TCRLA_Public/060119.mbx         T R O U B L E D   C O M P A N Y   R E P O R T E R

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

          Thursday, January 19, 2006, Vol. 7, Issue 14

                            Headlines

A R G E N T I N A

ALTO PALERMO: Reports Real Estate Turn-over to Raghsa
AOL LATIN: Files Joint Plan of Reorganization & Liquidation
ESTABLECIMIENTO: Court Designates Trustee for Liquidation
SALTA HYDROCARBON: Fitch Ups Currency Ratings to B from Junk


B E R M U D A

BELVEDERE INSURANCE: Bermuda Scheme Gets U.S. Court Recognition
FOSTER WHEELER: Runs EPC Phase of Habshan Gas Complex Expansion
LORAL SPACE: XTAR to Provide Services to Danish Armed Forces

B R A Z I L

ACESITA: US$87M Natural Gas Supply Pact Expected to Reduce Costs
BANCO BMC: Fitch Puts Low-B Ratings on Local & Foreign Currency
BRAZIL: Currency Suffers from Lowered Interest Rates
KLABIN: Board Approves MA-1100 Project
COMPANHIA ENERGETICA: S&P Revises Junk Outlook to Stable

TCP: Market Share Slips 34.5%
COSAN: Moody's Rates Proposed US$250 Mil. Perpetual Bonds at Ba2


C A Y M A N   I S L A N D S

BEAUFORT EUROPEAN: Creditors to Prove Claims
CMO HOLDINGS: Begins Liquidation
EDGE INVESTMENT: Enters Voluntary Liquidation
RGA SIGMA: Voluntary Wind Up Begins


G U A T E M A L A

BANCAFE: Banking Authorities Rule Out Intervention


M E X I C O

AXTEL: Revenues Up 23% in Fourth Quarter of 2005
BALLY TOTAL: Liberation Group Urges Holders Sign GOLD Proxy Card
BALLY TOTAL: Int'l Shareholder Services Recommends Pardus Slate
BALLY TOTAL: Says Pardus, Liberation Ignore Fundamental Issues
DESC: 2005 Revenue Likely to be Two Times Higher

DISTRIBUTED ENERGY: Schwallie Joins Management Team as CEO
GRUPO ELEKTRA: Renews Agreement With Western Union For Six Years
GRUPO TMM: Posts Results of Cash Tender Offer


V E N E Z U E L A

AES CORP: Shutting 480-megawatt California Power Station
VENEZUELA: Oil Companies Repay US$126 Mil. in Taxes & Other Fees
* Espirito Santo Sets Buy Recommendation on Three Brazilian Cos.
* Fitch Rates Latin America on National Scale

     -  -  -  -  -  -  -  -

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

ALTO PALERMO: Reports Real Estate Turn-over to Raghsa
-----------------------------------------------------
Alto Palermo S.A. reported in a letter sent to the Comision
Nacional de Valores on January 12, 2006, that the possession of
the real estate property located at Presidente Figueroa Alcorta
Avenue No. 3513/15/25/33/35 was given to RAGHSA SOCIEDAD
ANONIMA, on December 30, 2005 as agreed on the Purchase
Agreement signed by the Company and RAGHSA.

Alto Palermo acquires, develops, manages and operates shopping
centers.  The company also constructs and sells residential
buildings and manages a portfolio of credit card debt.

CONTACT: Alto Palermo S.A. (APSA)
         2/F
         476 Hipolito Yrigoyen
         Buenos Aires
         Argentina
         Phone: +54 11 4344 4600
         Web site: http://www.altopalermo.com.ar


AOL LATIN: Files Joint Plan of Reorganization & Liquidation
-----------------------------------------------------------
America Online Latin America, Inc. and its debtor-affiliates
unveiled to the U.S. Bankruptcy Court for the District of
Delaware a Disclosure Statement explaining their Joint Plan of
Reorganization and Liquidation.

                  Overview of the Plan

The proposed Plan pays in full all unaffiliated general
unsecured creditors who vote to accept the Plan and do not opt
out of a general release.  The Plan provides no distribution for
equity interests.

Other salient terms of the Plan include:

    (i) America Online Latin will be converted to a limited
        liability company and continue to exist as America
        Online Latin America, Inc., LLC,

   (ii) AOL Latin America Management LLC, AOL Puerto Rico
        Management Services, Inc., and America Online Caribbean
        Basin, Inc. will be dissolved on the Effective Date, and

  (iii) a Liquidating LLC will be established and will hold
        Reorganized America Online Latin America, Inc., LLC and
        certain of the Debtors' remaining assets.

                    Treatment of Claims

Under the Plan, Priority Claims will be paid in full and in
cash, equal to the amount of the allowed claims.

Holders of Secured Claims will receive either:

    (1) the return of assets on which the holder of a claim has
        a senior perfected and indefeasible lien or security
        interest, or

    (2) proceeds from the sale of the assets on which the holder
        of a claim has a senior perfected and indefeasible lien
        or security interest.

Holders of TW Party Claims will receive:

    (a) certain assets related to AOL Puerto Rico valued at $15
        million, and

    (b) either of these two treatments at the election of the
        Debtors:

         * LLC Option: The TW Parties will receive all the
           membership interests in the Liquidating LLC other
           than the interests that will go to general unsecured
           creditors, or

         * Cash Option: The TW Parties will receive all the
           membership interests in the Liquidating LLC. Cash
           will be set aside in a separate fund for general
           unsecured creditors.

Time Warner will turn over to the Cisneros Group Parties 40% of
their membership interest in the Liquidating LLC, subject to an
adjustment based on:

    (a) the value of AOL Puerto Rice assets transferred to the
        TW parties,

    (b) the value of certain general unsecured claims of AOL,
        and

    (c) payment of all general unsecured creditors.

General Unsecured Creditors will receive one of the two
treatments at the election of the Debtors:

    (1) LLC Option: General Unsecured Creditors will receive
        interest in the Liquidating LLC on the effective date
        entitling them to receive their ratable share of
        available cash in future distributions, or

    (2) Cash Option: Cash will be set aside in a separate fund
        on the effective date and general unsecured creditors
        will receive their ratable share of cash from the fund.

The Debtors tell the Court that their election of either option
will have no impact on the recovery of general unsecured
creditors.

Series C Redeemable Convertible Preferred Stock of America
Online Latin America, Inc. will be cancelled.  On the Effective
Date, Time Warner or the LLC Agents turn over to each of the
Cisnero Group parties on an equal basis, the Series C Beneficial
Interests.

Subordinated Claims will be discharged and holders of those
claims will receive nothing under the plan.

The Court will convene a hearing at 3:00 p.m. on Feb. 23, 2006,
to consider the adequacy of information contained in the
Debtors' Disclosure Statement explaining its Plan of
Reorganization.  If the Disclosure Statement is approved on the
Feb. 23 hearing, the Court will hold a confirmation hearing on
Mar. 1, 2006.

Headquartered in Fort Lauderdale, Florida, America Online Latin
America, Inc. -- http://www.aola.com/-- offers AOL-branded
Internet service in Argentina, Brazil, Mexico, and Puerto Rico,
as well as localized content and online shopping over its
proprietary network.  Principal shareholders in AOLA are
Cisneros Group, one of Latin America's largest media firms,
Brazil's Banco Itau, and Time Warner, through America Online.
The Company and its debtor-affiliates filed for chapter 11
protection on June 24, 2005 (Bankr. D. Del. Case No. 05-11778).
Pauline K. Morgan, Esq., and Edmon L. Morton, Esq., at Young
Conaway Stargatt & Taylor, LLP and Douglas P. Bartner, Esq., at
Shearman & Sterling LLP represent the Debtors in their
restructuring efforts.  When the Debtors filed for protection
from their creditors, they listed total assets of $28,500,000
and total debts of $181,774,000.


ESTABLECIMIENTO: Court Designates Trustee for Liquidation
---------------------------------------------------------
Pergamino accountants Benigno Ramon Fernandez and Nazareno
Cuccioletta were assigned trustees for the liquidation of local
company Establecimiento Avicola Argentina S.R.L., relates
Infobae.

The trustees will verify creditors' claims until March 28, 2006,
the source adds. After that, he will prepare the individual
reports, which are to be submitted in court on May 10, 2006. The
submission of the general report should follow on June 22, 2006.

The city's civil and commercial court handles the Company's
case.

CONTACT:  Establecimiento Avicola Argentina S.R.L.
          Avda. Libertador 834
          Guerrico, Partido de Pergamino (Buenos Aires)

          Mr. Benigno Ramon Fernandez
          Mr. Nazareno Cuccioletta
          Saavedra 368
          Pergamino (Buenos Aires)


SALTA HYDROCARBON: Fitch Ups Currency Ratings to B from Junk
------------------------------------------------------------
Fitch Ratings has upgraded to 'B' from 'CCC' the global scale
foreign and local currency ratings of Salta Hydrocarbon Royalty
Trust US$234,000,000 targeted amortization notes.  The Rating
Outlook is Stable.

The rating action is based on the better performance observed
during 2005, due to the recovery of hydrocarbon well-head prices
that positively impact the collateralized royalty incomes.  As
expected by Fitch, royalty incomes continued improving in 2005
due to the higher average gas price applied for the payment of
royalties (1.05 USD/MBTU in 2005 versus 0.82 USD/MBTU in 2004) -
that reflected the partial liberalization of the regulated well-
head gas price, offsetting the decrease on production levels.

Consequently, on the last three quarters it was confirmed the
trend of payments of principal above targeted payments initiated
in March 2005, which continued reducing the gap between the
current outstanding of the notes and the originally scheduled
outstanding debt.  As of Dec. 28, 2005, the outstanding debt was
US$206,672,127 (theoretical outstanding of US$200,242,525).  At
that date, the offshore six-month liquidity reserve account
remains fully funded.

The rating is affected by the country ceiling of Argentina,
reflecting the high Federal Government interference still
observed in the hydrocarbon sector.  Despite the increase on the
gas price, concessionaries remain unwilling to increase capital
expenditures with exploration of wells to revert the negative
trend observed on proven reserves and hence on production
levels. Concessionaries do not have incentives to further invest
under the current market conditions, since the gas price in
Argentina is still regulated and remains lower than the gas
price prevailing in other markets.  Furthermore, the Federal
Government still maintains the export withholding tax for oil,
and the fiscal incentives announced by the Federal Government to
beneficiate concessionaries on the exploration of new basins are
not clear.  Despite this scenario of uncertainty and unclear
rules, concessionaries are making some capital expenditures with
maintenance of wells.

Even though hydrocarbon production continued decreasing during
2005 (6.5% in the first 10 months compared with the same period
of previous year), in September 2005 it was cured the hold-back
event triggered under the transaction in September 2004.
Despite this negative trend on production, Fitch expects for
2006 increasing collateralized royalty incomes due to the
recovery of the gas average price.  Royalty incomes up to
October 2005 were 17.6% higher than the same period of previous
year, positively impacting the cash flows collateralizing the
notes.  In Fitch's opinion this will determine a further
reduction in the difference between the real and the theoretical
outstanding debt by 2006.

In a more predictable scenario, with less Federal Government
interference, the hydrocarbon production may grow based on some
capital expenses with maintenance of wells.  Consequently, Fitch
expects the structure continues performing well in the medium
term.  Fitch will continue to monitor developments in the oil
and gas sector as well as legal issues that may impact the
performance of this transaction.


=============
B E R M U D A
=============

BELVEDERE INSURANCE: Bermuda Scheme Gets U.S. Court Recognition
---------------------------------------------------------------
As reported in the Troubled Company Reporter on Jan. 17, 2006, a
meeting of Scheme Creditors of Belvedere Insurance Company
imited was held on Dec. 1, 2005, for voting on the Scheme.  The
Scheme was approved by the requisite majorities of 50% in number
and 75% in value voting in favor of the Scheme.

