importance of structural reforms to
encourage foreign direct investment, improve competitiveness,
and enhance Barbados' long-term growth potential. They welcomed
the significant progress that has already been made in some
areas, including the reduction in corporate tax rates,
telecommunications reform, and the corporatization of the
airport. They welcomed the authorities' focus on reforms
relating to tax policy and privatization, as well as their
continued commitment to further trade and capital account
liberalization within the context of the Caribbean Single Market
and Economy initiative and the envisaged Free Trade Area of the
Americas. Key areas for further reforms include the removal of
import and export licenses; reform of the sugar sector;
restructuring or privatization of the public enterprises that do
not meet public policy objectives; and enhanced labor market
flexibility. Directors also urged the authorities to rationalize
costly fiscal incentives to investment.

Directors observed that statistical information provided by
Barbados is broadly adequate for surveillance purposes, but
noted the need to strengthen the quality, coverage, and
timeliness of data for the public enterprises and the capital
account of the balance of payments

1 Under Article IV of the IMF's Articles of Agreement, the IMF
holds bilateral discussions with members, usually every year. A
staff team visits the country, collects economic and financial
information, and discusses with officials the country's economic
developments and policies. On return to headquarters, the staff
prepares a report, which forms the basis for discussion by the
Executive Board. At the conclusion of the discussion, the
Managing Director, as Chairman of the Board, summarizes the
views of Executive Directors, and this summary is transmitted to
the country's authorities.

CONTACT: IMF - International Monetary Fund
         External Relations Department
         Public Affairs
         Phone: 202-623-7300
         Fax: 202-623-6278
         Media Relations
         Phone: 202-623-7100
         Fax: 202-623-6772


OCEANUS MUTUAL: Creditors to Approve Scheme of Arrangement


IN THE MATTER OF The Oceanus Mutual Underwriting Association
(Bermuda) Ltd., in Liquidation




NOTICE IS HEREBY GIVEN that by an Order dated August 4, 2005
made in the Supreme Court of Bermuda, a meeting (the Scheme
Meeting) was ordered to be convened of the Scheme Creditors (as
defined in the Scheme of Arrangement hereinafter mentioned) of
Oceanus Mutual Underwriting Association (Bermuda) Ltd. for the
purpose of considering and, if thought fit, approving (with or
without modification) a Scheme of Arrangement proposed to be
made between the Company and the Scheme Creditors and that such
Scheme Meeting will be held at The Hotel De L'Europe, Nieuwe
Doelenstraat 2-8, 1012 CP Amsterdam, The Netherlands, on October
5, 2005 commencing at 11:30 a.m.( Netherlands time) at which
place and time all such Scheme Creditors are requested to

The Scheme Creditors may vote in person at the said Scheme
Meeting or they may appoint another person, whether such person
is or is not a Scheme Creditor, as their proxy to attend and
vote in their place and are requested to complete the Proxy Form
and return it by post to the Joint Liquidators c/o Amon Services
Limited, Amon House, Station Road, Heckington, Sleaford NG34
9JH, England (attn: Michael McDonald) or by fax to +44 (0) 870
330 0019. The Proxy Form must be received by 3:00 p.m. (London
time) on September 30, 2005.

Each Scheme Creditor or his proxy will be required to register
his attendance at the Scheme Meeting prior to its commencement.
Registration will commence at 10:30 a.m. (Netherlands time).

By its Order, the Court has appointed James R D Smith, or
failing him Douglas Tufts to act as Chairman at the said Scheme
Meeting and has directed the Chairman to report the result of
the Scheme Meeting to the Court.

A copy of the letter from the Joint Liquidators summarizing the
Scheme, the Scheme of Arrangement, the Explanatory Statement
(required to be furnished pursuant to Section 100 of the
Companies Act 1981) and a Notice of the meeting together with
the Proxy Form for use at the meeting, and the Voting Claims
Form are available on the Scheme website or in Bermuda from Anfossi
Management Ltd., The Armoury Building, 37 Reid Street, Hamilton
HM 12, Bermuda (Ref: DMT) and in England at the offices of
Deloitte & Touche LLP, Athene Place, 66 Shoe Lane, London EC4A
3WA, England (Ref: JRDS).

The Scheme of Arrangement will be subject to the subsequent
sanction of the Court.

CONTACT:  Attorneys for the Joint Liquidators
          Conyers Dill & Pearman
          Clarendon House
          2 Church Street
          Hamilton HM CX


BANCO BRADESCO: Board to Propose Stock Dividend Payment
The Board of Executive Officers of Banco Bradesco S.A. decided
in a meeting held on August 16, 2005 to propose to the Board of
Directors during the meeting set for September 1, 2005 the
payment to the Company's stockholders, pursuant to the Corporate
By-Laws and legal provisions, of interest on own capital related
to the month of September 2005, in the amount of R$0.057000 per
common stock and R$0.062700 per preferred stock , benefiting the
stockholders registered in the Company's records on that date
(September 1, 2005).

In a letter sent to the Securities and Exchange Commission the
Company informed:

Upon approval of the proposal, the payment will be made on
October 3, 2005, at the net amount of R$0.048450 per common
stock and R$0.053295 per preferred stock, after deduction of
Withholding Income Tax of fifteen percent (15%), except for the
legal entity stockholders that are exempt from such taxation,
which will receive for the declared amount.

