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        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, July 31, 2003, Vol. 4, Issue 150

                          Headlines


A R G E N T I N A

AEROLINEAS ARGENTINAS: Plans $30M Investment on Subsidiaries
AUTOPISTAS DEL SOL: Releases Cash Tender Offer Results
BPS AUSTRAL: Claims Authentication Ends August 29
DIRECTV LA: Creditors Committee Objects to Exclusivity Extension
ECIPSA: Bonds Rated 'D' by Moody's Latin America

EDITORIAL PERFIL: Moody's Assigns Default Ratings To Bonds
EL DESTINO: Court Sets Deadline For Claims Authentication
FRANNINO INDUSTRIA: Court Orders Bankruptcy
GEJAMAS: Bankruptcy Process Proceeds With Claims Verification
GRADIA: Officially Bankrupt According to Court Ruling

INDUSTRIAS METALURGICAS: $250M of Bonds Rated 'D' by Moody's
LA EUSKARA: Enters Bankruptcy Following Court Ruling
NII HOLDINGS: Announces Equity Deal for Debt Reduction
SELVA LUIS: Starts Reorganization Process
SIDERAR: Executive Forecasts 5% Boost In Sales Volumes For 2003

SOLDAR SERVICIOS: Bankruptcy Official by Court Ruling
TELEFONICA DE ARGENTINA: Waives Minimum Tender Offer Conditions


B E R M U D A

LORAL SPACE: Taps Weil Gotshal for Chapter 11 Legal Services
TYCO INTERNATIONAL: Files Restated Financials
TYCO INTERNATIONAL: Reports Third Quarter Results


B R A Z I L

AES CORP: Closes $950M Senior Secured Credit Facilities
BRAZILIAN BANKS: S&P Report Analyzes Risk in Banking Industry
COSIPA: Shareholders OK $81.6M Debenture Issue
EMBRATEL: Reports Second Quarter 2003 EBITDA of BRL379 Million
GERDAU: Increased Exports Overcome Reduced Brazilian Demand

KLABIN: Reports Improved Results for 2Q03
POWER DISTRIBUTORS: To Get Financial Aid From Government
USIMINAS: Gets $29.7M Loan From Brazil's Development Bank
VARIG-TAM: Merger Back On Track


C H I L E

ENDESA CHILE: Applies Electricity Law, Deposits Funds to Proceed


E C U A D O R

PETROECUADOR: Likely To Meet Production Goal In 2003 Budget


G U A T E M A L A

ENRON: Report Unveils Questionable Payments Made To Businessmen


J A M A I C A

AIR JAMAICA: Seeks New Marketing, Sales VP
NCB JAMAICA: Long-Term Foreign Currency Rating Lowered to 'B'
PAJ: Continued Losses Prompt Ferry Service Termination


M E X I C O

AHMSA: Reports Widening Losses in the 1H03
GRUPO IUSACELL: Movil Access Concludes Tender Offers
MEXICANA AIRLINES: Flight Booking Agreement with AAI Extended
SATMEX: Construction of Satmex 6 Suffers Setback
SATMEX: Talks With Telesat Held Up Amid Disagreement


U R U G U A Y

BANCO GALICIA: Several `Frozen Deposits' Holders Accept Plan


    - - - - - - - - - - -

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

AEROLINEAS ARGENTINAS: Plans $30M Investment on Subsidiaries
------------------------------------------------------------
Troubled Argentine flagship carrier Aerolineas Argentinas (AA)
will invest US$30 million to create subsidiary airlines to
operate in Latin America. AA will spend about USUS$7.5 million on
each airline, according to a report by South American Business
Information.

The subsidiaries, which would be called "Aerolineas Argentinas
Austral", would service flights to and from Paraguay, Chile,
Uruguay and Bolivia. AA plans to have local partners in each of
the said countries, the report adds.


AUTOPISTAS DEL SOL: Releases Cash Tender Offer Results
------------------------------------------------------
Autopistas del Sol S.A. (the "Company") announced Tuesday the
final results of its offer to apply up to U.S.$18 million to
repurchase its 9.35% Series A Senior Notes due 2004 and 10.25%
Series B Senior Notes due 2009 (together, the "Existing Notes")
and other unsecured financial indebtedness (the "Bank Debt" and,
together with the Existing Notes, the "Existing Debt"), for cash
(the "Cash Tender Offer") through a modified dutch auction. The
Cash Tender Offer was commenced on May 15, 2003 and expired,
after four extensions, at 5:00 p.m., New York City time, on July
24, 2003.

Based on the final count by the depositary (JPMorgan Chase Bank)
for the Cash Tender Offer, the Company accepted for purchase
U.S.$8,121,289 principal amount of Existing Debt at a purchase
price of U.S.$380 per U.S.$1,000 principal amount of Existing
Debt. The purchase price applies to all Existing Debt accepted
for payment pursuant to the Cash Tender Offer.

The cash payment required to complete the Cash Tender Offer was
U.S.$3,086,090. Payment for the Existing Debt accepted for
purchase will be made promptly through the depositary.

The Information Agent for the Cash Tender Offer was D.F. King &
Co., Inc. and its telephone number is (1 212) 493-6920. For
further information, contact Autopistas del Sol S.A. at (54 11)
5789-8700.


BPS AUSTRAL: Claims Authentication Ends August 29
-------------------------------------------------
Creditors of BPS Austral S.A. must submit their claims for
verification to the receiver before August 29, the deadline set
by Court No. 9 of Buenos Aires, relates Infobae. Mr. Juan Alberto
Krimerman, the designated receiver, will then prepare the
individual reports, which must be submitted on October 10, the
report adds.

Meanwhile, the general report comes due on November 21. The
report, however, did not indicate whether the court has chosen a
date for the informative assembly.

CONTACT:  Juan Alberto Krimerman
          Uruguay 594
          Buenos Aires


DIRECTV LA: Creditors Committee Objects to Exclusivity Extension
----------------------------------------------------------------

                          Committee Objects

Kathleen Marshall DePhillips, Esq., at Pachulski, Stang, Ziehl,
Young, Jones & Weintraub, in Wilmington, Delaware, agrees that
DirecTV is unquestionably a large case.  However, the Debtor's
request ignores the peculiar circumstances present. Specifically,
the Debtor is receiving secured DIP financing from Hughes
Electronics Corporation, which matures on March 16, 2004.

*** The Committee does not indicate how or when the DIP Financing
*** maturity date was extended by two weeks.

Hughes, the Committee says, could seek to foreclose on the liens
that secure the Hughes Financing after March 16, 2004.  Ms.
DePhillips contends that it is inappropriate to give the Debtor
the exclusive right to attempt to confirm a reorganization plan
until only 60 days prior to the maturity of secured financing
provided by its controlling equity holder, Hughes.

Section 1121(d) of the Bankruptcy Code grants the Court the
authority to extend a debtor's exclusivity period "for cause"
after notice and a hearing.  The Bankruptcy Code does not define
the term "cause."  The legislative intent is to promote "maximum
flexibility" in the court.  In exercising this flexibility, the
Court should appropriately consider the fact that, in this case,
the Debtor has strikingly greater plan leverage than is typical.
It is the rare Chapter 11 case in which the Debtor, through its
controlling equity holder:

    (a) will hold a superpriority administrative secured claim
        well in excess of $100,000,000 by the time of plan
        confirmation,

    (b) claims to be the largest prepetition creditor of the
        Debtor,

    (c) provides services to the Debtor upon which the Debtor is
        crucially dependent -- i.e., satellite services, and

    (d) owns or otherwise controls many of the Debtor's
        customers, and

    (e) holds guarantee claims secured by pledges of the Debtor's
        equity interests in its subsidiaries.

In short, Ms. DePhillips states, the Debtor and Hughes have
enormous plan leverage in this case, even absent the exclusive
right to file a plan of reorganization.  Given the extent of the
Hughes entanglements, it is the other unsecured creditors of the
Debtor who currently hold minimal plan leverage.  Moreover, as
time passes, and the maturity of the Hughes Financing moves
ominously closer, the Debtor and Hughes' leverage will likely
only increase.