The Scheme received sanction from the Supreme Court of Bermuda
at a hearing on Dec. 16, 2005.  A copy of the order sanctioning
the Scheme was then delivered to the Registrar of Companies on
Dec. 20, 2005, making the Scheme effective.

The legal advisers to the Joint Liquidators in relation to the
Scheme of Arrangement is:

        Attride-Stirling & Woloniecki
        Crawford House
        50 Cedar Avenue
        Hamilton HM11
        Bermuda

A full-text copy of Belvedere Insurance Company Limited's Scheme
of Arrangement is available for free at
http://www.kpmg.bm/news.asp?unid=149

                        Permanent Injunction

All scheme creditors are enjoined from

   (a) commencing or continuing any action against the Debtor or
       its property in the United States;

   (b) enforcing any judicial, administrative or regulatory
       judgment against the Debtor or any of its property in the
       United States;

   (c) invoking any statute, rule or law requiring the Debtor to
       establish or post security in the form of a bond or
       letter of credit as a condition of prosecuting or
       defending any proceedings;

   (d) drawing down any letter of credit established by the
       Debtor in excess of amount expressly authorized by the
       terms of the contract or agreement under which that
       letter of credit has been established; and

   (e) withdrawing from or setting off against property that is
       the subject of any trust or escrow agreement or similar
       arrangement in which the Debtor has an interest in excess
       of amounts expressly authorized by the terms of the
       contract or agreement under which those trust or escrow
       agreement has been established.

Full-text copies of Belvedere Insurance Company Limited's order
and motion for permanent injunction are available upon request
to:

         Chadbourne & Parke LLP
         30 Rockefeller Plaza
         New York, NY 10112
         Tel: (212) 408-5100
         Attn: Howard Seife, Esq.
               Francisco Vazquez, Esq.

Headquartered in Hamilton, Bermuda, Belvedere Insurance Company
Limited -- http://belvedere-liquidation.com-- wrote general
insurance and reinsurance in Bermuda between 1978 and 1994.  In
1994, Belvedere ceased writing new business and went into run-
off.  Belvedere was placed into liquidation in 1998 with Malcolm
L. Butterfield and Anthony J. McMahon -- both partners of KPMG
-- appointed as joint provisional liquidators and foreign
representatives.  The petitioners filed an ancillary proceeding
on Oct. 26, 1998 (Bankr. S.D.N.Y. Case No. 98-47660).  Andrew
Rosenblatt, Esq., Francisco Vazquez, Esq., Howard Seife, Esq.,
and Lisa Carol Dorr, Esq., at Chadbourne & Parke LLP represent
the Debtor.


FOSTER WHEELER: Runs EPC Phase of Habshan Gas Complex Expansion
---------------------------------------------------------------
Foster Wheeler Ltd. (Nasdaq: FWLT) announced Tuesday that one of
its subsidiaries has been awarded a contract by Abu Dhabi Gas
Industries Ltd. (GASCO) to provide management services for the
engineering, procurement and construction (EPC) phase of GASCO's
Habshan Gas Complex Expansion (HGCE) Project at Habshan, Abu
Dhabi, UAE. GASCO, a subsidiary of Abu Dhabi National Oil
Company, is one of the largest gas processing companies in the
world. The management services will be undertaken by Foster
Wheeler Energy Limited in the UK, previously awarded the
contract to provide management services for the front-end
engineering design and EPC contractor selection phases of this
project.

The Foster Wheeler contract value was not disclosed and the
project will be included in the company's fourth-quarter 2005
bookings.

The HGCE Project is a $1 billion expansion of the existing
Habshan Gas Complex, one of the world's largest gas processing
plants. This expansion project will allow the processing of
incremental associated gas resulting from ADNOC's expansion of
its crude oil production from 1.2 to 1.4 million barrels per
day. Associated gas is found in association with crude oil, as
distinct from non-associated gas, which is produced from
reservoirs that do not contain significant quantities of crude
oil.

"We are very pleased that GASCO has demonstrated its continued
confidence by selecting Foster Wheeler to manage the EPC phase
of this significant expansion at Habshan," said Steve Davies,
chairman and chief executive officer of Foster Wheeler Energy
Limited. "This award builds on our well-established and very
successful relationship with GASCO and follows on our success in
providing similar services for GASCO's Onshore Gas Development
III and Ruwais 3rd Train projects, which are both world-scale
developments."

"The HGCE Project is a strategic investment which will be
instrumental in delivering GASCO's vision: continuously to
generate value through world-class management of our gas plant
and distribution network within the hydrocarbon value chain,"
said Khaled Ghanem, senior project manager, GASCO. "We have
established an excellent working relationship with Foster
Wheeler and we perform as one integrated project management
team, committed to satisfying GASCO's expectations for the
successful implementation of the project, meeting our company's
ambitious health, safety and environmental quality requirements
and achieving a smooth, 'right first time' start-up."

The HGCE project is planned for completion in mid 2008 and
includes the following:

   -- Two new 800 tonnes per day SUPERCLAUS(R) sulfur recovery
      units;

   -- A new acid gas enrichment unit;

   -- New low pressure, high pressure and feed gas compressors
      plus associated pipelines;

   -- Associated offsites and utilities; and

   -- Upgrade of existing distributed control systems.

Foster Wheeler Ltd. is a global company offering, through its
subsidiaries, a broad range of engineering, procurement,
construction, manufacturing, project development and management,
research and plant operation services. Foster Wheeler serves the
refining, upstream oil and gas, LNG and gas-to-liquids,
petrochemical, chemicals, power, pharmaceuticals, biotechnology
and healthcare industries. The corporation is based in Hamilton,
Bermuda, and its operational headquarters are in Clinton, New
Jersey, USA.

At Sept. 30, 2005, Foster Wheeler's balance sheet showed a
$375,004,000 equity deficit.


LORAL SPACE: XTAR to Provide Services to Danish Armed Forces
------------------------------------------------------------
XTAR, LLC announced Tuesday that it has been awarded a multi-
year contract from HISDESAT Servicios Estrategicos, S.A. to
provide the Royal Danish Navy with X-band communications
services throughout Europe, Africa and the Middle East.  XTAR is
a joint venture between Loral Space & Communications (NASDAQ:
LORL) and HISDESAT.

The initial five-year agreement will provide the RDN with
capacity either in right- or left-hand circular polarization on
the XTAR-EUR satellite, ideally located at 29 degrees East
longitude.

"By taking advantage of XTAR's right- or left-hand polarization,
the Royal Danish Navy will be able to use its new, state-of-the-
art dual-polarization terminals," said Miguel Angel Primo, chief
operating officer, HISDESAT. "The use of both polarizations on
the XTAR satellite essentially doubles throughput compared to
older, single-polarization satellites, making available much
needed X-band capacity."

In addition to being Loral Space & Communications' joint venture
partner in XTAR, HISDESAT acts as XTAR's exclusive sales agent
to certain Western European ministries of defense.

Denis Curtin, chief operating officer, XTAR LLC, said, "The
agreement with the RDN is a direct result of the unique industry
and government partnership that XTAR and HISDESAT have achieved
with its joint venture. Denmark is now the second European
nation to use XTAR-EUR following the company's initial contract
with the Spanish Ministry of Defense."

In May 2005, XTAR was awarded a contract with the U.S.
Department of State's Diplomatic Telecommunications Service
Program Office (DTS-PO), Fairfax, Va., to provide X-band
communications services to embassies and consulates in Africa
and Asia. The DTS Network provides responsive, reliable, secure,
and cost-effective telecommunications services to users at more
than 260 sites around the world, representing nearly 50 U.S.
Government entities.

In 2005, XTAR demonstrated its high-power X-band service to
branches of the US military and other allied governments. Using
legacy equipment, test results from XTAR-EUR have consistently
shown data rates that far eclipse current military X-band
systems. With minor antenna and terminal modifications, XTAR has
achieved data rates in excess of 100 Mbps using both left and
right hand polarizations.

Built by Space Systems/Loral, XTAR-EUR entered service in April
2005. The satellite carries twelve 72 MHz, high-power X-band
transponders that provide coverage from Eastern Brazil and the
Atlantic Ocean, across all of Europe, Africa and the Middle East
to as far east as Singapore.  XTAR-EUR is expected to provide
service for nearly 20 years.  Upon the launch of SPAINSAT in
early 2006, XTAR will lease eight 72 MHz X-band transponders on
the satellite, to be designated XTAR-LANT, in order to provide
greater flexibility and additional X-band services.

The XTAR-EUR satellite features traditional global beams as well
as on-board switching and multiple steerable beams, allowing
users access to X-band capacity as they travel anywhere within
the footprint of the satellite. XTAR-EUR is designed to work
with existing X-band terminals, as well as next generation X-
band terminals that feature antennas smaller than 2.4 meters.

XTAR, LLC, headquartered in Rockville, Md., is a new satellite
communications company committed to serving the long-haul
communications, logistics and infrastructure requirements of the
U.S., Spanish and allied governments. The company is a joint
venture between Loral Space & Communications, which owns 56
percent, and HISDESAT, which owns 44 percent. For more
information, visit XTAR's web site at http://www.xtarllc.com.

HISDESAT Servicios Estrategicos S.A. is a Spanish company
headquartered in Madrid. HISDESAT's aims are the acquisition,
operation and commercialization of Government-oriented space
systems, beginning with satellite communications in the X- and
Ka-band frequencies. HISDESAT is owned jointly by HISPASAT,
S.A., the Spanish commercial satellite services company, INSA
and the leaders of Spain's space industries: EADS-CASA Espacio,
INDRA and SENER. HISDESAT will provide enhanced capabilities,
including Ka-band, for Spain's defense applications.

Loral Space & Communications is a satellite communications
company. Its Space Systems/Loral division is a world-class
leader in the design and manufacture of satellites and satellite
systems for commercial and government applications including
direct-to-home television, broadband communications, wireless
telephony, weather monitoring and air traffic management.
Through its Loral Skynet division, it owns and operates a fleet
of telecommunications satellites used to broadcast video
entertainment programming, distribute broadband data, and
provide access to Internet services and other value-added
communications services.

The Company and various affiliates filed for Chapter 11
protection (Bankr. S.D.N.Y. Case No. 03-41710) on July 15, 2003.
Stephen Karotkin, Esq., and Lori R. Fife, Esq., at Weil, Gotshal
& Manges LLP, represent the Debtors in their successful
restructuring.  As of Dec. 31, 2004, the Company listed assets
totaling approximately $1.2 billion and liabilities totaling
approximately $2.3 billion.  The Court confirmed the Debtors'
chapter 11 Plan on Aug. 1, 2005.


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

ACESITA: US$87M Natural Gas Supply Pact Expected to Reduce Costs
----------------------------------------------------------------
In April 2005, stainless steel producer Acesita S.A. signed a
200 million real (US$87 million) natural gas supply deal with
Gasmig, Gazeta Mercantil reports.  Acesita expects a 30% costs
reduction as a result of the deal.

Gasmig will be supplying liquefied petroleum gas as substitute
for fuel in Acesita's rolling plant.  Pipeline works for the
natural gas supply are underway, Gazeta Mercantil says.

"Acesita has taken several steps toward reducing its costs even
more and to making our prices more attractive," Acesita CFO
Gilberto Audelino Correa said.

The steelmaker produces some 800,000t/y of stainless steel, of
which it exports 230,000t/y, Gazeta Mercantil relates.

Acesita S.A. produces and markets stainless and silicon steel,
and provides technical services related to its activities in
Brazil.  The company's products include flat stainless, silicon
and high carbon steel, flat high alloy bars, long bars, steel
forgings, steel tubes, plates and non-flat steel.