The respective Interests will be computed, net of Withholding
Income Tax, in the calculation of the mandatory dividends for
the year as provided in the Corporate By-Laws.

The Interests relating to the stocks under custody at CBLC -
Brazilian Company and Depository Corporation will be paid to
CBLC which will be transferred to the stockholders through the
depository Brokers.

CONTACT: Banco Bradesco S.A.
         Investor Relations
         Jean Philippe Leroy
         Phone: 55 11 3684.9229

         Luiz Osorio Leao Filho
         Phone: 55 11 3684.9302


BANCO BRADESCO: Discloses 3M Registered Share Acquisition
The Board of Directors of Banco Bradesco S.A. informed the
Securities and Exchange Commission in a letter dated August 15,
2005 that the Company's Board of Executive Officers have been
authorized to acquire stocks issued by the Company for resale or

In a letter to the Commission, the Company wrote:

The Board of Directors of this Bank, in a meeting held on this
date, according to the Paragraph 6 of Article 6 of the Company's
Bylaws, and in compliance with the requirements set forth in
Paragraphs 1st and 2nd of Article 30 of the Law 6,404/76 and the
CVM (Brazilian Securities Commission) Instructions 10, 268 and
390 as of February 14, 1980, November 13, 1997 and July 8, 2003,
respectively, resolved:

I) To authorize the Board of Executive Officers of this Company
to acquire, up to 3,000,000 registered book-entry stock, with no
par value, comprising 1,500,000 common stock and 1,500,000
preferred stock, to be maintained in treasury stock for later
resale or cancellation, without decreasing the Capital Stock,
being incumbency of the Board of Executive Officers to determine
the opportunity and the number of stocks to be effectively
acquired, within the limits authorized and the validity term of
this resolution.

For the purposes of Article 8 of CVM Instruction 10, as of
February 14, 1980, it is specified that:

a) The objective of the present authorization is the application
of resources available for Investment, resulting from the
"Profits Reserve - Statutory Reserve" account;

b) It will be valid for the period of 90 (ninety) days (from
August 17, 2005 to November 14, 2005);

c) According to the dispositions of Article 5 of CVM Instruction
10, the Bank has 319,429,456 outstanding stocks, comprising of
88,705,553 common stocks and 230,723,903 preferred stocks;

d) The acquiring process of these stocks will be undertaken at
market price and be intermediated by Bradesco S.A. Corretora de
Titulos e Valores Mobiliarios, with head office at Avenida
Ipiranga, 282, 13th floor, Consolacao, Sao Paulo, SP.

II) To register that: 1) in relation to the authorization
granted to the Board of Executive Officers, during the meeting
of the Board of Directors No. 1,058, as of February 2, 2005, it
was verified that 1,511,500 common registered book-entry stocks
were acquired up to August 11, 2005; 2) 1,538 common stocks and
1,287 preferred stocks, all book-entry ones, were accounted in
treasury, resultant of the conversion of Bradesco Seguros S.A.
stockholders, which added may be cancelled by proposal of the
Board of Directors to be presented on the next Special
Stockholder's Meeting, without decreasing the Capital Stock.

CONTACT: Banco Bradesco S.A.
         Investor Relations
         Jean Philippe Leroy
         Phone: 55 11 3684.9229

         Luiz Osorio Leao Filho
         Phone: 55 11 3684.9302


BANCO ITAU: S&P Affirms Strong Ratings Despite Risks
Standard & Poor's Ratings Services affirmed Wednesday its 'BB-
/B' foreign currency and 'BB/B' local currency counterparty
credit ratings on Banco Itau S.A. The outlook is stable. The
ratings on Banco Itau incorporate the fact that it operates in
Brazil and is exposed to the economic and industry risk of the

"Nevertheless, Banco Itau continues to be one of the most
creditworthy institutions in Latin America and benefits from a
strong and well-diversified business profile, professional
management team, focused strategy, and excellent earnings track
record," said Standard & Poor's credit analyst Tamara Berenholc.

The bank's professional management team and well-defined
strategy explain the attainment of its growth and
diversification targets. Banco Itau's focus on improving its
cross-selling of products and services, enhancing clientele
profitability, and cost control efforts support its moderate
business and financial profile. Management's good market
knowledge and experience should help the bank to maintain its
good market and financial position.

The ratings on Banco Itau also reflect the fact that it operates
in Brazil and is exposed to the economic and industry risk of
the country, including the direct exposure to government risk in
the form of open-market operations and marketable securities. At
June 2005, its total government exposure was equivalent to
approximately 1.3x its capital. Given its strategy to reduce
government exposure, this is among the lowest ratios when
compared to those of its retail peers, and should be maintained
at current levels.

The stable outlook on the local currency credit rating reflects
Banco Itau's exposure to the economic and industry risks of the
Brazilian banking industry and Brazil's sovereign credit rating.

In the event of an upgrade or positive outlook for the sovereign
local currency rating and improvement in the economic and
industry risks within the Brazilian banking industry, it is
likely that Banco Itau's outlook would be revised to positive or
it would be upgraded. On the other hand, in the event of a
downgrade or change to negative outlook for the local currency
sovereign credit rating, the local currency credit rating on
Banco Itau S.A. would move in tandem.