In addition, it will be impossible for the Committee to attract
an outside plan sponsor, if it does not even have the ability to
file a reorganization plan.  An outside investor will have to
expend enormous time and resources simply understanding the
minutia of the various Hughes relationships.  An outside investor
also will likely have to engage in complicated negotiations with
the Debtor's programmers, in order to attempt to maximize the
Debtor's future profitability.  No outside investor is likely to
commence undertaking this effort unless the Committee can insure
the potential investor that, if the investor proceeds, the
Committee at least will have the ability to file a plan.

Given these unique circumstances, the Debtor's requested
extension should be denied to the extent it denies the Committee
the ability to submit a reorganization plan.  Ms. DePhillips
argues that plan exclusivity should not apply to the Committee,
in order to establish something resembling a balanced plan
negotiation playing field in DirecTV's case.

                           *     *     *

In response to the motions, Judge Walsh extends the Debtor's
exclusive periods -- but not as long as the Debtor requested.
Specifically, the Court extends the Exclusive Proposal Period to
and including September 25, 2003, and the Exclusive Solicitation
Period to and including November 25, 2003. (DirecTV Latin America
Bankruptcy News, Issue No. 10; Bankruptcy Creditors' Service,
Inc., 609/392-0900)


ECIPSA: Bonds Rated 'D' by Moody's Latin America
------------------------------------------------
A total of US$1.6 million of corporate bonds issued by
Emprendimientos Inmobilarios y Financieros S.A. (ECIPSA) received
'D' ratings from Moody's Latin America Calificadora de Riesgo
S.A. on Friday. Moody's said that the rating is assigned to
financial obligations that are currently in default.

The rating, based on the Company's financial situation as of
April 30, 2003, applies to bonds, which the National Securities
Commission of Argentina described as "Obligaciones negociables
Clase B". The bonds, whose maturity date was not disclosed, were
classified under "Simple Issue."


EDITORIAL PERFIL: Moody's Assigns Default Ratings To Bonds
----------------------------------------------------------
Moody's Latin America Calificadora de Riesgo S.A. rates corporate
bonds issued by Editorial Perfil S.A. 'D'. An announcement from
the National Securities Commission of Argentina indicates that
the rating, issued last Friday, was based on the Company's
financial standing as of the end of March this year.

The rating applies to US$250 million worth of bonds, which the
NSC described as "Primera serie de Obligaciones Negociables". The
bonds were classified under "Series and/or class", but the
maturity date was not indicated.

Moody's gives the 'D' rating obligations that are in payment
default.


EL DESTINO: Court Sets Deadline For Claims Authentication
---------------------------------------------------------
Creditors of El Destino de Olavarria S.R.L. have until August 25,
2003 to have their claims authenticated relates Infobae. Court
No. 2 of Olavarria recently declared the local company bankrupt,
the report adds.

Mr. Vazquez is tasked to verify credit claims and prepare the
required individual and general reports for the bankruptcy
process. In the meantime, the report did not indicate whether the
court has set the deadline for the filing of the said reports.

CONTACT:  El Destino de Olavarria S.R.L.
          A Barros 2825
          Olavarria

          Ruben Adolfo Vazquez
          Vicente Lopez 3387
          Olavarria


FRANNINO INDUSTRIA: Court Orders Bankruptcy
-------------------------------------------
The Civil and Commercial Court of Mendoza ruled that Frannino
Industria Metalurgica S.A.A.C.I.F. go into bankruptcy, relates
Infobae. The report adds that Court No. 3 of Mendoza, which
handles the case, designated Mr. Jorge Carcull as receiver for
the bankruptcy proceedings. However, it did not mention the
deadline for credit verification.

CONTACT:  Frannino Industria Metalurgica S.A.A.C.I.F.
          Carril Urquiza sin numero
          Guaymallen, Mendoza

          Jose Carcull
          Martinez de Rosas 1015
          Mendoza


GEJAMAS: Bankruptcy Process Proceeds With Claims Verification
-------------------------------------------------------------
The Civil and Commercial Court of Mercedes ordered Mr. Jose Luis
Carriquiy, receiver for the bankruptcy process of Gejamas
S.A.C.I. Y.F., to verify creditors claims in preparation for the
individual reports. Local news portal Infobae relates that Court
No. 4, which handles the Company's case, has set September 10,
2003 as deadline for credit authentication.

The individual reports will be filed on October 22, while the
general report will be submitted on December 4, says Infobae. The
report did not mention whether the court has set a date for an
informative assembly.

CONTACT:  Gejamas S.A.C.I. Y.F.
          12 de Octubre 2068
          Bragado, Mercedes

          Jose Luis Carriquiy
          Calle 40 No. 726
          Mercedes


GRADIA: Officially Bankrupt According to Court Ruling
-----------------------------------------------------
Entre-Rios based company Gradia S.A. was declared bankrupt by the
Civil and Commercial Tribunal of Parana. Local news source
Infobae says that Court No. 1 of Parana handles the proceedings.
The designated receiver for the case is Mr. Carlos Maria
Figueroa. Creditors must submit their claims to the receiver for
authentication before August 22 this year.

CONTACT:  Gradia S.A.
          Ave. Almafuerte 1887
          Parana, Entre Rios

          Carlos Maria Figueroa
          Cordoba 401
          Parana, Entre Rios



INDUSTRIAS METALURGICAS: $250M of Bonds Rated 'D' by Moody's
------------------------------------------------------------
Industrias Metalurgicas Pescarmona's corporate bonds received
default ratings from Moody's Latin America Calificadora de Riesgo
S.A., relates the National Securities Commission of Argentina.

The rating, which is given to financial obligations that are in
default, applies to bonds, which the NSC described as "Programa
de obligaciones negociables". The bonds, worth a total of US$250
million, mature on March 15, 2006.


LA EUSKARA: Enters Bankruptcy Following Court Ruling
----------------------------------------------------
La Euskaria S.A. is undergoing the bankruptcy process upon the
order of the Civil and Commercial Tribunal of Dolores. The
Company was placed in the hands of its receiver, Mr. Miguel
Telese, relates Infobae.

The report adds that creditors must have their claims verified by
the receiver before September 12 this year. Court no. 2, which
handles the case, instructed the receiver to submit the
individual reports by October 28, and the general report by
December 11 this year.

CONTACT:  La Euskaria S.A.
          Muniz 539
          Buenos Aires

          Miguel Telese
          Buenos Aires 595
          Dolores


NII HOLDINGS: Announces Equity Deal for Debt Reduction
------------------------------------------------------
NII Holdings, Inc. (Nasdaq: NIHD) announced Tuesday that it
intends to raise approximately $100 million through a proposed
public offering of shares. The company expects to use the net
proceeds from the offering, together with cash on hand, to retire
secured vendor debt.

In conjunction with this transaction, on July 29th, NII entered
into an agreement with Motorola Credit Corp. to retire the $103.2
million Brazilian Motorola Equipment Financing Facility plus
accrued interest at a cost of $86.0 million from the net proceeds
of the offering and retire $100.0 million of the $225 million
International Motorola Equipment Financing Facility prior to
December 31, 2003.

This press release shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of
these securities in any state in which such offer, solicitation
or sale would be unlawful prior to registration or qualification
under the securities laws of any such state.

About NII Holdings, Inc.

NII Holdings, Inc., a publicly held company based in Reston, Va.,
is a leading provider of mobile communications for business
customers in Latin America. NII Holdings, Inc. has operations in
Argentina, Brazil, Mexico and Peru, offering a fully integrated
wireless communications tool with digital cellular service,
text/numeric paging, wireless Internet access and Nextel Direct
Connectr, a digital two-way radio feature. NII Holdings, Inc.
trades on the NASDAQ market under the symbol NIHD. Visit the
Company's website at http://www.nii.com.

Nextel, the Nextel logo, Nextel Online, Nextel Business Networks
and Nextel Direct Connect are trademarks and/or service marks of
Nextel Communications, Inc.

CONTACT:  Investor Relations: Tim Perrott
          (703) 390-5113
          tim.perrott@nii.com

          Media Relations: Claudia E. Restrepo
          (786) 251-7020
          claudia.restrepo@nii.com



SELVA LUIS: Starts Reorganization Process
-----------------------------------------
Selva Luis Selva Carlos S.H. starts reorganizing its business
after receiving permission from the Civil and Commercial Tribunal
of Pergamino. According to local news source Infobae, Court No. 2
of Pergamino recently approved the Company's motion for "Concurso
Preventivo."