BANCO BMC: Fitch Puts Low-B Ratings on Local & Foreign Currency
---------------------------------------------------------------
Fitch Ratings has today assigned Long- and Short-term local and
foreign currency ratings of 'B-' and 'B' respectively to Banco
BMC S.A.  The Outlook assigned to the Long-term ratings is
Stable.  The agency also assigned an individual rating of 'D/E'
and affirmed the bank's support rating of '5'.  At the same time
the Long-term foreign currency rating 'B-' was assigned to BMC's
second senior unsubordinated unsecured international fixed-rate
notes programme.  BMC has a National Long-term rating of 'BBB-'
and National Short-term rating of 'F3(bra)' by Fitch.  The
Outlook of the National Long-term rating is Stable.

The ratings of BMC's notes - maturing in three years, with the
initial amount of USD100 million -reflects the international
ratings assigned to BMC.  These indicate the relative success of
its senior management in redefining the size of the bank after
the liquidity crisis in November 2004, after the intervention of
the Brazilian central Bank in Banco Santos S.A., BMC's leverage
more in line with small and medium-sized banks and the expertise
of its executives.  On the other hand, the ratings also
incorporate the fact that BMC is a small bank (more susceptible
to the volatile Brazilian environment), having presented low
profitability and loan portfolio quality compared to its peers,
as well as greater revenue concentration in a few products, due
to the restructurings it has undergone in recent years.

BMC suffered from the liquidity crisis that followed the Banco
Central do Brasil intervention in Banco Santos S.A.  The bank's
time deposits fell some 40%, versus a peer average of 30% in
Q404 - some of its principal providers of funding (pension funds
and asset managers) remain reluctant to resume investing in
small and medium-sized banks.  Since then, BMC has redefined its
business focus, reducing some unprofitable activities and
expanding its consignment lending to retirees and pensioners of
the Instituto Nacional do Seguro Social, the Brazilian social
security agency, selling a good part of the portfolio it
originates.  This has enabled the bank to adjust its cost
structure and adapt its liquidity to the new environment.

The maintenance of the Outlook of BMC's and its issue
programme's Long-term ratings is dependent on the sustained
growth of the bank's activities, strengthening its franchise and
improving its profitability, asset quality and cost ratios,
while maintaining liquidity.  Fitch also expects moderate
leveraging as well as a dividend policy that is compatible with
its results.

Controlled by Jaime Pinheiro, BMC primarily focuses on
consignment loan agreements, as well as direct consumer vehicle
financing (90% trucks) and loans to medium sized companies,
secured by receivables.


BRAZIL: Currency Suffers from Lowered Interest Rates
----------------------------------------------------
As a result of Brazil's central bank's decision to make the
biggest interest rate reduction in more than two years, the
country's real suffered the highest decline in two months.  The
country's fixed-income securities became less attractive to
overseas investors, Elzion Barreto at Bloomberg reports.
Additionally, the bank's continued dollar purchases also helped
weaken the real.

The bank cut the rate from 18% to 17.25%, according to
Bloomberg.  The bank targets a 15% rate reduction by end of
2006.

The real closed at 2.28903 on Jan. 18, 2006.

                        *    *    *

On Nov 29, 2005, Standard & Poor's upgraded Brazil's credit
outlook to positive from stable.  Brazil's effort to trim down
external public and private sector external debt is paying off,
at least on the ratings.

S&P analysts Lisa Schineller said the debt reduction, coupled by
solid exports, are reducing the likelihood of a default.
However, its dependence on debt to finance the budget
continues to restrict its rating.

Reuters said S&P expects Brazil's financing needs to remain
near 85% in 2005 and 2006, close to the median for 'BB-'-
rated countries.  Also restricting its fiscal and economic
progress is high interest rates, but S&P believes efforts to
cut bureaucratic red tape should boost its prospects.


KLABIN: Board Approves MA-1100 Project
--------------------------------------
The Board of Directors of Klabin, a company controlled by Klabin
Irmaos e Cia., approved on Friday, January 13, its MA-1100
Project, which increases the capacity of its Monte Alegre plant
in Telemaco Borba from 700 thousand tons/annum to 1.1 million
tons/annum. The company will invest approximately BRL1.5 billion
in the expansion. The project will place the Monte Alegre Plant,
currently the largest manufacturing site for paper in Brazil,
among the twelve largest paper producing plants in the world,
and will put Klabin among the six largest global producers of
virgin-fiber paperboard.

A new, state-of-the-art paper machine, measuring 250 meters in
length, will be installed at the site, increasing total
production of paperboard from 330 thousand tons/annum to 680
thousand tons/annum. The project also provides for the
installation of a production line for eucalyptus fiber using the
CTMP (Chemi-Thermo Mechanical Pulp) process, which will be the
largest in Brazil with a capacity of 140 thousand tons/annum.

The increase in the use of eucalyptus will result in more
competitive paperboard in terms of quality and cost as compared
to the paperboard sold on global markets.  "The growing use of
eucalyptus in paperboard, as an alternative to long and recycled
fibers is a highly important innovation, with great potential
for winning market share," says Klabin's managing director,
Miguel Sampol.  The measure will provide greater rigidity and a
reduction in the weight of paper, based on customer demand.

Klabin paperboard is already innovative in the market because it
combines long fibers (pine) and short (eucalyptus) with
comparative advantages because they offer the best qualities of
both:  resistance and good printing capacity. The main uses of
paperboard are in the segments of foodstuffs (milk, milk
products, juices, sauces, wines and refrigerated liquids),
beverages (soft drinks and beer), hygiene and cleaning products,
and pharmaceuticals.

"The project will strengthen Klabin's comparative advantages in
global markets, which are the basis for serving a wide range of
clients," comments Sampol.  "All the competitive analyses have
indicated that Klabin will continue to be the lowest-cost
producer, considering production, distribution, and capital
costs."

With the project, Klabin - which is the largest paper exporter
in Brazil, shipping to over 50 countries - intends to increase
its share of exports to 40% of the company's revenues. "Klabin
products are widely accepted in the United States and in Asian
and European countries, including Russia, where the consumer
market requiring packaging is undergoing major growth," Sampol
emphasized.

The focus on paperboard is occurring because it is a high value-
added product, with higher and more stable prices in the
international market than commodities like pulp and kraftliner,
which adds value to the company's product mix.  "Our investment
in paperboard may be interpreted as a sign of a new path for
exports from Brazil, with products that are modern and high-
tech," says Sampol.  "The quality of Klabin paperboard, which
nowadays is on a par with the best producers worldwide, the
Scandinavians, is proof that Brazil can also be a major exporter
of paper."

The pioneering certification of Klabin's production chain for
both paperboard and kraftliner by the Forest Stewardship Council
is one of the company's important points of difference,
attesting that its production process is marked by due respect
to economic, social and environmental aspects.

The new project provides for the installation in Monte Alegre of
a new plant for co-generation of energy from bio-mass.  A new
bio-mass boiler with a capacity of 250 tons of steam/hour will
be the largest in operation in Brazil, providing for a reduction
in the consumption of fuel oil of 20 thousand tons/annum,
contributing to a reduction in greenhouse-gas effects.  A
reduction in the rates of water consumption and of liquid and
solid effluents is also forecast.

The project provides for the creation of approximately 1
thousand direct jobs, 250 of which in operation of the plant and
750 in the forestry area.  During implementation of the project,
it is estimated that up to 4,500 jobs will be created, and that
R$350 million in taxes will be paid.

"In recent years, Klabin has restructured its businesses and its
finances, focusing on the packaging industry.  The expansion
project reinforces our position as market leaders, and the
achievement of the objectives set out in the restructuring begun
in 2003 attests to our ongoing commitment to sustainable
development," Miguel Sampol adds.

                        *    *    *

On Oct 21, 2005, Standard & Poor's Ratings Services affirmed its
'BB-' foreign currency and 'BB' local currency corporate credit
ratings on Klabin S.A.  S&P said the outlook was stable.

"The foreign currency rating on Klabin S.A. mirrors the
sovereign foreign currency rating assigned to the Federative
Republic of Brazil," said Standard & Poor's credit analyst
Marcelo Costa. "The local currency rating reflects the company's
exposure to the volatilities of the Brazilian economy (as
packaging products bear a close correlation to GDP), as well as
a still-fragmented market for corrugated boxes that does not
allow for pricing policies that are consistent with the
company's leading market share." These risks are partially
offset by Klabin's very competitive cost position, some
diversification into exports (accounting for 28% of sales), and
its comfortable and improving liquidity and capital structure.


COMPANHIA ENERGETICA: S&P Revises Junk Outlook to Stable
--------------------------------------------------------
Standard & Poor's Ratings Services revised the outlook on
Brazilian utility Companhia Energetica de Sao Paulo to stable
from negative and affirmed its 'CCC' ratings on the company.

"The outlook revision to stable reflects more predictable cash
generation from 2006-- as CESP is fully contracted for the next
two years -- and some additional financial flexibility in 2006,"
said Standard & Poor's credit analyst Juliana Gallo.

The latter will derive from the sale of Companhia de Transmissao
de Energia Elétrica Paulista, or a capitalization from the State
of Sao Paulo if the sale does not materialize.  For these
reasons, we expect CESP to manage its debt maturities in the
short term.

"On the other hand, the company is vulnerable due to its
significant debt maturities in the medium to long term, lack of
capacity to produce free cash flow to amortize debt, and high
refinancing risk," said Ms. Gallo.

CESP has a highly leveraged capital structure and significant
exposure to currency volatility (with about 46% of total debt
denominated in dollars).  Complete ratings information is
available to subscribers of RatingsDirect, Standard & Poor's
Web-based credit analysis system, at
http://www.ratingsdirect.com/


TCP: Market Share Slips 34.5%
-----------------------------
Brazil's largest mobile phone operator Telesp Celular
Participacoes' (TCP or Telemar or Vivo) market share slipped to
34.5% in December 2005, Business News Americas reports.

TCP also lost almost a percentage point during the crucial
Christmas sales period last year.

The Company, which is jointly owned by Spain's Telefonica
Moviles and Portugal Telecom, reached 40.5% market share in
December 2004 but was stagnant in 2005. Change in its strategy
to focus on profitability rather than growth of the client base
might have caused this to happen.

Angora Senior CTVM analyst Eduardo Roche said, "Mobile companies
appear to be looking at retention costs in the fourth quarter,
and this will continue in 2006. It will be important to see the
change from acquisition costs [of clients] to retention costs in
2006."

Tough competition also caused the Company's market share to
fall. Shares fell from 38.8% in April to 35.4% in November and
finally to 34.5%.

TCP still holds the greatest share of the user base, with around
29 million users, maintaining its market leadership in December.
According to telecommunications regulator Anatel, its advantage
against the competition however fell.

                        *    *    *

Telesp Celular Participacoes S.A., through its susbsidiaries,
provides cellular telecommunications services using both digital
and analog technologies in Brazil. It provides voice service and
ancillary services, including voicemail and voicemail
notification, call forwarding, three-way calling, caller
identification, short messaging, limitation on the number of
used minutes, and cellular chat room. The company's data service
includes wireless application protocol (WAP) service through
which its clients can access WAP sites and portals. In addition,
it offers direct access to the Internet through either PCMCIA
cards designed to connect compatible personal digital assistants
and laptops, or cellular phones by cable connection that offers
to corporate subscribers secure access to their intranet and
office resources. The company also offers roaming services,
through agreements with local cellular service providers
throughout Brazil and other countries. In addition, the company
offers multimedia message services; and mobile execution
environment that enable the handset to download applications and
execute them at the mobile and a user interface with icons to
identify the services, such as voice mail, downloads, and text
messaging. The company is based in Sao Paulo, Brazil. Telesp
Celular Participacoes S.A. is a subsidiary of Brasilcel N.V.