The stable outlook on the foreign currency credit rating
reflects the outlook on the sovereign credit rating of Brazil.
At current levels, a change in the foreign currency sovereign
credit rating would lead to a similar action on Banco Itau's
foreign currency rating.

Primary Credit Analyst: Tamara Berenholc, Sao Paulo (55) 11-

Secondary Credit Analyst: Milena Zaniboni, Sao Paulo (55) 11-

TCP: Board Approves Restructuring Proposal, Recapitalization
The Boards of Directors of Telesp Celular Participacoes S.A.
("TCP") and Tele Centro Oeste Celular Participacoes S.A.
("TCOPart") approved the proposal to their shareholders of the
terms, conditions and justifications for a corporate
restructuring involving the referred companies, the purpose of
which is to allow the use, by TCOPart, of the tax benefit
arising out of the amortization of the premium resulting from
the below described acquisition, by TCP, of preferred shares in

TCP was the original owner of the investments represented by
controlling shares in TCOPart, as well as of the preferred
shares acquired in the voluntary public offering for acquisition
of additional preferred shares in TCOPart, carried out in
October 2004 ("OPA") and, consequently, was also the owner of
the premium paid for the preferred shares acquired in the OPA
(the "Premium"). In order to avoid the transfer of any TCP's
debts to TCOPart, the shares in TCOPart owned by TCP consequent
of the OPA were transferred by way of an increase of capital to
a holding company called Bagon Participacoes Ltda. ("Bagon"), as
an act prior to the restructuring process.

The managements of the companies involved in the restructuring
process understand that the below described corporate
restructuring will add value to the those companies, having in
consideration that it will allow:

1) An improvement in the capitalization conditions for TCOPart;

2) An improvement in the cash flow, resulting from the tax
benefit arising out of the Premium amortization.

The restructuring contemplated will be structured in such a
manner as to avoid negative impacts over the future results of
TCOPart, on account of the amortization of the referred Premium.

1. Implementation of the Corporate Restructuring - The corporate
restructuring shall be implemented as follows:

1.1 Merger of Bagon into TCOPart: Bagon, which presently holds
the shares in TCOPart and the respective Premium, will be merged
into TCOPart, which will remain as the controlling shareholder
of Bagon. After the merger, Bagon will be extinguished and
TCOPart will succeed to it in all its rights and obligations.
The net assets to be merged into TCOPart will comprise the
referred equity interest, the Premium value and the provisions
for maintaining the wholeness of TCOPart's equity and shall be
evaluated based on their book value at August 15, 2005, in
accordance with the accounting practices enacted by the
applicable laws.

The Appraisal Report for Bagon's net assets to be transferred to
TCOPart, under the provisions in article 226 of Law n 6404/76,
shall be prepared by Deloitte, Touche, Tohmatsu Auditores
Independentes, an independent appraisal firm, ad referendum to
the shareholders of TCOPart and quota holders of Bagon. The
equity variations occurring between August 15, 2005 and the date
of the actual merger shall be absorbed by TCOPart. It is
estimated that the net asset value of Bagon to be merged into
TCOPart is eight hundred and sixty-nine million, five hundred
and fifteen thousand, eight hundred and eighty-one reais
(R$869,515,881.00). The merger of Bagon into TCOPart, however,
shall not entail an increase in the capital stock of the merger
company, having in consideration that Bagon's equity is
represented by its investment in the merger company and that the
premium will be booked in the "Special Reserve of Premium" entry
of the merger.

1.2 TCP, in its capacity as shareholder of Bagon, will receive
in substitution for the equity interest it held in the mergee
company, 28,084,178 new preferred shares issued by TCOPart,
corresponding to the shares issued by TCOPart currently held by
Bagon, in such a manner that one new share issued by TCOPart
will correspond to each share held by Bagon in the capital stock
of TCOPart. The shares in TCOPart to be received by TCP will
have the same rights as the currently outstanding shares issued
by TCOPart. No change will occur in the number of shares into
which the capital stock of TCOPart is divided, as well as in the
voting, dividend and equity rights held by the common and
preferred shareholders of TCOPart. Thus, TCP will again hold
shares directly in TCOPart, in exactly the same number, type and
with the same rights as it held before the transaction.

This transaction was structured with the purpose of avoiding
that the amortization of the premium recorded in Bagon adversely
affects TCOPart's profit to be distributed to the shareholders.
Therefore, if the transaction is approved by the managements of
the respective companies, Bagon will book a provision for
maintaining the wholeness of the referred companies' and their
shareholders' equity. The reversal of such provision will allow
the adverse effects arising out of the amortization of the
Premium over the balance sheet of TCOPart to be offset, thus
ensuring the continuance with the flow of dividends to its
shareholders, as set forth in article 16 of CVM Instruction n

2. Additional information about the restructuring process
intended for the purposes of Article 2 of CVM Instruction nº

2.1 The estimated cost of the corporate restructuring
transaction proposed herein is one hundred and ninety-four
thousand, one hundred and ninety reais (R$194,190.00) and
consists of expenses in connection with rendering of financial,
accounting and legal consultancy services.