The reorganization proceeds with the authentication of credit
claims to be done by the designated receiver, Ms. Maria Rosa del
Valle Bustamante. The deadline for verification is August 18 this
year. The Court has also instructed the receiver to prepare the
individual reports to be submitted on September 5, and the
general report, which is due on November 11. The informative
assembly will be on May 14 next year, the report adds.

CONTACT:  Selva Luis Selva Carlos S.H.
          Calle 30 Numero 3812
          Mercedes

          Maria Rosa del Valle Bustamante
          Ave. Roca 814
          Pergamino


SIDERAR: Executive Forecasts 5% Boost In Sales Volumes For 2003
---------------------------------------------------------------
Argentine steelmaker Siderar is seeing a 5% increase to 2.09Mt in
sales volumes this year compared to 2002, Business News Americas
reports, citing Daniel Novegil, executive VP of flat and long
products for parent company Techint. The bullish forecast is due
to a healthier domestic market attributable to a rise in
industrial activities on behalf of small and midsize companies,
as well as import substitution for Siderar's products, the
executive said.

Last year, Siderar sold 35% of its output on the domestic market,
amounting to 732,000t, and 65% or 1.36Mt was exported. In the
first half of this year, Siderar closed with a domestic-export
sales mix of 50:50, Novegil said.

"Since January 2003, when Siderar began increasing shipments to
the domestic market, there have been no signs of a slowdown. The
company is working at full capacity and we are in the process of
recovering our market share in Argentina," the executive said.

Siderar has a capex budget of US$30mn-35mn for this year, of
which some 35% is slated for projects aimed at increasing
productivity. Some US$5mn of the total is for investments in
information technology.

Siderar is Argentina's largest integrated steelmaker with
installed capacity of 2.2Mt/y.

CONTACT:  Leonardo Stazi
          Siderar S.A.I.C.
          Phone: 54 (11) 4018-2308/2249
          Home Page: www.siderar.com


SOLDAR SERVICIOS: Bankruptcy Official by Court Ruling
-----------------------------------------------------
Soldar Servicios Industriales S.R.L. will undergo the bankruptcy
process following a decision from the Civil and Commercial
Tribunal of Mendoza, relates local news portal Infobae without
mentioning the factors behind the ruling.

The case is handled by Court No. 3 of Mendoza, which assigned Mr.
Gerardo Priori as receiver for the bankruptcy process. However,
the report did not indicate the deadline for credit claims
verification.

CONTACT:  Soldar Servicios Industriales S.R.L.
          Acceso Sur Kilometro 55,
          5 Lujan de Kuyo
          Mendoza

          Gerardo Priori
          Rufino Ortega 729
          Mendoza


TELEFONICA DE ARGENTINA: Waives Minimum Tender Offer Conditions
---------------------------------------------------------------
Telefonica de Argentina S.A. ("TASA" or the "Company") announced
Tuesday that it has waived the minimum tender conditions of its
offers to exchange two series of existing TASA notes (the 11.875%
TASA Notes due 2004 (the "TASA 2004 Notes") and the 9.125% TASA
Notes due 2008 (the "TASA 2008 Notes")) for two new series of
TASA notes plus a cash payment (the "TASA Exchange Offers"), and
its offers to exchange two series of existing notes issued by
TASA's holding company, Compania Internacional de
Telecomunicaciones S.A. ("Cointel"), (the 8.85% Cointel Series A
Notes due 2004 (the "Cointel Series A Notes") and the 10.375%
Cointel Series B Notes due 2004 (the "Cointel Series B Notes"))
for two new series of TASA notes plus a cash payment (the
"Cointel Exchange Offers" and together with the TASA Exchange
Offers, the "Exchange Offers").

The Company has received, as of 5:00 p.m., New York City time, on
July 28, 2003, the following percentages tendered of existing
notes:

-- U.S.$212 million, representing 71% of aggregate principal
amount of the U.S.$300 million TASA 2004 Notes,

-- U.S.$240 million, representing 65% of aggregate principal
amount of the U.S.$368.5 million TASA 2008 Notes,

-- U.S.$167 million, representing 74% of aggregate principal
amount of the U.S.$225 million Cointel Series A Notes, and

-- Ps.31 million, representing 18% of aggregate principal amount
of the Ps.175 million Cointel Series B Notes.

Each of the Exchange Offers was conditioned upon the receipt of
at least of 90% of each class of existing notes. The Company has
announced that it has waived these minimum tender conditions in
their entirety.

As a result of waiving the minimum tender conditions, the Company
has extended the expiration date of each of the Exchange Offers
to 11:59 p.m., New York City time, on August 4, 2003. The Company
has also granted withdrawal rights to holders of the existing
TASA and Cointel notes until 11:59 p.m., New York City time, on
August 4, 2003, the time of expiration of the Exchange Offers.

In connection with the Exchange Offers, the Company is preparing
a prospectus and proxy solicitation supplement to be dated July
29, 2003, supplementing each prospectus and proxy solicitation,
dated June 17, 2003, each as supplemented on July 24, 2003. All
other terms of the Exchange Offers remain in effect as set forth
in the relevant prospectus and proxy solicitation.

Copies of each prospectus and proxy solicitation, each prospectus
and proxy solicitation supplement dated July 24, 2003, and each
prospectus and proxy solicitation supplement dated July 29, 2003
may be obtained by calling D.F. King & Co., Inc., at +1-800-549-
6697 or +1-212-269-5550, or by mail at 48 Wall Street, 22nd
Floor, New York, NY 10005, Attention: Thomas A. Long.

A copy of the company's registration statement and any other
document filed may be read at the SEC's public reference room at
450 Fifth Street, N.W. Washington, D.C. 20549. These documents
are also available at the public reference rooms at the SEC's
regional office in New York City. Please call the SEC at +1-800-
SEC-0330 for further information on the public reference rooms.
Additional filings are also available to the public over the
Internet at the SEC's website at http://www.sec.gov.

Morgan Stanley & Co., Incorporated (including its affiliates) is
acting as dealer manager for the Exchange Offers. BBVA Banco
Frances S.A. (Reconquista 199, (C1003ABE) Buenos Aires,
Argentina; Attention: Santiago Barros Moss, Tel. 5411 4346-4311)
is acting as solicitation agent in Argentina.

CONTACT:  Morgan Stanley
          Simon Morgan
          Phone: +1-212-761-2219

          Heather Hammond
          Phone: +1-212-761-1893



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

LORAL SPACE: Taps Weil Gotshal for Chapter 11 Legal Services
------------------------------------------------------------
Loral Space & Communications Ltd., and its debtor-affiliates want
to employ Weil, Gotshal & Manges, LLP as their attorneys in these
chapter 11 cases.

The Debtors tell the U.S. Bankruptcy Court for the Southern
District of New York that Weil Gotshal is intimately familiar of
the Company's businesses and affairs because it assisted and
advised prior to the Petition Date with respect to formulating,
evaluating, and implementing various restructuring,
reorganization, and other strategic alternatives.

In this retention, that Debtors want Weil Gotshal to:

a. take all necessary or appropriate actions to protect and
   preserve the Debtors' estates, including the prosecution
   of actions on the Debtors' behalf, the defense of any
   actions commenced against the Debtors, the negotiation
   of disputes in which the Debtors are involved, and the
   preparation of objections to claims filed against the
   Debtors' estates;

b. prepare on behalf of the Debtors, as debtors in
   possession, all necessary or appropriate motions,
   applications, answers, orders, reports and other papers
   in connection with the administration of the Debtors'
   estates;

c. take all necessary or appropriate actions in connection
   with a plan or plans of reorganization and related
   disclosure statement(s) and all related documents, and
   such further actions as may be required in connection
   with the administration of the Debtors' estates; and

d. perform all other necessary or appropriate legal
   services in connection with these chapter 11 cases.