COSAN: Moody's Rates Proposed US$250 Mil. Perpetual Bonds at Ba2
----------------------------------------------------------------
Moody's Investors Service assigned a Ba2 foreign currency rating
to the proposed USD 250 million senior unsecured perpetual bonds
which will be guaranteed by Usina da Barra S.A. and FBA --
Franco Brasileira S.A. Acúcar e Alcool.  The outlook is stable.

Cosan's Ba2 rating reflects its solid position as the largest
sugar and ethanol producer in Brazil and the third-largest sugar
producer in the world, the favorable industry fundamentals for
both sugar and ethanol producers in Brazil, Cosan's position as
the lowest cost producer position, and its improved credit
profile and corporate governance following the recent IPO and
expected issuance of the proposed perpetual notes.  However,
Cosan's ratings are constrained due to its exposure to volatile
sugar and ethanol prices, exchange rate variation, the company's
lack of product diversification, and the risks arising from its
acquisitive strategy in the fragmented Brazilian sugar market.

Additionally, the rating also reflects Cosan's history of high
seasonal working capital variations and very significant
investments leading to negative free cash flow generation in
some years, as well as the risks arising from its risk
management exposure policies and practices, which may impact
EBITDA, cash flow and interest expense.

The net proceeds of the proposed perpetual notes will primarily
be used to repay short-term debt, with the remaining proceeds
used for working capital needs and general corporate purposes.
Following the issuance of the perpetual notes and the company's
recent IPO that raised BRL 844 mln of net proceeds, with some of
the proceeds being used to reduce short-term debt, Moody's
expects Cosan to significantly reduce its short-term debt level,
which represented 41% of total debt (including refinanced taxes
but excluding PESA) at the end of its six months ended in
October 30, 2005.  Similarly, Moody's also expect Cosan to
reduce its secured debt as a percentage of total debt to a level
of less than 10% of the total, compared to the current 25% level
at the end of October 30, 2005.

The assigned Ba2 FC rating to Cosan's guaranteed perpetual
senior unsecured notes reflects Cosan's Ba2 global local
currency and the degree of sovereign interference anticipated in
times of stress.  Please refer to Moody's January 2005 Special
Comment entitled "Piercing the Country Ceiling: An Update."

Cosan's Ba2 global local currency corporate family rating could
be raised if the company is able to increase its scale and
product diversification, reducing the level of correlation
between sugar and ethanol.  An improvement in the ratings or
outlook could also result from a significant increase in the
percentage of total world sugar production that trades in the
unregulated markets.  Quantitatively, positive rating momentum
would require the company to generate free cash flow to debt in
the range of 9-12% (currently slightly negative) and EBIT/
Interest in the 4-5x range on a sustainable basis.

At the same time, Cosan's current ratings could come under
negative pressure if the company's current 60% percentage of
sales derived from exports reduces significantly; if the Central
South region of Brazil, Cosan's only area of production,
suddenly experiences a material adverse event such as a natural
catastrophe or a prolonged drought; or if Cosan's acquisitive
strategy leads to a large debt-financed acquisition that leads
to a deterioration of current credit metrics. Quantitatively,
Cosan's ratings would come under negative pressure if free cash
flow remains negative at the end of its FY 2007 and/or if
Debt/EBITDA increases to above 4x (excluding PESA debt).

Moody's has reviewed some preliminary legal documentation for
the perpetual notes transaction.  The rating assumes that there
will be no material variation from the draft documents reviewed
and that all legal agreements are legally, valid, binding and
enforceable.  Additionally, the rating assumes that the
perpetual notes will be guaranteed by Usina da Barra S.A. and
FBA; that the guarantee will be unconditional, irrevocable and
valid; and that the perpetual notes will rank pari passu with
the existent 2009 senior unsecured notes.

Cosan S.A. Indústria e Comercio, headquartered in Sao Paulo,
Brazil, is the third largest sugar producer in the world.  In
2004/2005 it crushed more than 26 million tons of sugar cane in
fourteen mills located in the Central South region of Brazil,
with sugar sales of 2.3 million tons and ethanol sales of 825
million liters.


===========================
C A Y M A N   I S L A N D S
===========================

BEAUFORT EUROPEAN: Creditors to Prove Claims
--------------------------------------------
                     Beaufort European Fund
                   (In Voluntary Liquidation)
                The Companies Law (2004 revision)
                           Section 135

TAKE NOTICE that the following special resolution was passed by
the shareholder(s) of Beaufort European Fund at an extraordinary
general meeting of the shareholder(s) held on December 15, 2005:

THAT the Company be placed into voluntary liquidation forthwith.

THAT Johann LeRoux and Jon Roney be appointed, jointly and
severally, as liquidators of the Company.

Creditors of Beaufort European Fund are to prove their debts or
claims on or before February 9, 2006, and to send full
particulars of their debts or claims to the joint liquidators of
the Company. In default thereof, they will be excluded from the
benefit of any distribution made before the debts are proved or
from objecting to the distribution.

CONTACT:  Jon Roney, Joint Voluntary Liquidator
          Maples Finance Limited, P.O. Box 1093GT
          Grand Cayman, Cayman Islands


CMO HOLDINGS: Begins Liquidation
--------------------------------
                CMO Holdings Corp., Series 2003-1
                    (In Voluntary Liquidation)
                The Companies Law (2004 revision)
                           Section 135

TAKE NOTICE that the following special resolution was passed by
the shareholder(s) of CMO Holdings Corp., Series 2003-1 at an
extraordinary general meeting of the shareholder(s) held on
December 20, 2005:

THAT the Company be placed into voluntary liquidation forthwith.

THAT Murray McGregor and Richard Gordon be appointed, jointly
and severally, as liquidators of the Company.

Creditors of CMO Holdings Corp., Series 2003-1 are to prove
their debts or claims on or before February 9, 2006, and to send
full particulars of their debts or claims to the joint
liquidators of the Company. In default thereof, they will be
excluded from the benefit of any distribution made before the
debts are proved or from objecting to the distribution.

CONTACT:  Messrs. Murray Mcgregor and Richard Gordon
          Joint Voluntary Liquidators
          Maples Finance Limited, P.O. Box 1093GT
          Grand Cayman, Cayman Islands


EDGE INVESTMENT: Enters Voluntary Liquidation
---------------------------------------------
               Edge Investment Master Fund, Ltd.
                  (In Voluntary Liquidation)
                    Notice of Liquidation
               The Companies Law (2004 Revision)

The following special resolution was passed by the shareholders
of Edge Investment Master Fund, Ltd. on December 21, 2005:

RESOLVED THAT the Company be voluntarily wound up and that
A.R.C. Directors Ltd, PO Box 10250 APO, Grand Pavilion
Commercial Centre, Suite # 7, 802 West Bay Road, Grand Cayman,
Cayman Islands, be and is appointed as liquidator of the Company
for that purpose.

Notice is hereby given that creditors of the Company are to
provide details of and prove their debts or claims to the
liquidator of the Company on or before January 23, 2006 and to
establish any title they may have under the Companies Law (2004
Revision) or to be excluded from the benefit of any distribution
made before such debts or claims are proved or from objecting to
the distribution.

CONTACT:  A.R.C. Directors Ltd., Voluntary Liquidator
          PO Box 10250 APO
          Grand Pavilion Commercial Centre
          Suite # 7, 802 West Bay Road
          Grand Cayman, Cayman Islands
                     or
          Campbells
          4th Floor, Scotia Centre
          P.O. Box 884 George Town
          Grand Cayman, Ref: RCS

          Phone: 1 345 769 3400
          Fax: 1 345 769 3404


RGA SIGMA: Voluntary Wind Up Begins
-----------------------------------
                    RGA Sigma Reinsurance SPC
                    (In Voluntary Liquidation)
                 The Companies Law (2004 Revision)

TAKE NOTICE THAT the following resolution was passed as a
Special Resolution by the shareholders of RGA Sigma Reinsurance
SPC by
Written Resolution dated November 28, 2005:

That the Company be voluntarily wound up and that Global Captive
Management Ltd., of Genesis Building, P.O. Box 1363GT, Grand
Cayman, Cayman Islands, be appointed Liquidator of the Company
for the purposes of such winding-up.

NOTICE IS HEREBY GIVEN that the creditors of RGA Sigma
Reinsurance SPC which is being wound up voluntarily are
required, within 30 days of this notice, to send in their names
and addresses and the particulars of their debts and claims and
the names and addresses of their attorneys-at-law (if any) to
the undersigned. In default thereof, they will be excluded from
the benefit of any distribution made before such debts are
proved.

Date of Publication: December 29, 2005

CONTACT:  Global Captive Management Ltd., Voluntary Liquidator
          Peter Mackay
          Genesis Building, P.O. Box 1363GT
          Grand Cayman, Cayman Islands
          Telephone: (345) 949 7966


=================
G U A T E M A L A
=================

BANCAFE: Banking Authorities Rule Out Intervention
--------------------------------------------------
The banking authorities of Guatemala will not interfere with the
affairs of the country's fourth largest bank -- Banco del Cafe,
which has US$204 million in securities under custody at bankrupt
U.S. commodity trader Refco Inc., local daily La Prensa reports.

Bancafe is Refco's fifth-largest unsecured creditors.  A copy of
Refco's 99 largest unsecured creditors appeared in the Troubled
Company Reporter on Jan. 5, 2006, see:

            http://ResearchArchives.com/t/s?45b

Banking regulator Willy Zapata said in published reports that
Bancafe is in no danger of being intervened.  The regulatory
body however, ordered the bank to create reserves equivalent to
10% of the funds held in Refco.

Additionally, the banking authorities ordered Bancafe's parent
company Grupo Financiero del Pais not to pay dividends to its
shareholders from its 2005 earnings, La Prensa relates.

                        *    *    *

On Aug. 4, 2005, Moody's Investors Service withdrew all of its
ratings for Bancafe S.A. for business reasons.  These ratings
were withdrawn:

   -- Long Term Foreign Currency Deposit Rating: Ba3, with
      negative outlook;

   -- Short Term Foreign Currency Deposit Rating: Not Prime,
      with negative outlook; and

   -- Bank Financial Strength Rating: E+, with stable outlook.

Moody's said that the action does not reflect a change in
Bancafe's creditworthiness.


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

AXTEL: Revenues Up 23% in Fourth Quarter of 2005
------------------------------------------------
Axtel, S.A. de C.V. (BMV: AXTELCPO; OTC: AXTLY)(Axtel) announced
Tuesday its unaudited fourth quarter and full year results ended
December 31, 2005. Figures in this release are based on Mexican
GAAP, stated in constant pesos (MXN) as of December 31, 2005.
Comparisons in pesos are in real terms, that is, adjusted for
inflation.

Revenues

The Company derives its revenues from:

- Local calling services. The Company generates revenue by
enabling its customers to originate and receive an unlimited
number of calls within a defined local service area.

Customers are charged with a flat monthly fee for basic service,
a per call fee for local calls (measured service), a per minute
usage fee for calls completed on a cellular line (calling party
pays, or CPP calls) and a monthly fee for value added services
and internet when requested by the customer.

- Long distance services. The Company generates revenues by
providing long distance services (domestic and international)
for its customers' completed calls.

- Other services. The Company generates revenues from other
services, which include activation fees for new customers as
well as data, interconnection and dedicated private line service
charged on a monthly basis.

Revenues from operations

Revenues from operations increased to MXN1,321.0 million in the
fourth quarter of year 2005 from MXN1,074.6 million for the same
period in 2004, an increase of MXN246.4 million or 23%. The
Company's lines in service at the end of the fourth quarter of
2005 increased to 605,904 from 453,519 at the end of the same
period in 2004, an increase of 34%.