2.2 The transaction was preceded by the organization of Bagon,
which is the current holder of the investment represented by the
controlling shares of TCOPart and by preferred shares acquired
through the OPA, which includes the Premium, with the purpose of
avoiding that obligations of the controlling group are
undertaken by TCOPart as a result of the contemplated
restructuring. In addition, the Protocol of Merger and
Justification was executed between the managements of TCOPart
and BAGON, in accordance with articles 224 and 225 of Law n
6404/76, providing for the conditions and criteria for merger of

2.3 No changes will be made to the voting, dividend, and equity
rights of the common and preferred shareholders of TCOPart, both
before and after the transaction.

2.4 Right to Withdraw: The approval of the resolutions relating
to the restructuring process herein described, in accordance
with the provisions in article 137 of Law n 6404/76, shall not
give the dissenting shareholders the right to withdraw.

2.5 Liabilities: No debt or liability shall be transferred to
TCOPart by force of this restructuring. Bagon will book a
provision for maintaining the wholeness of the shareholders'
equity of the mentioned company. The reversal of such provision
by the end of the restructuring process will allow the adverse
effects arising out of the amortization of the premium over its
balance sheets to be offset and will ensure the continuance with
the flow of dividends of TCOPart, under the terms of article 16
of CVM Instruction n 319/99.

2.6 Experts: Deloitte, Touche, Tohmatsu Auditores Independentes,
an independent appraisal firm, was hired for preparing the
necessary accounting appraisal reports, which hiring shall be
confirmed by the general meetings of shareholders of the
companies. Deloitte, Touche, Tohmatsu Auditores Independentes is
an independent firm as regards the companies subject matter of
the restructuring process, in accordance with independent audit
rules provided for by the Regional Board of Accounting.

2.7 Regulatory authorities: The implementation of the above
described corporate restructuring does not require prior
authorization by the National Telecommunications Agency -
ANATEL, anti-trust or other authorities.

2.8 The restructuring process contemplated herein shall not
cause any change in the share control of TCOPart.

2.9 The general meeting of shareholders for evaluation of the
restructuring proposal disclosed herein shall be called with due
regard to the pertinent legal and statutory terms, for August
31, 2005.

The documents related to the transaction referred to herein
shall be available to the shareholders of the companies involved
in the restructuring process as from August 17, 2005, at the
below listed addresses, from 09:00 a.m. to 05:00 p.m., against
presentation of the statement evidencing their respective
shareholding position. Further information may be obtained from
telephone number 0XX11 5105-1172, with Mr. Charles Allen.

CONTACT: Telesp Celular Participacoes S.A.
         VIVO - Investor Relations
         Phone: 55 11 5105-1172

VARIG: Adds Flights from New York, Miami to Brazil on 12/15
VARIG Brazilian Airlines, the largest air carrier in Latin
America and the anchor for Star Alliance in the region,
announced Wednesday that it would increase its flight schedule
between both New York and Miami to Brazil on December 15th, the
beginning of the peak summer season in South America.

VARIG said it would expand its New York to Sao Paulo service
from daily flights to 11 per week by adding 4 daylight
departures from John F. Kennedy International Airport. The
airline will utilize the newest aircraft in its fleet, and its
largest in terms of capacity, the three-class Boeing 777, on the
New York route.

From Miami, flights will nearly double with the addition of 6
weekly offerings, bringing the number of flights to 13 per week.
All of these flights will be on comfortable MD-11 aircraft
providing three classes of service. From Miami, VARIG will offer
both night and day time departures.

All flights will connect to Rio de Janeiro, VARIG's second
largest hub. From Sao Paulo and Rio, the carrier has an
extensive schedule of flights within Brazil and to most major
cities of South America. With a variety of first and business
class lounges and superior service which has been VARIG's
hallmark for 78 years, the airline is well equipped to serve
both business and leisure travelers.

The carrier also has service from Los Angeles to Sao Paulo, and
is celebrating 50 years of service from the United States (New
York - Idlewild) to Brazil this year.

In addition to its broad offering of flight schedules, which
includes services to the Orient, Europe, Caribbean, Mexico and
the United States, VARIG has a subsidiary Hotel Company,
Tropical Hotels, and a maintenance sister company, VARIG
Engineering and Maintenance (VEM) as well a cargo subsidiary,


AES GENER: Registers 62% Profit Drop, EBITDA Cut in 1H05
Power company AES Gener posted net profits of CLP4.88 billion
(US$9.2 million) in the 1H05, down 62% compared 1H04, reports.
Business News Americas. Operating revenues during the 1H04 were
up 20.7% at CLP235 billion from the CLP195 billion in the same
period last year.

Meanwhile, operating profits fell 24.6% to CLP40.6 billion in
1H05 from CLP53.8 billion in 1H04 due to natural gas cuts from
Argentina, which obliged the Company to use more expensive
alternative fuels at its thermoelectric plants and purchase more
power on the spot market.

As a result operating costs were up 40% in 1H05 to CLP185
billion from CLP132 billion in the 1H04. January-June EBITDA was
CLP63.9 billion, down 19.4% year-over-year for the six-month

Non-operating costs fell 29.2% to CLP24.1 billion in 1H05
compared to CLP34 billion in 1H04, reflecting a CLP9.35-billion
debt reduction carried out in 2004.

Equity at end-June stood at CLP832 billion, down 2.9% year-over-
year for the period.

US power company AES (NYSE: AES) owns AES Gener through its
Inversiones Cachagua holding company.