Stephen Karotkin, Esq., a member of Weil Gotshal, reports that
the Firm's current customary hourly rates are:

- members and counsel $375 to $725 per hour

- associates $200 to $440 per hour

- paraprofessionals and staff $50 to $175 per hour

Loral Space & Communications Ltd., headquartered in New York, New
York, and together with its affiliates, is one of the world's
leading satellite communications companies with substantial
activities in satellite-based communications services and
satellite manufacturing. The Company filed for chapter 11
protection on July 15, 2003 (Bankr. S.D.N.Y. Case No. 03-41710).
Stephen Karotkin, Esq., and Lori R. Fife, Esq., at Weil, Gotshal
& Manges LLP, represent the Debtors in their restructuring
efforts. When the Debtors filed for protection from its
creditors, it listed $2,654,000,000 in total assets and
$3,061,000,000 in total debts. (Troubled Company Reporter, July
29, 2003, Vol. 7, Issue No. 148)


TYCO INTERNATIONAL: Files Restated Financials
---------------------------------------------
Tyco International Ltd. (NYSE: TYC, BSX: TYC, LSE: TYI) announced
Tuesday that, following discussions with the Securities and
Exchange Commission, it has restated its historical financial
statements.

The restatement includes two previously recorded charges related
to the ADT business, which were recorded in the quarter ended
March 31, 2003, reflecting a change in the amortization method
for customer contracts acquired through the ADT dealer program
($364.5 million pre-tax) and a change in accounting for the ADT
dealer program connect fee ($265.5 million pre-tax).

As previously announced, the Company is restating pre-tax charges
of $434.5 million recorded in the quarter ended March 31, 2003
for items related to prior periods and pre-tax charges of $261.6
million recorded in the quarter ended December 31, 2001.

In addition to these charges, the Company is also restating prior
periods for $71.5 million in pre-tax charges primarily related to
workers' compensation and general liability accruals recorded in
the quarter ended March 31, 2003. The restatement of prior period
results also includes $46.6 million of cumulative pre-tax charges
related to split dollar life insurance arrangements for former
senior executives. The previously announced charges have also
been adjusted for an incremental cumulative tax benefit of $116
million as of March 31, 2003.

The Company filed Tuesday restated financial statements that
reflect all of the above charges in amendments to its Annual
Report on Form 10-K for the fiscal year ended September 30, 2002,
as well as its Quarterly Reports on Form 10-Q for the quarters
ended December 31, 2002 and March 31, 2003. For a description of
the charges discussed above and other components of the
restatement, please see Note 1 and Management's Discussion and
Analysis in the Company's amended filings available at
www.tyco.com.

This restatement pushes back the adjustments referred to above
into the historical periods to which they relate. The effects of
the restatement of these charges are to reduce the Company's
previously reported results for fiscal years 1998-2001 and to
improve the previously reported results for fiscal 2002 and the
first six months of fiscal 2003.

Tyco does not anticipate that the restatement will have any
adverse impact on its operating results or cash flows for the
remainder of fiscal 2003 or future years. The Company continues
to be in compliance with the covenant tests under its various
financing agreements in each of the affected quarters.

The Company believes that the restatement addresses all of the
significant remaining issues identified as part of the SEC
Division of Corporation Finance's ongoing review of its periodic
reports. It continues to be involved in a dialogue with the SEC
Corporation Finance Staff, however, and the review is not yet
complete. The Company is working to resolve any remaining
comments to its periodic reports as expeditiously as possible.
There can be no assurance that the resolution of any such
remaining Staff comments will not necessitate further amendments
or restatements to the Company's previously filed periodic
reports.

ABOUT TYCO INTERNATIONAL

Tyco International Ltd. is a diversified manufacturing and
service company. Tyco is the world's largest manufacturer and
servicer of electrical and electronic components; the world's
largest designer, manufacturer, installer and servicer of
undersea telecommunications systems; the world's largest
manufacturer, installer and provider of fire protection systems
and electronic security services and the world's largest
manufacturer of specialty valves. Tyco also holds strong
leadership positions in medical device products, and plastics and
adhesives. Tyco operates in more than 100 countries and had
fiscal 2002 revenues from continuing operations of approximately
$36 billion.

CONTACT: Media: Gary Holmes, 212-424-1314
         Investor Relations: Ed Arditte, 212-424-1390


TYCO INTERNATIONAL: Reports Third Quarter Results
-------------------------------------------------
Tyco International Ltd. (NYSE: TYC, BSX: TYC, LSE: TYI) reported
Tuesday earnings of $0.27 per share for its third quarter,
compared to a restated loss of $0.20 per share from continuing
operations in the third quarter of 2002. The historical results
presented in this press release are restated as filed today with
the Securities and Exchange Commission on Form 10-K/A for the
period ended September 30, 2002 and on Forms 10-Q/A for the
periods ended December 31, 2002 and March 31, 2003.

Chairman and Chief Executive Officer Ed Breen said: "We made
fundamental progress in the third quarter toward positioning our
operations for long-term success. During the period, we generated
strong cash flow, delivered solid revenue, and strengthened our
balance sheet. At the same time, I am confident we can and must
improve our profit performance, and I am committed to
aggressively implementing the operating discipline necessary to
achieve this."

    Financial highlights of the quarter:

-- Earnings from continuing operations for the third quarter
include the impact of the Company's retirement of certain debt
securities as disclosed on June 16, which reduced earnings per
share by $0.07.  In addition, the Company settled certain tax
matters that increased EPS by $0.02.  Including these items,
earnings per share for the quarter were $0.27 per share. For the
first three quarters, earnings were $0.61 per share on a restated
basis compared to a restated loss of $0.73 per share for the same
period in the prior year.

-- Revenues were $9.4 billion, up 3.4% from $9.1 billion in the
third quarter of last year, due to favorable changes in foreign
currency rates.  For the nine months ended June 30, 2003,
revenues were $27.3 billion, a 4.2% increase over the same period
last year, again because of favorable changes in foreign currency
rates.

-- Cash from continuing operating activities was $1.5 billion, up
38% from last year's third quarter.  For the first three
quarters, cash from continuing operating activities was $3.6
billion, essentially unchanged from the same period last year.
Free cash flow from continuing operations in the third quarter
was $844 million compared to $73 million in the same period last
year.  For the first three quarters of 2003, free cash flow was
$1.8 billion, compared to $131 million of cash outflow for the
same period last year.  Free cash flow is a non-GAAP financial
measure and is described below.  For a reconciliation of cash
from operating activities to free cash flow, see the attached
table.

Mr. Breen added: "The results for our Engineered Products and
Plastics and Adhesives businesses were adversely impacted by a
soft global industrial economy and higher raw material commodity
prices. Fire & Security continues to be in a turnaround situation
under new management and delivered good cash flow performance.
Our Healthcare and Electronics businesses continued to deliver
solid performance this quarter."

Mr. Breen concluded: "Our leadership team is intensely focused on
the operating challenges and opportunities faced by each of our
businesses. I am more confident than ever in our strategy and our
team, and I am convinced that we are making the right decisions
to transform Tyco into a high-performing operating company."

QUARTERLY OPERATING RESULTS

The financial results presented in the tables below are in
accordance with generally accepted accounting principles (GAAP).
All dollar amounts are stated in millions. All comparisons are to
the quarter ended June 30, 2002 unless otherwise stated.

     Electronics                  June 30,       June 30,
                                    2003           2002

     Net revenues                 $2,668.3       $2,650.7
     Operating profit (loss)        $368.4        ($272.3)
     Margins                          13.8%        (10.3%)

Revenues increased $18 million, driven by a $178 million increase
from foreign currency, partially offset by a $110 million revenue
decline in TyCom.

The loss in the third quarter of 2002 included $611 million in
charges related primarily to the impairment of goodwill at TyCom.
The remaining increase in operating profit was mostly driven by
foreign currency. Tyco Electronics experienced strength in its
automotive business, offset by softness in certain industrial
markets.

     Fire and Security Services
                                      June 30,       June 30,
                                        2003           2002

     Net revenues                     $2,857.2       $2,711.7
     Operating profit                   $188.3          $76.4
     Margins                               6.6%           2.8%

Revenues increased $146 million driven by a $168 million impact
from foreign currency. Aside from currency changes, modest
revenue growth in the Security business was offset by weakness in
non-residential construction and pricing pressure in the Fire
Protection business.