Revenues from operations increased to MXN4,966.8 million for the
year ended December 31, 2005 from MXN3,988.7 million for the
same period in 2004, an increase of MXN978.1 million or 25%.
This result was driven by the contribution of revenues due to
the launch of operations of six new cities during the second
half of 2004 and infrastructure expansion in the current cities,
resulting in a higher customer base and traffic growth.

The Company derived its revenues from the following sources:

- Local services. Local service revenues increased to MXN962.4
million for the three-month period ended December 31, 2005 from
MXN754.1 million for the same period ended in 2004, an increase
of MXN208.3 million or 28%. For the year ended December 31,
2005, local services increased to MXN3,567.1 million from
MXN2,839.7 million recorded in the same period in 2004, an
increase of MXN727.4 million or 26%. Higher number of lines in
service reflected in the monthly rent and a higher cellular
consumption were the main drivers of these increases.

- Long distance services. Long distance service revenues
increased to MXN115.0 million for the three-month period ended
December 31, 2005 from MXN105.3 million in the same period in
2004, an increase of MXN9.8 million or 9%, due to the Company's
increased number of lines in service. For the year ended
December 31, 2005, long distance services increased to MXN451.9
million from MXN394.5 million registered in the same period in
2004, an increase of MXN57.4 million or 15%.

- Other services. Revenue from other services increased to
MXN243.6 million in the fourth quarter of 2005 from MXN215.3
million in the same period in 2004, an increase of MXN28.3
million or 13%.

Other services revenue increased to MXN947.8 million for the
year ended December 31, 2005 from MXN754.6 million for the same
period in year 2004, an increase of MXN193.2 million or 26%.

Consumption

- Local Calls. Local calls increased to 444.6 million for the
three-month period ended December 31, 2005 from 332.9 million
for the same period ended in 2004, an increase of 111.8 million
or 34%.

For the year ended December 31, 2005, local calls increased to
1,615.2 million from 1,192.8 million recorded in the same period
in 2004, an increase of 442.4 million calls or 35%. A higher
number of lines in service was the main driver for these
increases.

- Cellular ("Calling Party Pays"). Minutes of use of calls
completed to a cellular line increased to 171.0 million for the
three-month period ended December 31, 2005 from 123.5 million in
the same period in 2004, an increase of 47.5 million or 38%. For
the year ended December 31, 2005, cellular minutes increased to
597.5 million from 430.0 million registered in the same period
in 2004, an increase of MXN167.5 million or 39%.

- Long distance. Long distance minutes increased to 127.2
million for the three-month period ended December 31, 2005 from
103.6 million in the same period in 2004, an increase of 23.6
million or 23%. For the year ended December 31, 2005, long
distance minutes increased to 480.4 million from MXN354.6
million registered in the same period in 2004, an increase of
MXN125.9 million or 35%.

Cost of Revenues and Operating Expenses

- Cost of Revenues. For the three-month period ended
December 31, 2005, the cost of revenues was MXN418.9 million, an
increase of MXN59.5 million compared with the same period of
year 2004. For the year ended December 31, 2005, the cost of
revenues reached MXN1,550.5 million, an increase of MXN280.4
million in comparison with the same period in year 2004. Both
increases were mainly due to a higher consumption in cellular
and domestic long distance traffic.

- Gross Profit. Gross profit is defined as revenues minus costs
of revenues. For the fourth quarter of 2005, the gross profit
accounted for MXN902.1 million, an increase of MXN186.9 million
or 26%, compared with the same period in year 2004. For the year
ended December 31, 2005, the Company's gross profit increased to
MXN3,416.3 million from MXN2,718.7 million recorded in the same
period of year 2004, an increase of MXN697.6 million or 26%.

- Operating expenses. For the fourth quarter of year 2005,
operating expenses grew MXN26.5 million or 7%, totaling MXN432.0
million. During the same period of year 2004 this amount was
MXN405.5 million. For the year ended December 31, 2005,
operating expenses increased MXN263.7 million coming from
MXN1,423.8 million in 2004 to MXN1,687.4 million in 2005. These
increases were attributable primarily to rents, sales
commissions and network maintenance based on the current
operational levels of the Company.

- Adjusted EBITDA. (1) The Adjusted EBITDA was MXN470.1 million
for the three-month period ended December 31, 2005 as compared
to MXN309.8 million for the same period in 2004, an increase of
52%. As a percentage of total revenues it was 36% for the three-
month period ended December 31, 2005. For the year ended
December 31, 2005 it increased to MXN1,728.9 million from
MXN1,294.9 million in the same period in year 2004, an increase
of MXN434.0 million, or 34%.

- Depreciation and Amortization. As a result of the continuing
expansion of the Company's asset base, depreciation and
amortization increased to MXN307.9 million for the three-month
period ended December 31, 2005 from MXN266.3 million for the
same period in year 2004, an increase of MXN41.6 million or 16%.

Depreciation and amortization for the twelve-month period ended
December 31, 2005 reached MXN1,130.2 million from MXN1,034.2
million in the same period in year 2004, an increase of MXN96.0
million or 9%.

- Operating Income (loss). Operating income increased to
MXN162.2 million for the three-month period ended December 31,
2005 compared to an operating income of MXN43.4 million
registered in the same period in year 2004, an increase of
MXN118.8 million or 273%. For the year ended December 31, 2005
the Company's operating income reached MXN598.6 million when
compared to the income registered in the same period of year
2004 of MXN260.7 million, an increase of MXN337.9 million or
130%.

- Comprehensive financial result. The comprehensive financial
loss was MXN29.0 million for the three-month period ended
December 31, 2005, compared to a comprehensive financial loss of
MXN13.8 million for the same period in 2004. This result was
attributable to the reopening of the Company's Senior Notes on
the first quarter of 2005 increasing the Company's net interest
expense. For the year ended December 31, 2005 this effect was
offset by a foreign exchange gain.

- Capital Expenditures. Axtel invested MXN482.4 million in fixed
assets during the fourth quarter of year 2005 vs. MXN683.0
million during the same period in 2004, a 29% decrease. For the
year ended December 31, 2005, Axtel invested MXN1,575.9 million
in fixed assets compared to MXN1,583.2 million in the same
period of year 2004, a decrease of MXN7.3 million. This
investment was targeted towards the expansion of the Company's
network infrastructure both in current and new cities, as well
as to the net lines added during this period.

- Highlights.  On December 6, 2005, Axtel and certain
shareholders successfully completed an Initial Public Offering
(IPO) both in domestic and international markets for an amount
of MXN3,360 million. A total of 131,670,000 Ordinary
Participation Certificates (CPO's) were sold in both primary and
secondary offerings at a price of $25.50 pesos each.

                        *    *    *

On Nov 03, 2005, Standard & Poor's Ratings Services raised its
local and foreign currency corporate credit ratings on
Monterrey, Mexico-based Axtel S.A. de C.V. to 'B+' from 'B'. The
outlook was revised to positive from stable. The rating on
Axtel's US$250 million senior notes due 2013 was also raised to
'B+' from 'B'.


BALLY TOTAL: Liberation Group Urges Holders Sign GOLD Proxy Card
----------------------------------------------------------------
The Liberation Investments, L.P. and Liberation Investments Ltd.
and the Liberation Investment Group, LLC, Emanuel R. Pearlman
and Gregg E. Frankel are urging fellow shareholders of Bally
Total Fitness Holding Corporation to sign a GOLD proxy card to
protect investment in Bally.

On January 13, 2006, the group wrote:

As owners of approximately 11.5% of the common stock of Bally
Total Fitness Holding Corporation, we at Liberation Investments
have, over the past 18 months, watched in dismay as the
Company's Chief Executive Officer, President and Chairman, Paul
Toback, has, in our view, acted to enrich and entrench himself
as CEO of Bally. Unfortunately, Bally's Board has failed to curb
what we see as Toback's excesses and failings. AS A RESULT, WE
HAVE CONCLUDED THAT IMMEDIATE SHAREHOLDER ACTION IS REQUIRED TO
ALIGN THE INTERESTS OF MANAGEMENT WITH THOSE OF SHAREHOLDERS AND
TO PROTECT AND IMPROVE SHAREHOLDER VALUE. To protect your
investment in Bally, we urge you to sign, date and return the
enclosed GOLD proxy card today [January 13].

The Path Forward

By joining our call for reform, together we can send a strong
message to the Board to: (1) Appoint a CEO who is highly
competent and has the shareholders' best interests in mind; (2)
Implement corporate governance best-practices that align the
interests of management with those of shareholders; (3) Restore
the confidence of the capital markets in Bally; and (4) Soundly
reject Bally's proposal for a highly dilutive equity
compensation plan.

What Is Paul Toback Afraid Of?

Following a steady stream of self-serving public statements by
Bally and Toback about Toback's success at the helm of Bally,
why is he so afraid to let shareholders have a say in Bally's
future direction? Ask yourself why Toback has mounted, in our
view, such a reckless and expensive campaign against his
shareholders-with an attack strategy consisting almost entirely
of frivolous lawsuits seeking to deny you the right to vote on
our proposals, endless press releases touting his dubious
"accomplishments," and misleading personal smears. FOR SOMEONE
WHO PURPORTS TO BE DOING SUCH A GOOD JOB FOR SHAREHOLDERS,
TOBACK SEEMS AWFULLY CONCERNED THAT 75% OF BALLY'S SHAREHOLDERS
WANT TO VOTE HIM OUT OF OFFICE. WHAT DOES THAT TELL YOU?

Toback's "Record" Speaks For Itself

Ultimately, the performance of every CEO is evaluated on the
basis of his or her record. Toback should not be exempt. We
believe that Toback's record speaks for itself, but we invite
you to consider the facts for yourself:

-- PUMP-AND-DUMP SCHEME: In what one shareholder has described
    as "pump-and-dump scheme," Toback sold most of his stake in
    Bally one day after an earnings conference call during which
    he boasted about his substantial holdings in Bally's stock,
    emphasized that Bally "has a really positive ability to
    grow." and announced that the company was for sale. Toback
    sold his stock for over $2.9 million. He also negotiated
    with Bally to receive a special payment of $838,777 to cover
    his tax expenses in connection with the stock sale. Why
    should shareholders have confidence in Toback's leadership
    when his actions show that he doesn't have confidence in his
    own ability to maximize the value of Bally's stock?

-- BUNGLED CONSENT SOLICITATION: Due to Toback's inability to
    turn out restated financials when promised and his, as we
    see it, mismanagement of a consent solicitation process, the
    Company was forced to issue over 1.9 million shares of Bally
    stock and pay approximately $12.4 million in cash to
    bondholders and bank lenders (plus investment banking and
    legal fees). Can we trust this man to effectively represent
    our company to the capital markets?

    Toback Sold * Be Bold * Out With The Old * Vote Gold

-- DOMINATION OF BOARD: In recent years, Toback has permitted
    people who we believe to include his friends and associates
    to fill Board vacancies without putting them up for a
    shareholder vote. In fact, 4 of 7 current Bally directors
    were appointed to their positions and have never been voted
    into office by shareholders. Predictably, the result has
    been a Board that has repeatedly rubber-stamped Toback's
    worst decisions. Some recent examples of this chummy Board's
    failure of proper oversight include:

-- The Board approved two rich grants of restricted stock and
    options to management during 2005, each before the release
    of financial statements. These grants, which chiefly
    benefited Toback, were comprised of approximately $5.5
    million in restricted stock and options to purchase an
    additional approximately 794,000 shares.

-- Immediately following an enormous management sell-off of
    equity compensation in December of 2005, of which Toback was
    the principal beneficiary, the Board approved a generous new
    equity compensation plan for the issuance of up to another
    1.75 million shares of Bally stock, which could be highly
    dilutive to shareholders.