         Mariano Sanchez Fontecilla 310 Piso 3
         Santiago de Chile
         Phone: 562-6868900
         Fax: 562-6868991

E L   S A L V A D O R

BANCO CUSCATLAN: S&P Reviews, Afirms 'BB/B' Ratings
Standard & Poor's Rating Services affirmed Wednesday its 'BB/B'
counterparty credit and CD ratings on Banco Cuscatlan S.A. The
outlook is stable.

The ratings are constrained by limited growth prospects in El
Salvador due to its economy's small size and diversification,
credit quality of its loan portfolio, and the current strong
competitive environment, which pressures earnings. "The ratings
affirmations are based on the bank's strong market position in
El Salvador, its adequate profitability, and the increasing
recognition of the Cuscatlan brand in the region," said Standard
& Poor's credit analyst Leonardo Bravo.

Banco Cuscatlan has maintained its market position as the
second-largest bank in El Salvador, holding 22% of the system's
deposits and loans. El Salvador's economy is small, concentrated
in few sectors, and has exhibited lower economic growth than
have other Central American countries. Although economic
performance has been slow in El Salvador, Banco Cuscatlan has
achieved higher loan growth than have its peers as it has been
more aggressive than competition, mainly in corporate and
mortgage loans to high-end clients.

Banco Cuscatlan has maintained adequate profitability ratios in
the El Salvador market, with 1% ROAs in the past three years.
There has been margin compression for the Salvadorian banks in
general and for Banco Cuscatlan in particular, as the banks have
been unable to transfer the full impact of the hike in
international interest rates to their clients as a consequence
of the important competition in the market. As Banco Cuscatlan
has been the most active bank in El Salvador to use funds from
international capital markets, the impact of higher
international rates has been more important than for peers.
Nevertheless, Banco Cuscatlan has reduced its exposure in
foreign market by prepaying its U.S. CP program and other lines
of credit. Similar actions are expected for the second half of
2005. To compensate the slow growth in the net interest margin,
the bank has increased trading activities, which although a
volatile source of earnings, is adequate for the current rating
level. As a consequence, market sensitive income now represents
around 15% of total revenues, compared to only 9% in 2002. As
are other players in the system, Banco Cuscatlan is placing
great emphasis on greater growth in the retail segment, which
should offset downward pressure on margins. As loan growth is
anticipated to be moderate, profitability should remain at
current levels.

The stable outlook reflects our opinion that the bank's
strategies and adequate operations should maintain profitability
at good levels in a stable economic environment. An economic
downturn or the continuation of low growing prospects of the
Salvadorian economy, however, could affect the bank's overall
performance, putting pressure on the ratings. Ratings could be
raised if there is a strong positive development in economic
conditions, along with consistent improvements in asset quality
and profitability measures, together with improved capital

Primary Credit Analyst: Leonardo Bravo, Mexico City (52)55-5081-

Secondary Credit Analyst: Francisco Suarez, Mexico City (52) 55-


ASARCO: Court Authorizes Jordan Hyden Local Counsel Retention
ASARCO LLC seeks the Court's authority to employ Jordan, Hyden,
Womble & Culbreth, P.C., as bankruptcy co-counsel.

In the operation and management of the assets of the Debtor, and
in connection with continuing duties and responsibilities of the
Debtor, numerous legal questions and matters will arise, which
require the services and advice of attorneys.  The Debtor has
selected Jordan Hyden to serve as its co-counsel because the
firm's members have had much experience in matters of this
character and are well qualified to represent the Debtor.

Jordan Hyden's services will include:

  (a) assist the Debtor and Baker Botts in the counseling and
      professional advice regarding continued operation of its
      businesses and management of its property and duties and
      responsibilities as Debtor;

  (b) assist in preparing the schedules and statements
      required pursuant to the Bankruptcy Code;

  (c) assist in preparing on the Debtor's behalf all
      necessary applications, notices, answers, adversaries,
      orders, reports and other legal papers regarding the
      Debtor's obligations and operations under Chapter 11;

  (d) assist the Debtor and Baker Botts in the negotiation of a
      Plan satisfactory to parties-in-interest, and to prepare a
      Disclosure Statement which will be submitted to
      parties-in-interest; and

  (e) assist the Debtor and Baker Botts in performing all other
      legal services as may be necessary and appropriate to
      advise, instruct, assist or otherwise perform in the
      debtor's chapter 11 case.

Karen C. Paul, Senior Associate General Counsel at ASARCO,
informs the Court that Jordan Hyden was retained by two of the
Debtor's subsidiaries, Capco Pipe Company, Inc. in Alabama, and
Lake Asbestos of Quebec, Ltd., in June 2004, for the purpose of
filing chapter 11 bankruptcy proceedings for Capco and LAQ.  The
firm received a $75,000 retainer from the Debtor on behalf of
Capco and LAQ.  Jordan Hyden provided legal services to Capco
and LAQ, and sent them monthly bills, which were paid on a
regular basis by the Debtor.

In April 2005, immediately prior to filing their bankruptcy
cases, Jordan Hyden was also retained by three other
subsidiaries of ASARCO -- Cement Asbestos Products Company, Lake
Asbestos of Quebec, Ltd., and LAQ Canada, Ltd.  The firm filed
the Chapter 11 cases for the five ASARCO subsidiaries on April
11, 2005.