Operating profit in the third quarter of 2002 included $166
million in charges, primarily related to impairment of long-lived
assets and restructuring charges. The resulting $54 million
operating profit decline is attributable to weak performance at
Continental Europe Security and lower margins in Fire Protection.

     Healthcare
                                    June 30,       June 30,
                                      2003           2002

     Net revenues                  $2,212.7       $2,042.1
     Operating profit                $563.7         $420.2
     Margins                           25.5%          20.6%

Revenues increased $171 million, partially driven by a $94
million increase from foreign currency. The remaining revenue
increases were driven by growth in the Medical and Pharmaceutical
businesses.
Operating profit was driven by favorable sales performance in
Medical and Pharmaceutical and a continued focus on optimizing
operating expenses. Third quarter 2002 profits included a $33
million restructuring charge.

     Engineered Products and Services

                                 June 30,       June 30,
                                   2003           2002

     Net revenues               $1,185.0       $1,211.0
     Operating profit (loss)       $92.1        $(74.3)
     Margins                         7.8%         (6.1%)

Revenues declined $26 million, despite a $77 million benefit from
foreign currency, due to lower volumes in Flow Control and
Infrastructure Services. Flow Control suffered from weak economic
conditions and softness in non- residential construction.

The operating loss in the third quarter of 2002 included a $252
million charge, primarily for goodwill impairment. The resulting
$86 million year-over-year decrease in operating profit was the
result of lower volumes at Flow Control, as well as increased raw
material costs at Electrical and Metal Products.

     Plastics and Adhesives

                                      June 30,       June 30,
                                        2003           2002
     Net revenues                     $ 489.4        $ 483.9
     Operating profit                   $54.1          $71.4
     Margins                             11.1%          14.8%

Revenues increased 1%, or $6 million, driven by an $11 million
increase from favorable changes in foreign currency. Revenue
growth in the Films business was more than offset by weakness in
the division's other three businesses.

Operating profit declined 24%, or $17 million year-over-year, due
to the impact of higher resin costs, less favorable sales mix and
lower volumes.

    Other Items

-- Net interest expense was $248 million, down 1% from $250
million in the same period a year ago.

-- The effective tax rate was 29.8%.  This rate includes the
impact of the $152 million charge for debt retirement, which was
not tax deductible.  In addition, the tax rate was favorably
impacted by a prior-year tax settlement of $22 million.  This
settlement also resulted in $19 million of interest income.

-- The Company had cash on hand of $3.9 billion at June 30, 2003,
compared to approximately $4.0 billion and $5.7 billion,
respectively, at March 31, 2003 and December 31, 2002.

-- Tyco's debt-to-capitalization ratio was 44.3% as of June 30,
2003, compared with 46.2% at March 31, 2003, and 50.1% at
September 30,
2002.  The Company adopted FASB Interpretation No. ("FIN") 46,
"Consolidation of Variable Interest Entities," as of July 1,
2003, in connection with its synthetic leases.  As a result, the
Company will increase total debt by $517 million and record a
non-cash cumulative effect accounting charge to pre-tax income
estimated at $110-$125 million in its fourth quarter. The ongoing
annual negative impact on pre-tax income is estimated to be $25-
$30 million.

-- As noted, the Company retired all of its 6.25% Dealer
Remarketable Securities due in 2013.  The portion of the payment
in excess of par ($152 million) was recorded as an expense in the
third quarter and reduced earnings per share by $0.07.

OUTLOOK

Based on current economic conditions and the operating issues in
some Tyco businesses, the Company expects earnings in the fourth
quarter to be $0.32-$0.35 per share. This does not include the
impact of the adoption of FIN 46, as mentioned above.

Free cash flow is expected to remain strong, and as a result, the
Company is raising its outlook for free cash flow for FY 2003 to
a range of $2.2-$2.5 billion. This guidance excludes any
voluntary pension contribution, which the Company is considering
making in the fourth quarter. Cash flow from continuing operating
activities is expected to range from $4.4-$4.7 billion. The
difference between the outlook for free cash flow and cash flow
from continuing operating activities is about $2.2 billion, which
reflects net capital expenditures, acquisition of dealer
accounts, cash paid for holdbacks and purchase accounting, Tyco
Global Network spending, dividends paid, and the impact from
accounts receivable programs.

ABOUT FREE CASH FLOW

"Free cash flow" is a non-GAAP metric used by the Company to
measure its ability to meet its future debt obligations, and is
also one component of measurement used in the Company's
compensation plans. The Company believes that free cash flow is
an important measure of the Company's management of cash flow and
resulting performance. This metric is used by investors, analysts
and others to make investment decisions. The measure should be
used in conjunction with other GAAP financial measures and is not
presented as an alternative measure of cash flow as determined in
accordance with accounting principles generally accepted in the
United States of America. Free cash flow as presented herein may
not be comparable to similarly titled measures reported by other
companies. Free cash flow has limitations due to the fact that it
does not represent the residual cash flow available for
discretionary expenditures. For example, it does not exclude
payments made on capital lease obligations. See the accompanying
table to this press release for a cash flow statement presented
in accordance with GAAP and a reconciliation presenting the
components of free cash flow.

To see financial statements:
http://bankrupt.com/misc/TYCO_INTERNATIONAL.htm



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B R A Z I L
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AES CORP: Closes $950M Senior Secured Credit Facilities
-------------------------------------------------------
The AES Corporation (NYSE:AES) announced Tuesday that it has
successfully closed its amended and restated senior secured bank
credit facilities providing for a $250 million revolving loan and
letter of credit facility and a $700 million term loan facility.
The transaction substantially reduces parent debt maturities
through 2007, achieves a significant decrease in parent interest
costs, and further enhances AES's financial flexibility.

Loans under the amended facilities bear a floating interest rate
at either LIBOR plus 4% or a base rate plus 3%. The term loans
are subject to mandatory prepayment with a portion of net cash
proceeds of certain asset sales in excess of $250 million and the
proceeds of certain debt issues. The credit facility benefits
from a first priority lien, subject to certain exceptions and
permitted liens, on (i) all of the capital stock of material
domestic subsidiaries owned directly by AES and 65% of the
capital stock of certain material foreign subsidiaries owned
directly by AES and (ii) certain inter-company receivables and
notes receivable and inter-company tax sharing agreements. The
collateral is shared with AES's 10% Senior Secured Notes due 2005
and certain other secured parties.

Under the amended terms, the maturity of the bank credit
facilities has been extended to July 31, 2007 (subject to a
possible extension to April 30, 2008 in the case of the term
loans if certain conditions are met). The total amount of credit
available under the amended facilities was increased by
approximately $135 million to $950 million. This increase,
together with cash on hand, was used to repay in full the $150
million balance of the AES New York Funding SELLS loan, resulting
in the release of all of the unregistered common stock of AES and
other collateral that had secured such loan.

Barry Sharp, Chief Financial Officer, stated, "This transaction
represents another successful step towards our goal of continuing
to strengthen AES's financial position. As a result, the NY SELLS
loans have been repaid and all of our corporate bank facilities
now mature in 2007 and 2008. We have significantly improved our
parent debt maturity profile, with minimal resulting parent debt
maturities through 2007. This transaction also meaningfully
reduces our parent interest costs with a 250 basis point interest
rate reduction across our corporate bank facilities."

AES also announced Tuesday that it had called for redemption all
$198 million aggregate principal amount of its outstanding 10
1/4% Senior Subordinated Notes due 2006. The notes will be
redeemed on August 28, 2003 at a redemption price equal to 100%
of the principal amount thereof plus accrued and unpaid interest
to the redemption date.

AES is a leading global power company comprised of contract
generation, competitive supply, large utilities and growth
distribution businesses.

The company's generating assets include interests in 158
facilities totaling over 55 gigawatts of capacity, in 28
countries. AES's electricity distribution network sells 108,000
gigawatt hours per year to over 16 million end-use customers.

For more general information visit our web site at www.aes.com or
contact investor relations at investing@aes.com.