Toback's Strategy: More Politics As Usual

Once you strip away the legalese and the theatrical expressions
of outrage, Toback's central strategy in this proxy contest
appears to us to be quite simple: Use whatever means necessary,
including the suppression of shareholder rights , to prevent
shareholders from voting on Liberation's proposals to remove him
from office. It is remarkable that Toback, a man who spent many
years in politics, seems to harbor such hostility for the most
basic principles of shareholder democracy. But how else can the
actions described below be understood?

-- WALL-TO-WALL LITIGATION: Toback has launched one lawsuit
    after another against Liberation in the hopes of preventing
    you from voting on our proposals, only to be rebuffed time
    after time.

-- POISON PILL AS A WEAPON: The day after he learned that he
    faced a proxy contest, Toback adopted a "poison pill" plan -
    an anti-takeover defense - and brazenly wielded it as a club
    to beat down shareholders intent on engaging in a legitimate
    expression of shareholder democracy. Although we believe
    that a "poison pill" has never before been used as an
    offensive weapon against shareholders in a proxy contest,
    even this tactic is not beneath Toback.

-- CLASSIFIED BOARD: Toback has repeatedly refused to allow
    shareholders to vote to declassify the Board, even though
    the existence of a classified Board severely limits your
    ability to replace underperforming directors.

-- PROXY CARD MAY DISENFRANCHISE: Toback's proxy card may
    disenfranchise shareholders by not providing for an up-or-
    down vote on Liberation's proposals. Bally's proxy card only
    enables shareholders to vote to give Bally discretion to
    vote against Liberation's proposals or vote not to give
    Bally such discretion (which has the same effect as a "No"
    vote on Liberation's proposals). This "heads I win, tails
    you lose" tactic has all of the hallmarks of a manipulative
    scheme to deceive shareholders.

At great cost to shareholders, Toback has advanced his agenda
with the full range of resources available to him as the chief
of a public company, including a well-oiled public relations
machine with years of experience, as we see it, spinning bad
news for him and a veritable army of lawyers arrayed across the
country. BUT EVEN WITH HIS YEARS OF POLITICAL BACKGROUND AND HIS
FORMIDABLE RESOURCES, TOBACK CANNOT CAMPAIGN HIS WAY OUT OF HIS
RECORD. LET'S SHOW TOBACK THAT WE WON'T ACCEPT POLITICS AS USUAL
ANYMORE.

The future of your investment is at stake.  Act today to protect
your investment.  We urge you to sign, date and return the
enclosed GOLD proxy card today.  Do not sign the white proxy
card from Bally or the green proxy card from Pardus.  If you
have already done so, you may revoke your proxy by delivering a
later-dated GOLD proxy card in the enclosed postage-prepaid
envelope. If you have any questions about voting, or for more
information, please call our proxy solicitors, Innisfree M&A
Incorporated, as follows: Shareholders-Call Toll-Free at 888-
750-5834; Banks and Brokers-Call Collect at 212-750-5833.

Liberation Investments, L.P. Liberation Investments Ltd.
Liberation Investment Group, LLC Emanuel R. Pearlman, Gregg E.
Frankel

The undersigned hereby appoints Emanuel R. Pearlman, Gregg E.
Frankel and Nicole A. Jacoby, and each of them, the proxy or
proxies of the undersigned, with full power of substitution, and
hereby authorizes them to vote, as provided below, all shares of
Common Stock, par value $.01 per share, of Bally Total Fitness
Holding Corporation (Bally) which the undersigned would be
entitled to vote if personally present at the Annual Meeting of
the Stockholders of Bally to be held on January 26, 2006, and at
any and all adjournments or postponements thereof (the Annual
Meeting). The undersigned hereby revokes any previous proxies
with respect to any and all matters to be voted upon at the
Annual Meeting.

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

                         *     *     *

As reported in the Troubled Company Reporter on Dec. 6, 2005,
Standard & Poor's Ratings Services revised its CreditWatch
implications on Bally Total Fitness Holding Corp. to developing
from negative.  The corporate credit rating remains at 'CCC'.

Bally's ratings were originally placed on CreditWatch on
Aug. 8, 2005, following the commencement of a 10-day period
after which an event of default would have occurred under the
company's $275 million secured credit agreement's cross-default
provision and the debt would have become immediately due and
payable.  Subsequently, Bally entered into a consent agreement
with lenders to extend the 10-day period until Aug. 31,
2005.  Prior to Aug. 31, the company received consents from its
bondholders extending its waiver of default to Nov. 30, 2005.


BALLY TOTAL: Int'l Shareholder Services Recommends Pardus Slate
---------------------------------------------------------------
Pardus Capital Management informed that Institutional
Shareholder Services Inc. has recommended stockholder of Bally
Total Fitness to vote in favor of Pardus' slate of nominees for
the board.  Pardus wrote:

We are pleased to report that Institutional Shareholder
Services, Inc. -- which Bally Total Fitness Holding Corporation
(NYSE: BFT) itself describes as "the world's leading provider of
voting and corporate governance services" -- has recommended
that you vote in favor of Pardus' slate of nominees for the
board. As important as the recommendation itself are the reasons
given by ISS. Echoing what Pardus has been saying since we began
soliciting proxies, ISS issued a stinging indictment of
management and the board, citing Bally's serious financial and
accounting problems, and its "questionable judgment regarding
ongoing operations."

For its part, Bally seeks your vote with perhaps its most brazen
argument yet. Despite all the shortcomings of management and the
current board, they argue that they deserve your vote because
they tried to settle with us and announced a program of limited
reforms responding to some of Pardus' requests. But if Bally
truly wanted to settle and implement our reform program, why did
management and the board decide to file frivolous litigation
against Pardus and Mr. Kornstein? If they really want good
governance, why did it take a proxy contest for them to make
their first proposal? John Rogers, Bally's newly-appointed Lead
Director, has been on the board since April 2003 - why did it
take him over two and a half years to get religion? And why are
they still leaving important loopholes open, as described in our
January 12, 2006 letter to you?

As ISS said, the Company's proposals "have been made at the
'11th hour' and in the face of a hostile proxy fight.
Ultimately, it is important to interpret the motivations and
impetus that led the board to announce these changes, and not
simply focus on the merits of the changes themselves." If all of
us don't support change, reform at Bally will be dead the day
after the meeting.

ISS's Criticisms of Management and the Board

ISS did not simply decide that our slate is superior to Bally's.
It analyzed Bally's recent history and concluded - as we at
Pardus have - that management and the board have repeatedly
failed to perform. Among the failures noted by ISS:

   -- The Company missed three extended deadlines for filing its
      financial statements in 2004 and 2005 - requiring it to
      pay substantial fees and equity to lenders. Most of
      current management and the present board - including the
      new Lead Director - were in place during this time.

   -- The Company has "focused on" provisions of the Rights Plan
      that purport to prevent owners of more than 15% of Bally's
      stock from "acting in concert to run a proxy contest." ISS
      said - as we have been saying for weeks: "It is extremely
      rare for a company to utilize a poison pill in this
      fashion and this seems to be a potentially extreme
      application of the poison pill as it could function to
      frustrate rather than protect shareholders. We do not
      believe that management should restrict shareholders'
      ability to speak together and coordinate their
      presentation of ideas and concerns to management."
      Contrary to Bally's self-serving rhetoric, management and
      the board are using the pill in this "extreme" fashion to
      entrench themselves, not protect you.

   -- ISS is concerned that the Company's most recent lawsuit is
      an "attempt to frustrate shareholders' ability to present
      concerns to management." If management and the board
      really believe they have performed well - and we doubt
      they have any such belief - why do they need to try to
      stifle dissent?

   -- Right after the December 1, 2005 earnings call - during
      which Mr. Toback emphasized management's ownership of a
      substantial stake in the Company - he and others in
      management made substantial stock sales. We regard that as
      a grave breach of management's duties to the Company and
      to all stockholders and believe those sales should be
      investigated by independent directors.

   -- Despite, to quote ISS, "the missed filing deadlines and
      questionable operating decisions, the board continued to
      award restricted stock and options to the senior
      management team," and "Mr. Toback received a bonus of
      $400,000 in 2004, despite the determination of the
      compensation committee that the Company's performance
      goals for 2004 were not met."

Against this background, ISS recommended that stockholders
support Pardus' board slate.  ISS parted company with us,
however, in deciding to recommend approval of the stock plan.
Where the stock plan is concerned, ISS's analysis is too narrow.
ISS evaluates equity-based compensation in public companies
primarily by evaluating the economic cost of the program to the
Company.  That method, however, does not consider the unique
circumstances in Bally's case that make approval of the stock
plan completely inappropriate here.

First, given management's substandard performance, the generous
compensation (including stock) they have already received, and
the fact that they dumped stock just last month to the great
injury of the Company, Bally management is not entitled to
anything more.  The last thing management deserves is a new
reward.

Second, as explained in our January 12 letter, the stock plan,
even as belatedly amended by Bally, creates serious conflicts
between management and stockholders, and, if the Company is
sold, would allow senior management to shift millions in sale
proceeds from stockholders to themselves.  The "amended" plan
would allow senior management to get a new round of stock
options the moment the sale process is "concluded."  Moreover,
as ISS commented, the proposed plan has a number of fundamental
flaws - vesting provisions are at the discretion of
administrators, performance goals or hurdles were not
established and there was no disclosure of executive stock
ownership or executive holding period guidelines.

While we are prepared to support a properly structured plan -
one that rewards real achievement and does not create conflicts
or unfairness in the sale process - the current plan should be
rejected.

As Usual, Management and the Board Refuse to Listen

On Saturday, Jan. 14, 2006, Bally issued a release commenting on
the ISS recommendation. But, true to form, the Company failed to
respond to ISS's criticisms of management and the board.  In
fact, in a stunning display of arrogance, the release fails even
to mention any of these criticisms.  Management and the board
should have taken responsibility for their many failures, or, at
the least, tried to explain themselves.  Instead, they acted as
if those failures never happened.  You can't learn from
criticism if you refuse even to acknowledge it.

John Rogers, the new Lead Director, went so far as to use the
opportunity to praise the management team, including Mr. Toback,
the recent seller of so many Bally shares.  Mr. Rogers is quoted
as saying that the "Board remains confident that Bally's
turnaround is working and that the current management team led
by Paul Toback is responsible for returning the Company to
profitability and setting it on the right path."  The board -
and particularly its Lead Director - is supposed to hold
management accountable, not be its apologist.

This release - along with Bally's history of baseless lawsuits
and threats to trigger the Rights Plan - show that this board is
not yet willing or able to act in the benefit of the
stockholders who own the Company.  Do not be fooled by Bally's
"spin." Comparing the full ISS report to Bally's artfully
crafted press release plainly demonstrates that this management
and board are out of touch with stockholders or, worse,
unwilling to be candid with you.  Voting your shares for Pardus
will demonstrate that stockholders will no longer tolerate this
management's many mistakes and will enable reform for the
benefit of all stockholders.

If this board will not hold management accountable, then we, as
stockholders, must do so.  Pardus will defend itself against
frivolous litigation and threats to trigger the poison pill and
will hold those who directed and approved the Company's strategy
fully accountable for injuries to us and other stockholders.

We Urge You to Vote for Shareholder Democracy and Reform

ISS concluded that "there is a clear argument for fresh views
and ideas on the Bally board."  In view of this company's
history, that is a huge understatement.  Contrary to what the
Company appears to believe, criticizing the failures of
management and the board and demanding a fair sale process is
not "destabilizing" activity - it is shareholder democracy.  If
you have not already returned one of our proxies, we urge you to
do so, to begin the process of reform at Bally in the interests
of all stockholders.

Vote FOR the Pardus nominees and in accordance with our
recommendation on the other proposals to be voted on at the
upcoming annual meeting by signing, dating and returning the
GREEN proxy card previously provided to you.