In the Subsidiary Debtors' cases, the bankruptcy court entered
an Interim Compensation Order, and then subsequently approved
both a Stipulation and an Escrow Agreement regarding the payment
of attorneys fees, among ASARCO and the five Subsidiary Debtors.

Jordan Hyden has been paid current in accordance with the Court-
approved compensation arrangements in the Subsidiary Debtors'
cases.  The firm currently holds in its trust account a $75,000
retainer plus the 20% holdback portion of its prior bills that
have been paid, as required under the Interim Order.

Jordan Hyden expects those compensation arrangements will
continue on substantially the same terms.

The firm has not previously represented ASARCO other than during
the few days before the Debtor's Petition Date to prepare the
Chapter 11 filing.

The Debtor proposes to compensate Jordan Hyden in accordance
with the firm's standard hourly rates:

             Attorney                        Hourly Rates
             ------------                    ------------
             Shelby A. Jordan                    $375
             Harlin C. Womble, Jr.               $350
             Nathaniel Peter Holzer              $300
             Michael Urbis                       $250
             James Evans                         $165

             Legal Assistants                Hourly Rate
             ------------                    -----------
             Barbara Smith                       $125
             Grace Duplessis, C.L.A.             $125
             Shaun Claybourn                      $95
             Brandi Barrier                       $70

ASARCO has filed a complaint against the five Subsidiary Debtors
and the Future Claims Representative appointed in the Subsidiary
Debtors' cases seeking a declaratory judgment that ASARCO is not
liable to the Subsidiary Debtors, their bankruptcy estates, or
any of their present or future creditors for any liabilities,
asbestos-related or otherwise, under various alter ego theories.
As such, ASARCO and the Subsidiary Debtors are adverse with
respect to the Complaint.

The Subsidiary Debtors have not filed any responsive pleadings
to the Complaint or taken any formal position with respect to
the allegations in the Complaint.  Jordan Hyden has not engaged
in any substantive work on behalf of the Subsidiary Debtors with
respect to the Complaint, other than to review it, to accept
service of the summons on behalf of the five Subsidiary Debtors,
and to accept an extension until September 13, 2005, of the
deadline for the Subsidiary Debtors to file a responsive
pleading to the Complaint.

The current and future creditors of the Subsidiary Debtors are
the parties who will benefit from any recovery on the Alter Ego
Claims.  Hence, the Subsidiary Debtors have determined to seek
court approval to permit their interests and the interests of
their estates to be represented by the Official Committee of
Unsecured Creditors, the Future Claims Representative, and their
counsel, and not by the Debtors or Jordan Hyden.

Nathaniel Peter Holzer, Esq., assures the Court that his firm is
a "disinterested person" as that term is defined in Section
101(14) of the Bankruptcy Code, as modified by Section 1107(b).
The firm has no connection with the creditors or other parties
to ASARCO's case, or their attorneys, which is adverse to the
Debtor's interests.

                          *     *     *

The Court approves ASARCO's application to employ Jordan Hyden
on an interim basis.  The order will be final if no party files
an objection by Sept. 11, 2005.

Headquartered in Tucson, Arizona, ASARCO LLC -- is an integrated copper mining,
smelting and refining company.  Grupo Mexico S.A. de C.V. is
ASARCO's ultimate parent.  The Company filed for chapter 11
protection on Aug. 9, 2005 (Bankr. S.D. Tex. Case No. 05-21207).
James R. Prince, Esq., Jack L. Kinzie, Esq., and Eric A.
Soderlund, Esq., at Baker Botts L.L.P., and Nathaniel Peter
Holzer, Esq., Shelby A. Jordan, Esq., and Harlin C. Womble,
Esq., at Jordan, Hyden, Womble & Culbreth, P.C., represent the
Debtor in its restructuring efforts.  When the Debtor filed for
protection from its creditors, it listed $600 million in total
assets and $1 billion in total debts.

The Debtor has five affiliates that filed for chapter 11
protection on April 11, 2005 (Bankr. S.D. Tex. Case Nos. 05-
20521 thru 05-20525).  They are Lac d'Amiante Du Quebec Ltee,
CAPCO Pipe Company, Inc., Cement Asbestos Products Company, Lake
Asbestos Of Quebec, Ltd., and LAQ Canada, Ltd.  Details about
their asbestos-driven chapter 11 filings have appeared in the
Troubled Company Reporter since Apr. 18, 2005.  ASARCO has asked
that the five subsidiary cases be jointly administered with its
chapter 11 case. (ASARCO Bankruptcy News, Issue No. 2;
Bankruptcy Creditors' Service, Inc., 215/945-7000)

CINTRA: Pilots Union Wants Stake in Two Airlines
Airline holding company Cintra SA (CINTRA.MX) is working with
the national pilots union to find a way to give them a stake in
AeroMexico and Mexicana, the country's two main airlines due to
be sold this year, reports Dow Jones Newswires.

The pilots have expressed interest in bidding on the two
airlines, Cintra chief executive Andres Conesa said, adding the
pilots union would be limited to a 10% stake at most.

Cintra recently received letters of interest from 10 groups of
investors for AeroMexico and 11 for Mexicana. The carriers are
being sold separately, although investors are allowed to submit
bids for both. The airlines, which together control close to 80%
of domestic air travel, merged in the early 1990s.