CONTACT:  AES Corporation
          Kenneth R. Woodcock, 703-522-1315


BRAZILIAN BANKS: S&P Report Analyzes Risk in Banking Industry
-------------------------------------------------------------
While there has been improvement in certain areas of the
Brazilian banking industry, including its regulatory framework
and transparency, Brazilian banks have experienced a worsening in
the quality of their client base, and are highly influenced by
the sovereign credit rating. Improvement of economic risks would
depend mostly on proactive management to reduce public debt
levels and a successful consolidation of pension and tax reform,
according to a report published by Standard & Poor's Ratings
Services.

"Brazil has some of the most resilient banks in the region," said
Standard & Poor's credit analyst Daniel Araujo. "Nevertheless,
the operating environment continues to pose significant
challenges."

With approximately Brazilian reais (BrR) 1.25 trillion (about
$375 million) in total assets at March 2003, Brazil's financial
system remains one of the largest in Latin America and among
emerging countries. The banking industry has exhibited
improvements in its regulatory framework, supervision, and market
transparency in recent years. Other positive factors include the
implementation of the new payment system in 2002, the
consolidation process leading to larger, stronger banks in the
system, and increased foreign participation (as compared to the
mid-1990s).

Nevertheless, other key unresolved issues constraining further
improvements in the Brazilian banking system, in Standard &
Poor's Ratings Services' opinion, include the large presence of
public-sector banks, the still-mandatory allocation of lending,
the structural low level of financial intermediation, and the
effectiveness of the legal framework.

ANALYSTS:  Daniel Araujo, Sao Paulo (55) 11-5501-8939
           Tamara Berenholc, Sao Paulo (55) 11-5501-8950
           Claudio Gallina, Sao Paulo (55) 11-5501-8938


COSIPA: Shareholders OK $81.6M Debenture Issue
----------------------------------------------
Brazilian steel company Companhia Siderurgica Paulista (Cosipa)
obtained approval from shareholders to launch a BRL240-million
(US$81.6mn) public debenture issue. The approval came at an
extraordinary meeting held Tuesday afternoon, says local daily
Agencia Estado.

According to the report, the date of the operation depends on the
approval of Brazil's National Monetary Council (CMN).

Cosipa is owned by Usiminas.

CONTACT:  COSIPA
          Avenida do Cafe, 277
          Torre B, 8  e 9  andar
          Vila Guarani
          04311-000 Sao Paulo, Brazil
          Phone: +55-11-5070-8800
          Fax: +55-11-5070-8863
          URL: http://www.cosipa.com.br


EMBRATEL: Reports Second Quarter 2003 EBITDA of BRL379 Million
--------------------------------------------------------------
Embratel Participacoes Earnings Release Second Quarter 2003
Results (All financial figures are in Reais and based on
consolidated financial in "Brazilian Corporate Law") Embratel
Participacoes S.A. (Embratel Participacoes or the "Company")
NYSE: EMT; BOVESPA: EBTP3, EBTP4 The Company holds 98.8 percent
of Empresa Brasileira de Telecomunicacoes S.A. ("Embratel").
SECOND QUARTER 2003 EBITDA of R$379 million EBITDA margin reaches
23 percent; continued profitability improvement

Highlights

-- Net revenues were R$1.7 billion in the second quarter of 2003.
Year-to-date revenues reached R$3.4 billion.

-- Embratel's second quarter 2003 EBITDA was R$379 million.
EBITDA margin rose to 22.7 percent in the second quarter 2003
from 21.6 percent in the previous quarter. Year-to-date EBITDA
margin was 22.2 percent representing an increase of 4 percentage
points when compared to the first half of 2002.

-- Collections further improved enabling allowance for doubtful
accounts to drop for the sixth consecutive quarter to R$84
million or 3.9 percent of gross revenues (5.1 percent of net
revenues) compared to 4.9 percent of gross revenues in the first
quarter of 2003 and 6.6 percent in the comparable 2002 quarter.
Voice aging profile continued to improve and days-sales-
outstanding fell to 59 days.

-- Net income in the second quarter of 2003 was R$128 million,
after deducting the provision corresponding to the remaining
value of Embratel's investment in Acessonet and other provisions.
Without these one-time charges, net income would have been R$248
million.

-- Cash position rose 25 percent to R$662 million and net debt
fell 15 percent to R$3.4 billion.

-- Approximately R$100 million, net of new financing, were
amortized during the quarter. Embratel reduced total outstanding
debt by R$414 million (US$124 million) in the first half of 2003.

-- Total capital expenditures in the quarter were R$56 million.

-- Free cash flow (consolidated) as measured by EBITDA minus
Capex, was R$323 million, representing a growth of 14 percent.

-- The number of contracts for local services doubled in the
quarter while capacity made available to clients rose 78 percent.

-- Embratel launched its free Internet provider - Click 21(TM) -
with higher speed and storage capacity than alternatives in the
market.

Data Communication Services

Embratel launches free Internet provider - Click 21

Embratel's data communications revenues (data & Internet and
wholesale) were R$438 million in second quarter of 2003,
representing a 3.8 percent decline relative to the previous 2003
quarter and a similar 4.0 percent reduction from the second
quarter of 2002. Year-to-date, Embratel's data revenues were
R$893 million representing a decline of 1.4 percent compared to
the first six months of 2002. The main cause for the quarter-
over-quarter and year-over-year reduction was the termination of
the Service Agreement with the Internet provider UOL that
represented R$19 million of revenues in the first half of 2003.

Wholesale revenues increased in the second quarter of 2003 with
greater usage of services by new PCS providers.

Earlier this month, Embratel launched, on a trial basis, its own
free Internet service provider - Click 21(TM). Embratel's free
Internet provider carries the assurance of a fast dial-up, no
busy signal, 24h help desk, email service and higher speed and
storage capacity. Residential customers and small businesses will
have an additional service to benefit from Embratel's known
quality - they will be dialing into Brazil's largest and most far
reaching Internet backbone. Click 21(TM) is being offered in more
than 100 Brazilian cities. This service introduction enhances
Embratel's offerings to consumers and enables the company to use
its provider as a channel for the sale of voice services to
residential customers and small business.

Voice Services

Domestic Long Distance

Focusing on revenue profitability

The continuing increase in the average revenue per minute as well
as the growing traffic in alternative calling plans and advanced
voice services is the result of Embratel focusing on the revenue
streams that yield higher profitability. The decline in domestic
long distance revenues in the second quarter of 2003 of 2.0
percent from the previous 2003 quarter to R$936 million, in part,
reflects this effort. Year-over-year domestic long distance
revenue declined 17.5 percent and was impacted by call management
activity to improve collections and profitability. On a quarter-
over-quarter basis the decline is explained by lower basic voice
fixed-to-fixed traffic and public phone revenues due to
substitution for our advanced voice services and competition.
Revenues from other voice services, such as fixed-to-mobile, PCS
and advanced voice services continued to increase, as did
revenues from customers using basic voice services enrolled in
Embratel's alternative calling plans. Specifically, traffic from
advanced voice services continued to rise while revenues
increased 8.9 percent when compared to the previous 2003 quarter
and 18.6 percent in relation to the same 2002 quarter.

Long distance per call carrier selection was initiated by most
Brazilian cellular companies on July 6, 2003. The long distance
cellular market is estimated to be no higher than 10-15 percent
of cellular revenues. Embratel believes the opening of this
market represents a revenue enhancement opportunity since it
enables customers to use Embratel for all of their long distance
calling needs. Through research and traffic on the company's
network Embratel has observed that the 21 access code is having
wide acceptance and continues to reflect ongoing growth.

Accumulated in the first half of the year, domestic long distance
revenues were R$1.9 billion compared to R$2.3 billion in the
first half of the previous year. The decline in revenues is
explained by both a substantial increase in the number of blocked
lines due to delinquency and fraud as well as to higher
competition.

International Long Distance

International long distance revenues were R$214 million in the
second quarter of 2003 representing a 5.2 percent decline from
the previous 2003 quarter. Despite the increase in inbound
traffic, the impact of the Real appreciation on inbound revenues
as well as slightly lower traffic in outbound routes caused the
decline. Compared to the second quarter of 2002, international
revenues were 9.6 percent lower. The year-over-year reduction in
international voice revenues is the result of lines blocked due
to bad debt and fraud, competition and the Real appreciation in
the quarter.