Do not sign the white proxy card from Bally or the gold proxy
card from Liberation Investments.  If you have already done so
you may revoke your proxy by delivering a later-dated GREEN
proxy card in the postage-prepaid envelope previously provided
to you.

If you have any questions about voting, or for more information,
please call our proxy solicitors, D.F. King & Co., Inc., toll-
free at 888-644-6071.

On December 27, 2005, Pardus European Special Opportunities
Master Fund L.P., Pardus Capital Management L.P., Pardus Capital
Management LLC, Karim Samii, Joseph R. Thornton, Charles J.
Burdick, Barry R. Elson and Don R. Kornstein filed a definitive
proxy statement with the SEC to solicit proxies in connection
with the 2005 annual meeting of stockholders of Bally Total
Fitness Holding Corporation to be held on January 26, 2006.
Company stockholders are encouraged to read the definitive proxy
statement and other proxy materials relating to the 2005 annual
meeting because they contain important information, including a
description of who may be deemed to be "participants" in the
solicitation of proxies and the direct or indirect interests, by
security holdings or otherwise, of the participants in the
solicitation. Such proxy materials are available at no charge on
the SEC's website at http://www.sec.gov In addition,
stockholders may also obtain a free copy of the definitive proxy
statement and other proxy materials by contacting D.F. King &
Co., Inc. at 888-644-6071 (toll-free) or 212-269-5550 (collect).

                        *     *     *

As reported in the Troubled Company Reporter on Dec. 6, 2005,
Standard & Poor's Ratings Services revised its CreditWatch
implications on Bally Total Fitness Holding Corp. to developing
from negative.  The corporate credit rating remains at 'CCC'.

Bally's ratings were originally placed on CreditWatch on
Aug. 8, 2005, following the commencement of a 10-day period
after which an event of default would have occurred under the
company's $275 million secured credit agreement's cross-default
provision and the debt would have become immediately due and
payable.  Subsequently, Bally entered into a consent with
lenders to extend the 10-day period until Aug. 31, 2005.  Prior
to Aug. 31, the company received consents from its bondholders
extending its waiver of default to Nov. 30, 2005.


BALLY TOTAL: Says Pardus, Liberation Ignore Fundamental Issues
--------------------------------------------------------------
Bally Total Fitness (NYSE:BFT), the nation's leader in health
and fitness, said Tuesday that its two dissident hedge funds,
Pardus and Liberation, are once again missing the key points in
their communications released Tuesday.

"In all of their communications urging shareholders to support
their views, Pardus and Liberation have consistently ignored the
fundamental issues that remain central to most shareholders --
how is the Company doing in turning around the business to
create more and lasting shareholder value, and what are Bally's
independent Board and management doing to address the sizeable
debt that the Company was saddled with since going public in
1996," said Paul Toback, Chairman and CEO.

Mr. Toback added, "The fact is that Bally continues to execute
well on its operational turnaround on all levels, including a
revamped business model and new marketing initiatives, which are
collectively driving revenue growth, improved efficiencies and
growth in new members. Pardus itself has acknowledged Bally's
strong financial performance, stating in their December 8, 2005
SEC filing, 'last week the Company (Bally) reported financial
and operating results that were even better than "street"
expectations.'

"Furthermore, an independent special committee of directors is
moving forward expeditiously in evaluating strategic
alternatives with two leading independent financial advisors to
best enhance long-term value for shareholders. These are the
issues that matter for investors. By now it should have become
abundantly clear that Pardus and Liberation have no constructive
plans of their own to improve Bally's business or build long-
term value for all Bally shareholders."

Bally continues to encourage shareholders to support the Board
of Directors' slate, which includes two candidates nominated by
Pardus, along with Eric Langshur, the head of Bally's Audit
committee, by dating and returning the WHITE proxy card.
Shareholders with questions or in need of assistance in voting
their shares should contact Bally's proxy solicitor, MacKenzie
Partners, toll-free at 800-322-2885 or collect at 212-929-5500.

Bally Total Fitness is the largest and only nationwide
commercial operator of fitness centers in the U.S., with nearly
440 facilities located in 29 states, Mexico, Canada, Korea,
China and the Caribbean under the Bally Total Fitness(R), Crunch
Fitness(SM), Gorilla Sports(SM), Pinnacle Fitness(R), Bally
Sports Clubs(R) and Sports Clubs of Canada (R) brands. Bally
offers a unique platform for distribution of a wide range of
products and services targeted to active, fitness-conscious
adult consumers.

                         *     *     *

As reported in the Troubled Company Reporter on Dec. 6, 2005,
Standard & Poor's Ratings Services revised its CreditWatch
implications on Bally Total Fitness Holding Corp. to developing
from negative.  The corporate credit rating remains at 'CCC'.

Bally's ratings were originally placed on CreditWatch on
Aug. 8, 2005, following the commencement of a 10-day period
after which an event of default would have occurred under the
company's $275 million secured credit agreement's cross-default
provision and the debt would have become immediately due and
payable.  Subsequently, Bally entered into a consent with
lenders to extend the 10-day period until Aug. 31, 2005.  Prior
to Aug. 31, the company received consents from its bondholders
extending its waiver of default to Nov. 30, 2005.


DESC: 2005 Revenue Likely to be Two Times Higher
------------------------------------------------
Distributed Energy Systems Corp. expects its 2005 revenue to be
twice higher than that of 2004's $22 million with loss of 11
cents a share, Reuters reports.

Reuters Estimates stated four analysts, on average, see a
fourth-quarter loss of 11 cents per share, excluding special
items.

On the other hand, five analysts on average say that the Company
will have 2005 revenue of $44.8 million.

Meanwhile, the Company has appointed Ambrose Schwallie, who was
previously Washington Group International's president of the
defense business unit, as chief executive officer.

                        *    *    *

Distributed Energy Systems Corp. engages in the creation and
delivery of products and solutions to the to the decentralized
energy markets. The company''s subsidiary, Proton Energy
Systems, Inc., engages in the development of technology related
to hydrogen production and fuel cell applications. Distributed
Energy''s another subsidiary, Northern Power Systems, Inc.,
engages in the design and integration of projects with an array
of technologies, including renewables, combustion, and
batteries. It also develops, manufactures, and installs utility
grade wind turbines. Its products include EPC services,
integrated power systems, on-site power systems, and on-site
renewably powered systems. Northern sells its products to
domestic and international customers. Distributed Energy Systems
Corp. was formed in 1996 and is headquartered in Wallingford,
Connecticut.


DISTRIBUTED ENERGY: Schwallie Joins Management Team as CEO
----------------------------------------------------------
The Board of Directors of Distributed Energy Systems Corp.
(Nasdaq: DESC) announced Tuesday it appointed Ambrose L.
Schwallie as chief executive officer and a director of the
company.

Mr. Schwallie comes to the company from Washington Group
International (Nasdaq: WGII), an integrated engineering,
construction, and management solutions company, where he served
as president of its defense business unit. He is a 26-year
veteran of Westinghouse Electric where he headed a business unit
that was acquired by WGII in 1999.

Distributed Energy was created in late 2003 when Proton Energy
Systems acquired Northern Power Systems. Both Proton and
Northern Power are leading developers of advanced energy
technologies and services to the new energy marketplace.

Walter W. "Chip" Schroeder, Distributed Energy's president,
continues as its president and a member of the Board of
Directors. He was a founder of Proton and has led the company
since its inception in 1996.

Distributed Energy also said today its preliminary expectation
is to report 2005 total revenues that are approximately double
2004's revenues of $22 million. The company also expects its
fourth-quarter per share results for 2005 to be better than the
loss of $0.11 cents it reported for the fourth quarter of 2004.
Distributed Energy plans to report its actual fourth quarter and
year-end results in early March.

"Ambrose Schwallie's skills and accomplishments are perfectly
suited to moving Distributed Energy to the next level," said Mr.
Schroeder. Dr. Robert W. Shaw, Jr., Distributed Energy's
chairman, stated: "Under Chip Schroeder's direction, the company
has emerged from early stage to commercial -- with substantially
improved performance in 2005. We are enthusiastic that we have
been able to attract Ambrose to work with Chip and lead our
team, particularly with his record of rapid, substantial and
profitable growth at the Washington Group business unit he has
led during the past several years."

"I'm excited about joining this talented team for two reasons,"
stated Mr. Schwallie. "First, we can build on the product and
services offerings the company is providing to customers today
and developing for next generation needs. Second, I believe we
can accelerate the company's growth and progress toward
profitability. I also believe the company has the people,
technology and business plan to create a leading market
position." Mr. Schwallie has personally invested $500,000 in
Distributed Energy common stock at the market price.

Mr. Schroeder added: "Speaking for all of us at Distributed
Energy, we welcome Ambrose Schwallie to our team. We look
forward to benefiting from the breadth and depth of his energy-
industry-related experience and his enthusiastic commitment to
Distributed Energy's dual objectives of growth with
profitability in the new energy marketplace. "

As president of Washington Group International's defense
business unit, Mr. Schwallie directed operations that primarily
serve the United States Departments of Defense and State. Prior
to that, he was president of the Westinghouse Savannah River
Company from 1991 to 1999, where he directed more than 10,000
employees engaged in three major missions at the Department of
Energy's Savannah River Site in South Carolina. Mr. Schwallie
has also served as an engineering manager at Westinghouse,
working on advanced reactor design for defense and space, liquid
metal reactors and alternate energy systems involving
photovoltaics, fuel cells and magneto hydrodynamics. He holds
bachelor of science and master of science degrees in mechanical
engineering from Ohio State University.

Option and Stock Grants

In order to align the interests of Mr. Schwallie with those of
DESC stockholders, his compensation package includes options to
purchase up to 500,000 shares of DESC common stock and up to
428,280 restricted shares of DESC common stock, as described
below. The options have an exercise price equal to the fair
market value of DESC common stock on the date of grant and vest
as to 25% of the original number of shares on the first
anniversary of the grant date and as to an additional 25% of the
original number of shares at the end of each successive year
following the first anniversary of the grant date until the
fourth anniversary of the grant date. In the event Mr.
Schwallie's employment is terminated prior to the first
anniversary of the grant date, he will nevertheless be entitled
to exercise options to purchase the shares that vest on the
first anniversary of the grant date. The Company also issued Mr.
Schwallie 28,280 shares of common stock at a price of $.01 per
share. These shares are fully vested but may not be transferred
prior to January 16, 2007. In addition, the Company issued Mr.
Schwallie 100,000 shares of restricted common stock at a price
of $.01 per share. Such shares are subject to a re-acquisition
right in favor of the Company during the first year after grant
at a price of $.01 per share if Mr. Schwallie's employment
ceases for any reason. The Company has also agreed to make the
following issuances of common stock to Mr. Schwallie at a price
of $.01 per share under the following conditions: 100,000 shares
of common stock will be granted if the Company meets or exceeds
the revenue, income and cash flow targets for 2006 approved by
DESC's Board of Directors, 100,000 shares of common stock will
be granted if the Company has, while Mr. Schwallie is serving as
chief executive officer, achieved two consecutive quarters of
positive operating cash flow prior to June 30, 2007 and 100,000
shares of common stock will be granted if the Company achieves,
while Mr. Schwallie is serving as chief executive officer, four
consecutive quarters of revenue totaling $100 million prior to
June 30, 2008, with the gross margin on that revenue being at
least 20%. These option and stock awards are being made as
inducement grants pursuant to Section 4350(i)(1)(A)(iv) of the
NASD Marketplace Rules.