Cintra is hoping to receive financial offers for the carriers in
November, and to sell at least 51% of each by the end of the

Credit Suisse First Boston (CSR) is managing the sale.

CONTACT: Cintra S.A. de C.V.
         Av Xola 535 piso 16 col. del Valle Mexico
         Phone: (5)448 - 8000
         Web site:

EMPRESAS ICA: Trumpets Ps. 1,259M Civil Construction Contracts
Empresas ICA, S.A. de C.V. (BMV and NYSE: ICA), the largest
engineering, construction, and procurement company in Mexico,
announced Wednesday the signing of four contracts for civil
construction projects for a total of Ps. 1,259 million.

Aeropuertos y Servicios Auxiliares (ASA), acting through its
Airport Project, Construction, and Maintenance Department,
awarded ICA Civil Construction two contracts after an
international bidding process. The projects are:

- In association with Doppelmayr Cable Car GMBH & Co, the
design, construction, putting into service, technology transfer,
and training for an Automated People Mover (APM) that will
connect Terminals 1 and 2 of the airport. The fixed price
contract has a value of Ps. 677.6 million, and is scheduled to
be carried out over 16 months, beginning in August 2005, with
completion scheduled for December 2006. Of the total value of
the contract, Ps. 190 million corresponds to Civil Construction,
and the remainder is for equipment. ICA will consolidate the
total amount of the contract.

- The deep foundation work, using piles and drilled shafts 30
and 60 meters deep, respectively; and the construction of
reinforcement beams, fills, and concrete bases for the northern
finger, southern finger, main terminal building, hotel patio,
and covered parking garage for the new Terminal 2. The unit
price contract is worth Ps. 373.4 million, and is scheduled to
be carried out over 7 months, with completion scheduled for
March 2006.

Operadora Mexicana de Aeropuertos (OMA) awarded ICA the contract
for the repaving of the Monterrey International Airport runway
through a bidding process. The unit price contract is worth Ps.
24.5 million and is scheduled to be concluded on October 30,

The Ministry of Transport and Communications (SCT) awarded ICA
the contract for the construction of the Arriaga-Ocozocuautla
highway in Chiapas through an international public bidding
process. Work includes the construction and earthworks for the
roadway, a drainage system, asphalt concrete pavement, tunnels,
and viaducts on a sub portion of Kilometer 17+180, and sealing
and road signs on Kilometer 20+700. The highway is 5.2
kilometers long and will also include the construction of two
tunnels of 60 and 200-meter length. The unit price contract is
worth Ps. 184 million and is scheduled for completion in 15
months, on November 13, 2006.

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

CONTACT: Empresas ICA Sociedad Controladora S.A. de C.V.
         Col. Escandon Del Migual Hidalgo
         Mexico City, 11800
         Phone: 525-272-9991

GRUPO MEXICO: Stoppages Fail to Cripple Copper Mines' Ops
Copper giant Grupo Mexico SA (GMEXICO.MX) downplayed the impact
of this week's work stoppages, according to Dow Jones Newswires.

An estimated 250,000 union members participated in Monday's
staggered work stoppages at all the 130 mining and steel
chapters across Mexico in a solidarity move with the Sicartsa
steel plant workers, who have been on strike since Aug. 1 over a
series of labor disputes, and U.S. copper miners at Asarco Inc.
(ASX.XX), who have been on strike since early July.

"Yes there was an impact but it really was not important, it was
really insignificant," said Juan Rebolledo, vice president for
international affairs for Grupo Mexico.

Despite the one-hour staggered work stoppages, Mr. Rebolledo
said the leaching process at Grupo Mexico's copper mines La
Caridad and La Cananea had continued, the executive said.

He added that operations at the SX-EW plant, where copper is
extracted from leached solutions, had been able to continue as
this process is done with high-technology equipment that doesn't
require a lot of manpower.

Grupo Mexico is scheduled to start next week talks with workers
at La Cananea regarding the renewal of collective contracts.
Workers at the said mine have recently complained that they have
problems of their own and have threatened to go on strike Aug.
27 if talks over renewal of collective contracts don't advance
by that day.

But Mr. Rebolledo said he did not expect the Company to
encounter problems over the contract revision. Grupo Mexico had
not yet received the demands from the workers, he added.

          Avenida Baja California 200,
          Colonia Roma Sur
          06760 Mexico, D.F., Mexico
          Phone: +52-55-5264-7775
          Fax: +52-55-5264-7769
          Web site:

HYLSAMEX: Techint Completes Public Tender Offer for Shares
Argentine-Italian group Techint said on Wednesday that response
to its public share offer for Mexican steelmaker Hylsamex was
over 99%. Techint out bid several rivals in May to buy the 42.5%
stake held by Mexican industrial conglomerate Alfa in Hylsamex.
Late last month, Techint launch an offer to buy Hylsamex from
minority shareholders in a total deal worth about US$2.25

The offer expired on August 16 at 3pm, with shareholders holding
99.29% of the outstanding shares accepting the offer. Technint
will pay for the shares on August 22.