Year-to-date, international revenues were R$441 million compared
to R$465 million in the first half of 2002.

Local Services

Embratel's local services continue to expand. Approximately 1,200
contracts had been signed until the end of the second quarter of
2003. Embratel is providing local services in 1,400 different
sites and in 70 cities. The capacity made available to clients to
provide local services rose by 78% since March 2003. Research
among clients who switched their local services to Embratel has
shown that 66 percent found the service to be highly superior or
superior to their previous provider and 90 percent were either
highly satisfied or satisfied with the change.

Embratel believes local services enhance its competitiveness and
client retention capabilities and will provide a growing source
of revenues and profitability.

EBITDA

Another percentage point gain in EBITDA margin

EBITDA rose to R$379 million in the second quarter of 2003
raising EBITDA margin by another percentage point to 22.7 percent
from 21.6 percent in the first quarter of 2003. This margin gain
was related to improvements in collections, higher average
revenue per minute and reduced billing costs. On a year-over-year
basis, EBITDA margin gained four percentage points.

Allowance for doubtful accounts dropped for the sixth consecutive
quarter to R$84 million, or 3.9 percent of gross revenues (5.1
percent of net revenues). This is a one percentage point
reduction when compared to the first quarter of 2003 when
provision for doubtful accounts represented 4.9 percent of gross
revenues (6.2 of net revenues). Compared to the second quarter of
2002, this provision halved. The consistency of this decline
evidences that Embratel's actions to focus on profitable
revenues, target clients with specific calling plans and improve
collections are producing returns. The company has gained
considerable knowledge of its client base and is continuously
making improvements in its collections strategy.

Also contributing to the improvement in EBITDA is a lower
interconnection to revenues ratio (telco ratio) resulting from a
higher average revenue per minute and the traffic mix.

A further reduction in billing expenses occurred in the quarter
as the reduction in co-billing fees were fully absorbed.

Labor expenses increased 16.4 percent quarter-over-quarter
primarily due to severance payments related to the outsourcing of
Embratel's IT services to IBM in the quarter. Embratel outsourced
its IT infrastructure to IBM in April 2003 under a 10 year
contract. Embratel expects to save 30 percent of its IT expenses
while obtaining a higher level of IT services.

On an accumulated basis EBITDA rose 10 percent to R$748 million
compared to R$680 million in the first half of 2002. Year-to-date
EBITDA margin rose to 22.2 percent compared to 18.2 percent in
the same 2002 period.

EBIT

In the second quarter 2003, EBIT was R$92 million increasing 18.5
percent from the preceding quarter leading to an increase in
operating margin of one percentage point when compared to the
previous quarter.

Year-to-date EBIT was R$ 169 million representing an operating
margin of 5 percent and an 33.2 percent increase when compared to
the first half of 2002.

Net Income

Net income was R$128 million in the second quarter of 2003. This
is a significant increase when compared to a profit of R$11
million in the prior 2003 quarter and losses of R$ 152 million in
the second quarter of 2002. The improvement is related to a
better operating performance and the effect of the appreciation
of the Real on the company's unhedged foreign currency debt.

Interest expenses were R$108 million in the quarter compared to
R$93 million in the first quarter of 2003 and R$75 million in the
second quarter of 2002. The increase in interest expenses is the
result of higher Real denominated debt, associated with
Embratel's financing agreement (see financial position). Net
financial result was R$245 million in the quarter. Accumulated
interest income and expenses in the first half of 2003 were
respectively, R$109 million and R$201 million while net financial
result in the same period of 2003 was R$237 million.

Also in the quarter, Embratel provisioned R$101 million (other
non-operating expenses) corresponding to the remaining value of
its investment in Acessonet (see Release dated July 9, 2003), a
company that was acquired in 2000 to provide internet services.
The provision was constituted as a result of the early
termination of a Service Agreement with internet service provider
UOL. The matter is under an international arbitration process.
There was also a one time charge of R$19 million related to the
loss on the sale of other non-strategic assets.

Net income in the first half of the year was R$139 million
compared to a loss of R$189 million in the same period of the
prior year. Without the non-operating charges of the second
quarter of 2003, net income would have been R$259 million.

Financial Position

Cash position in June 30, 2003 was R$662 million. Embratel ended
the quarter with a total outstanding debt of R$4,1 billion. Net
debt fell to R$3.4 billion from R$4.0 billion in the previous
2003 quarter. Short term debt (accrued interest, short term debt
and current maturity long term debt in the next 12 months) is
R$1.8 billion of which R$1.2 billion is part of the financing
agreement and therefore will be rolled over for a period of 2
years at each original maturity.

During the quarter Embratel repaid R$100 million of debt, net of
new additions, reducing the company's overall outstanding debt.
Approximately 48 percent of the debt that matured and was rolled
over in the second quarter of 2003 was converted into Reais.

Accounts Receivables

The company's net receivable position on June 30, 2003 was R$1.4
billion an improvement of more than R$87 million relative to the
previous 2003 quarter. The voice aging profile has continued to
improve: approximately 75.7 percent of net voice receivables were
current at the end of the second quarter of 2003 compared to 72.4
percent at the end of the first quarter 2003. Days sales
outstanding, based on net receivables, fell to 59 days in the
second quarter of 2003 from 62 days in the previous quarter.


CAPEX

Total capital expenditures in the quarter were R$56 million. The
breakout of this expenditure is the following: local
infrastructure and access - 24.6 percent (including PPIs); data
and Internet services - 34.0 percent; network infrastructure -
1.7 percent, others - 35.5 percent and Star One - 4.2 percent.

Accumulated capex in the first half of 2003 was R$141 million.
Despite the low level of investment in the first half of the
year, Embratel continues to expect to be spending more on capex
in the second half of the year as investments in Star One will
begin to pick up.

Regulatory

Tariffs

On June 27, 2003 Anatel approved average tariff increase of 24.9
percent for domestic long distance basic plan voice services and
10.5 percent for international long distance services. Increases
in interconnection rates were 14.3 percent on average for the TU-
RL and 24.5 percent for the TU-RIU. This rate increase has been
challenged by several injunctions and final decisions are still
pending.

Local Areas

On July 17, 2003 Anatel initiated a public consultation process
to reduce the number of local areas in Brazil from the existing
7.500 local areas to 5.400. Embratel will benefit from this
reduction in the number of local areas since it will essentially
eliminate many loss-making revenues to Embratel given the
combination of the basic tariff plan and the interconnection
rates. While Embratel stands to lose a small amount of long
distance revenues, profitability improves. Embratel will also
gain with the enlargement of local areas that will represent a
larger addressable market for the company's local service
business.

Concession Contracts

In June Anatel established the rules for the renewal of the
concession contracts and the Brazilian Government issued a decree
setting the policy guidelines for the Telecommunications sector.
Embratel stated its intention to renew the concession contract
and viewed both the concession rules and the Presidential Decree
positively.

Embratel views positively the following aspects:

-- interconnection costs for 2006 and 2007 will be capped to a
proportion of per-minute tariffs for local voice services and in
2007 on, will be based on a long term cost model;

-- unbundling is obligatory and network parts pricing is to be
based on costs - arbitration process has been initiated;

-- explicit obligation to provide co-billing under equal-
treatment terms - arbitration process has been initiated;

-- introduction of regulation that guarantees the effective
accounting separation of the local and the long distance
concessions;

-- introduction of the General Plan of Competition with rules
that will improve the competition in the STFC local market.

Other Information

During the second quarter of 2003 Embratel signed an agreement to
sell its 2 percent ownership interest in the company Intelsat, an
international satellite company, for US$ 41 million. Payment for
this sale was received in July 2003. This was a non-strategic
asset to Embratel. The transaction was approved by Anatel.

Embratel is the premier communications provider in Brazil
offering a wide array of advanced communications services over
its own state of the art network. It is the leading provider of
data and Internet services in the country and is uniquely
positioned to be the country's only true national local service
provider for corporates. Service offerings: include telephony,
advanced voice, high-speed data communication services, Internet,
satellite data communications, corporate networks and local voice
services for corporate clients. Embratel is uniquely positioned
to be the all-distance telecommunications network of South
America. The Company's network is has countrywide coverage with
28,868 km of fiber cables comprising 1,068,657 km of optic
fibers.