Distributed Energy Systems Corp. (Nasdaq: DESC) creates and
delivers products and solutions to the emerging decentralized
energy marketplace, giving users greater control over their
energy cost, quality and reliability. As the parent company of
Proton Energy Systems (http://www.protonenergy.com)and Northern
Power Systems (http://www.northernpower.com),Distributed Energy
Systems delivers a combination of practical, ready-today energy
solutions and the solid business platforms for capitalizing on
the changing energy landscape.


GRUPO ELEKTRA: Renews Agreement With Western Union For Six Years
----------------------------------------------------------------
Grupo Elektra, S.A. de C.V. (BMV: ELEKTRA*; Latibex: XEKT), the
leading retail, consumer finance and banking and financial
services provider in Latin America, announced Tuesday that it
renewed its money transfer agreement with Western Union. The
renewal confirms the enormous value represented by Grupo
Elektra's large distribution network.

In 1996, Grupo Elektra and Western Union signed a 10-year
agreement through which Group Elektra-through its Elektra,
Salinas y Rocha and Bodega de Remates stores, as well as its
Banco Azteca branches-became a paying agent for money transfers
to Mexico.

Grupo Elektra has proven experience in the money transfer and
payments industry since 1994. During the last 12 years the
company has made over 36 million payments totaling more than
US$9 billion.

With approximately 1,400 stores and banking branches, a solid
experience in systems, communications, cutting-edge technology,
and the trust of millions of Mexicans in its brands throughout
100 years of company operations, Grupo Elektra is a leader in a
very competitive sector. The market includes participants such
as banks, retailers, telegraph offices, among others, with more
than 10,000 points of payment in Mexico.

"The alliance renewed today [Tuesday] between Grupo Elektra and
Western Union-a company with 50,000 points of sale in the U.S.-
has contributed towards an 80% reduction in the overall cost of
transfers from our neighboring country to Mexico within the last
12 years, benefiting millions of Mexican families," commented
Javier Sarro Cortina, CEO of Grupo Elektra. "In addition, the
Elektra and Western Union brands today represent security, speed
and trust for millions of low-income families in Mexico and
Latin America."

The renewed contract has a six-year and one month term, and
similar financial conditions to the prior agreement. The
contract also includes competitive advantages in the management
of brands and marketing.

As part of the agreements, Grupo Elektra will receive financial
resources of US$190 million, will be able to expand its
distribution network in other channels besides its own, and in
addition to the Western Union brand, it will become a paying
agent of Vigo Remittance Corp.-a leading international money
transfers company-in Mexico. Through this, Grupo Elektra will
further increase the options for the users of electronic money
transfers between the U.S. and Mexico. Since 2004, the company
operates as a paying agent of Vigo Remittance Corp. for money
transfers to Guatemala and Honduras.

At the close of 2005, Grupo Elektra totaled 7.6 million
transactions worth US$2 billion. With the new agreement the
company consolidates its leadership and contributes to improve
the quality of life of millions of Mexicans and Latin Americans.


GRUPO TMM: Posts Results of Cash Tender Offer
---------------------------------------------
Grupo TMM, S.A. (NYSE:TMM), a Mexican multi-modal transportation
and logistics company, announced Tuesday that the cash tender
offer to purchase up to $331,018,794 aggregate principal amount
of its outstanding Senior Secured Notes due 2007 expired at
12:00 midnight, New York City time, on Friday, January 13, 2006.
An aggregate of $428,194,642 principal amount of outstanding
2007 notes were tendered in the Offer. The Company accepted all
properly tendered notes on a pro rata basis, which will reduce
the outstanding principal amount of 2007 notes to $156,958,040.
As a result of the tender offer and pursuant to the terms of the
2007 Notes Indenture, the interest rate of the 2007 Notes
outstanding after the offer will be reduced by 1% commencing
February 1, 2006, such that if the Company elects to pay
interest in cash the Notes will bear interest at 9 1/2% per
annum.

The Bank of New York acted as the paying agent for the offer.
Requests for assistance or documentation should be directed to
the paying agent at The Bank of New York, Corporate Trust
Operations Reorganization Unit, 101 Barclay Street, Floor 7
East, New York, New York 10286, Attention: Mr. William Buckley,
Telephone: (212) 815-5788. Beneficial owners of the Notes may
also contact their brokers, dealers, commercial banks, trust
companies or other nominee through which they hold the Notes
with questions and requests for assistance.

Headquartered in Mexico City, Gruppo TMM --
http://www.grupotmm.com-- is a Latin American multimodal
transportation company.  Through its branch offices and network
of subsidiary companies, TMM provides a dynamic combination of
ocean and land transportation services.


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

AES CORP: Shutting 480-megawatt California Power Station
--------------------------------------------------------
Reuters reports that AES Corp. shut on Monday, Jan. 15, its 480-
megawatt unit 7 at the Redondo gas-fired power station in
California as planned, the California Independent System
Operator said in a report.  The unit was available until Friday
last week.

The Redondo plant includes two 175 MW units 5 and 6, and two 480
MW units 7 and 8.

Headquartered in Arlington, Virginia, AES Corporation --
http://www.aes.com/-- owns and operates power plants with a
generating capacity of about 45,000 MW (primarily fossil-fueled)
in the Americas, Europe, Asia, Africa and the Caribbean.  The
company's distribution subsidiaries sell power to 11 million
customers around the world with most in Latin America.  AES
Corp. is the parent company of EDC aka Electricidad de Caracas.

                        *    *    *

On Jan 11, 2006, Moody's affirmed the ratings of The AES
Corporation, including its Ba3 Corporate Family Rating and the
B1 rating on its senior unsecured debt.  The rating outlook
remains stable.

The rating affirmation follows AES's disclosure that it received
notice from a trustee on Dec. 30, 2005 that it was not in
compliance with the reporting covenant under various indentures
due to failure to make a timely filing of its quarterly reports
for the periods ending June 30, 2005 and Sept. 30, 2005.  If AES
fails to file such reports by February 28, the date that is 60
days after receipt of the notice, an Event of Default will occur
under such indentures.


VENEZUELA: Oil Companies Repay US$126 Mil. in Taxes & Other Fees
----------------------------------------------------------------
Venezuela's National Customs and Tax Administration Service
Superintendent José Vielma Mora disclosed that oil companies
have repaid US$126 million for income tax difference, the El
Universal reports.  According to Mr. Mora, this amount includes
a portion of back taxes, fines and interest in arrears.

Since December 2005, Seniat delivered back taxes records to 16
out of 19 oil firms that were parties to operational agreements.
Back taxes amounted to US$652 million.

"We will recover these taxes. Companies such as BP, Vinccler and
Shell are paying. All of them are fulfilling their commitments,"
Mr. Mora told El Universal.

                        *    *    *

On Nov. 29, 2005, Fitch Ratings assigned expected 'BB-' ratings
to the pending issues of Venezuelan government bonds maturing
Feb. 26, 2016, and Dec. 9, 2020.  The 2016 bond has a 5.75%
fixed coupon and the 2020 bond has a 6% fixed coupon.  The bonds
are being marketed in Venezuela to be purchased in local
currency at the official exchange rate but under New York law,
with all coupon and principal payments in U.S. dollars.

Venezuela's sovereign ratings are supported by superior
international liquidity and low external financing
requirements relative to similarly rated sovereigns.  The
ratings are constrained by vulnerability to external shocks
because of oil dependency; diminished capacity of the private
sector to absorb shocks because of heavy government
intervention in the productive sector; recent spending
increases that reduce fiscal flexibility; and concerns about
the rule of law and potential political instability.  Fitch said
the Outlook was Stable.


* Espirito Santo Sets Buy Recommendation on Three Brazilian Cos.
----------------------------------------------------------------
Business Americas reports that Portuguese financial group
Espirito Santo Research has tagged a buy recommendation on
Brazilian steel holding company Metalurgica Gerdau, which
controls assets of long steel producer Gerdau S.A. (NYSE: GGB).
Espirito Santo has selected the company as one of its top
choices among companies in Brazil.

"We believe the long steel segment will have a stand-out
performance in the steelmaking sector due to a renewal of
infrastructure investments in 2006 and a favorable position
toward pricing, which is a different situation compared to the
flat steel market," the research firm said in a report entitled
"Strategy 2006."

Brazil's upcoming October elections may boost the infrastructure
sector and in turn the long steel industry, Business News
states.

Other Brazilian companies that Espirito Santo set a buy
recommendation include CSN (NYSE: SID) and Usiminas for flat
steel producers CSN (NYSE: SID) and a neutral for flat and long
steel maker Arcelor Brasil, a subsidiary of Luxembourg-based
Arcelor SA.

Additionally, the consultancy firm gave a neutral rating to
stainless steel producer Acesita and a sell recommendation to
steel tube maker TenarisConfab, Business News reports.


* Fitch Rates Latin America on National Scale
---------------------------------------------
During the weeks between Dec. 19, 2005, and Jan. 6, 2006, Fitch
Ratings changed these ratings on the national scale in Latin
America:

Corporates:

   Saitec (Chile)

      -- Issuer's national scale long-term rating upgraded to
         'A+(chl)' from 'A(chl)'

      -- Debt issuance program and new bond issuance for
         UF4,500,000 assigned new national scale rating of
         'A+(chl)'

   Coca-Cola Embonor S.A. (Chile)

      -- Issuer's national scale Rating Outlook revised to
         Positive from Stable.  The rating remains unchanged at
         'A-(chl)'

   Petroflex Industria e Comercio S.A (Brazil)

      -- Issuer assigned new national scale long-term rating of
         'A-(bra)'.  The Rating Outlook is Stable.

      -- Fourth debentures issuance for BRL160,000,000 assigned
         new rating of 'A-(bra)'.

Structured Finance:

   Confibono XIV (Argentina)

      -- Fitch has assigned ratings to the above structured
         securitization of consumer loans; the program's ratings
         are:

            * Clase A: ARS21,317,899 'AA+(arg)';
            * Clase B: ARS1,253,994 'AA-(arg)'.

   Agroaval I (Argentina)

      -- Fitch has assigned ratings to the above structured
         securitization of small business loans; the program's
         ratings are:

            * Clase A: US$5,278,377 'A1+(arg)'.

   Tinuviel I (Argentina)

      -- Fitch has assigned ratings to the above structured
         securitization of personal loans; the program's ratings
         are:

            * Valores de Deuda: ARS2,800,000 'A(arg)'.
            * TV Azteca, S.A. de C.V. III (Mexico)

      -- Fitch has assigned ratings to the above structured
         securitization; the program's ratings are:

            * CB's III: MXP1,000,000,000 'AA(mex)'.

   Spira de Mexico, S.A. de C.V. I (Mexico)

      -- Fitch has assigned ratings to the above structured
         securitization; the program's ratings are:

            * CB's I: MXP150,000,000 'BBB(mex)'.

   Securitizadora BCI III (Chile)

      -- 3rd Patrimonio Seperado, series B rating 'Withdrawn'.

National ratings are an assessment of credit quality relative to
the rating of the 'best' credit risk in a country.  This 'best'
risk will normally, although not always, be assigned to all
financial commitments issued or guaranteed by the sovereign
state.  Therefore, a given national scale rating implies a
different level of risk compared with the same international
scale rating.

Additional information on these rating actions is available on:

Fitch Ratings http://www.fitchratings.com/
Fitch Argentina http://www.fitchratings.com.ar/
Fitch Bolivia http://www.fitchratings.com.bo/
Fitch Brazil http://www.fitchratings.com.br/
Fitch Central America http://www.fitchca.com/
Fitch Chile http://www.fitchratings.cl/
Fitch Dominican Republic http://www.fitchdominicana.com/
Fitch Mexico http://www.fitchmexico.com/
Fitch Venezuela http://www.fitchvenezuela.com/


                            ***********


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

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

Copyright 2006.  All rights reserved.  ISSN 1529-2746.

This material is copyrighted and any commercial use, resale or
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Information contained herein is obtained from sources believed
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