CONTACT:  Othon Diaz Del Guante
          Tel: +(52) 81-8865-1240

          Ismael De La Garza
          Tel: +(52) 81-8865-1224

          Kevin Kirkeby
          Tel: +(646) 284-9416


CORPORACION UBC: S&P Affirms 'BB-/B' Ratings
Standard & Poor's Ratings Services affirmed its 'BB-/B'
counterparty credit rating on Corporacion UBC Internacional S.A.
y Subsidiarias (UBCI), a holding company incorporated in Panama.
The outlook is stable. The rating incorporates the holding
company's structural subordination to its subsidiaries.

The rating is constrained by increased presence in markets that
have a lower risk rating than El Salvador's, such as Guatemala
and Costa Rica, and by strong banking competition in Panama. The
rating is underpinned by Cuscatlan's brand expansion in Central
America and the good earnings-generation capacity of UBCI's

"Although UBCI and its subsidiaries have adequate standards in
origination and prudent management of provisions, the large
portion of foreclosed and nonperforming assets from Banco
Cuscatlan de El Salvador negatively affects UBCI's asset quality
indicators. In addition, UBCI is entering banking markets,
namely Costa Rica and Guatemala, that we view as economically
more volatile than El Salvador," said Standard & Poor's credit
analyst Leonardo Bravo. Risks in those countries include a high
degree of foreign exchange exposure for the banking industry on
the loan book, as most loans in the banking system are granted
in dollars to borrowers with limited or nonexistent dollar
income. Nevertheless, in the case of UBCI, dollar exposure in
those countries is currently lower than the average of the
industry and is not a significant risk in UBCI's total asset

UBCI is a holding company incorporated in Panama, with
investments in banking and other financial subsidiaries in El
Salvador, Panama, Guatemala, Costa Rica, and Honduras. These
subsidiaries operate under the Cuscatlan brand name, of which
the largest operations are in El Salvador, where the group
originated. On a consolidated basis, UBCI had total assets of
$4.7 billion at June 2005, making it the second-largest
financial conglomerate in Central America and Panama. The
ratings assigned to the holding company, one notch below its
main subsidiary, Banco Cuscatlan S.A. (BB/Stable/B) in El
Salvador, reflect the structural subordination of the holding
company to its largest operating subsidiary.

Until now, UBCI has followed an adequate approach to integrate
its subsidiaries, permeating the Cuscatlan culture and policies.
The group has established operating limits that shape and manage
these risks well. UBCI has followed an adequate approach to
integrate its subsidiaries, permeating the Cuscatlan culture and
policies. Nevertheless, challenges remain to fully integrate all
operations under the same credit risk policies and technological

The stable outlook reflects our expectation that the group will
be successful in strengthening its position in the Central
American market, and that its increasing diversification will
mitigate country-specific risks. We expect the group to maintain
adequate earnings and not to allow asset quality to deteriorate.
The rating could be pressured, however, if the integration of
its recent acquisitions does not proceed as expected, or if the
regional economic environment deteriorates, hurting the banking
environment, or if ratings on its largest core operating
subsidiary are modified. Although its reliance on El Salvador's
operations will be reduced further as a result of risk
diversification by country, to date, the group continues to
generate significant earnings there, and El Salvador therefore
remains a key element in the ratings on the holding company.

Primary Credit Analyst: Leonardo Bravo, Mexico City (52)55-5081-

Secondary Credit Analyst: Francisco Suarez, Mexico City (52) 55-


SIDOR: Makes $57M Dividend Payment to CVG
Steelmaker Sidor has paid out US$57 million in second quarter
2005 dividends to state heavy industry holding company CVG,
reports Business News Americas. Pending approval from the
Company's board, 9.61% of the figure will be distributed among
Sidor workers owning shares in the Company, said Sidor's worker
representative Giovanni Barrios.

The dividend payment follows worker claims for past dividends,
which are now being resolved. Although agreements reached by the
minister and CVG president Victor Alvarez over past dividends
have yet to be signed, Mr. Barrios said.

"They [CVG] have honored the agreements but we require the
documents to be signed to ensure compliance in case of personnel
changes in public management," said Mr. Barrios.

CVG and Sidor shareholders reached agreements in May 2005
whereby CVG recognized the rights of series B shareholders to a
US$94 million dividend payment.

Sidor is 60%-owned by the Amazonia consortium made up of
Mexico's Hylsamex, the Techint group, Brazil's Usiminas and
Venezuela's Sivensa. The Company's plants are in Puerto Ordaz in
southeastern Venezuela's Bolivar state.

PDVSA: To Halt Oil Shipments to US if Aggression Continues
Venezuela's state oil firm Petroleos de Venezuela (PDVSA) will
stop shipping oil to US if the latter continues to aggress the
South American country, Business News Americas reports.

"We are willing to do it and ready to defend our rights," PDVSA
president and energy and oil minister Rafael Ramirez said.

Mr. Ramirez indicated that his office has been working to
safeguard oil activities under any circumstance. He mentioned
some replacement clients, saying that China received 14 tankers,
each with a capacity of 2 million barrels (Mb) of crude in the
first half of this year. Venezuela, according to Mr. Ramirez,
will not have problems placing its products elsewhere since
hydrocarbons are much sought after.

The US receives 60% of Venezuela's crude and pier 2 products
exports. The refineries PDVSA owns in the US through its Citgo
subsidiary receive about 1Mb/d of crude.


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

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