To see financial statements: http://bankrupt.com/misc/Embratel-
Participacoes.htm

CONTACT:  Embratel Participacoes
          Investor Relations:
          Silvia M.R. Pereira
          Phone: (55 21) 2121-9662
          Fax: (55 21) 2121-6388
          Email: silvia.pereira@embratel.com.br
                 invest@embratel.com.br


GERDAU: Increased Exports Overcome Reduced Brazilian Demand
-----------------------------------------------------------
Gerdau Group's net profit for January through June reached R$ 552
million, benefiting from a 78% growth in Brazilian exports, which
offset a 9% fall in domestic Brazilian sales. The Gerdau Group
recorded a consolidated net profit of R$ 552 million in the first
half of 2003, up 86% from the same period in the previous year. A
9% fall in Brazilian domestic sales was offset by a 78% growth in
exports from Brazil, mainly to countries in South America, Africa
and Europe. "Despite the increased value of the real, the
competitiveness of our companies delivered a very positive
performance this semester," stated Gerdau Group senior vice
president, Frederico Gerdau Johannpeter.

Gross sales revenue grew 67% to R$ 7.5 billion. Of this total,
Brazilian operations were responsible for 57%, North American
units for 39% and operations in Chile, Uruguay and Argentina for
4%.

North American expansion and return to full productivity at
A?ominas contribute to increased sales

Total sales reached 5.9 million metric tons, representing a
growth of 43%. This increase was due in part to the incorporation
of new units in North America, resulting from the merger with Co-
Steel in the second half of 2002, and to the recovery of
production capacity at A?ominas, located in Ouro Branco, state of
Minas Gerais.

In Brazil, Gerdau units sold 3.1 million metric tons of steel
products, 18% more than in the first half of 2002. Domestic
market sales totaled 1.7 million metric tons and exports, 1.4
million metric tons. The North American operations sold 2.6
million metric tons - a growth of 94% - while the units located
in Argentina, Chile and Uruguay sold a total of 209,000 metric
tons, up 30%.

Production up 45% in first half of 2002

Crude steel production was 45% higher than in the same period of
2002, reaching 6.1 million metric tons. Of this total, operations
in Brazil contributed 56% (3.4 million metric tons - up 25%)
North American units, 41% (2.5 million metric tons - up 86%), and
units in Argentina and Chile, 3% (170,000 metric tons - up 21%).

Total rolled steel production, including products such as rebar,
bars, profiles and wire rod, reached 4.4 million metric tons, an
increase of 42%. Brazilian mills produced 1.9 million metric tons
(up 11%), those in North America, 2.3 million metric tons (up
88%), and those in Argentina, Chile and Uruguay, 175,000 metric
tons (up 15%). The growth in North American production resulted
from the consolidation of the Co-Steel operations.

Investments total US$ 139 million

Investments in maintenance and technological modernization
totaled US$ 139 million for the semester, of which 80% (US$ 111
million) went to units located in Brazil, 18% (US$ 25 million) to
mills in the United States and Canada and 2% (US$ 3 million) to
operations in Argentina, Chile and Uruguay.

Announcement to be made in the coming weeks

Gerdau S.A. is finalizing studies regarding the restructuring of
A?ominas, which will allow for greater integration of the
industrial, commercial and financial operations of the two
companies. These changes will bring cost savings, a value yet to
be quantified. The results of the studies will be announced in
the coming weeks and submitted to shareholders for their
evaluation.

Brazilian and North American operations improve debt profile

Gerdau S.A. and A?ominas are developing a joint exports
receivables securitization program to raise US$ 400 million. This
is aims to extend the debt profile of the two companies.

At the end of June, Gerdau Ameristeel Corporation, the Gerdau
Group's North American subsidiary, entered into a US$ 350 million
senior secured credit facility, maturing in five years at a cost
of 4.5% per year, and completed the private offering of its
senior unsecured notes, to the sum of US$ 389.5 million. These
initiatives allowed the company's debt to be rolled over,
enabling the short-term value to be reduced by 29%. The funds
raised total US$ 755 million, with weighted average period to
maturity of 6.6 years and average interest of 7.7% per year.

Demand for Gerdau shares in Brazil grows 50%

Over the year-to-date, the Group's two listed companies in Brazil
- the holding company Metal£rgica Gerdau S.A. and the operating
company Gerdau S.A. - have shown a growth of around 50% in value
traded, demonstrating increased demand for the Group's shares.

Gerdau S.A. moved a total of R$ 912 million on the Sao Paulo
Stock Exchange, an increase of 50% over the same period of 2002.
The number of trades rose 85% to 43,344, and the daily average
reached R$ 7.2 million. On the New York Stock Exchange, 8.9
million Gerdau S.A. ADRs were traded, moving a daily average of
almost US$ 726,000, for a total volume of US$ 90 million. Gerdau
shares were traded daily on the Madrid Stock Exchange (Latibex),
moving approximately 1.1 million euros and 132,000 shares.

From January through June, the company's gross sales revenue grew
40% to R$ 3.1 billion. Net profit grew 49% to R$ 445 million, or
R$ 3 per share.

Shares in Metal£rgica Gerdau S.A. moved R$ 192 million - up 51% -
with a daily average of R$ 1.5 million. The number of trades was
up 89% on the same period in 2002, to 8,023. Net profit was up
43% to R$ 233 million, representing R$ 5.61 per share for the
semester.

Shareholders to receive R$ 73 million in interest on own capital

Shareholders will receive a total of R$ 73 million on August 14,
in the form of interest on own capital for the second quarter of
2003. Gerdau S.A. will pay out R$ 50 million, representing R$
0.34 per share, and Metal£rgica Gerdau S.A., R$ 23 million, or R$
0.56 per share.

Teleconferences to take place on Friday, August 1

This Friday, August 1, Gerdau executive vice president for
finance and investor relations, Osvaldo Schirmer, will hold
conference calls with financial analysts to discuss the Group's
performance. The meeting in Portuguese will be held at 12 PM, and
the meeting in English at 3 PM. (BrasĦlia time). Both meetings
can be observed in real time through the Gerdau website,
www.gerdau.com.br.

CONTACT:  Press Office +55(51) 3323-2170
          imprensa@gerdau.com.br
          URL: www.gerdau.com.br


KLABIN: Reports Improved Results for 2Q03
-----------------------------------------
HIGHLIGHTS

- Exports totaled US$ 112 million.
- EBITDA: R$ 297 million, with a 37% margin.
- Net Debt/EBITDA falls to 1.6x.
- Net Profit reaches R$ 1,031 million.

Consolidated net revenue rose 39% to R$ 812 million in 2Q03
despite a sluggish economy in Brazil. Operating cash generation
grew 75%, totaling R$ 297 million, with an EBITDA margin of 37%.
The closing of a US$ 610.5 million investment agreement involving
Riocell enabled Klabin to move forward in its financial
restructuring program. This will, in turn, promote a dramatic cut
in financial expenses and strengthen cash generation for the new
Development Plan.

INITIAL CONSIDERATIONS

The information presented herewith in connection with the
Company's operations and finances consists of consolidated
figures stated in local currency as per Brazilian Corporate Law,
except where otherwise indicated. This release compares the
performance of Klabin S.A. in 2Q03 to the figures for 2Q02, save
specifications to the contrary.

ECONOMIC AND FINANCIAL PERFORMANCE

SALES VOLUME AND NET REVENUE

Klabin's sales showed two different behaviors in the second
quarter of 2003. While exports continued to grow, supported by
the production of packaging paper and pulp at full capacity,
other segments such as corrugated boxes, tissue and multiwall
bags, basically geared towards the domestic market, were affected
by the sluggish Brazilian economy. Sales volume, excluding wood,
totaled 421 thousand tons in 2Q03, down 5% from 2Q02.

Net revenue rose 39% to R$ 812 million. The reason for this
improvement in revenue is that the higher prices practiced in
1Q03 were maintained in 2Q03.

Furthermore, the average exchange rate was superior to that
registered in 2Q02, albeit lower than the rate observed in 1Q03.

OPERATING RESULT

Thanks to productivity gains, tight control over operating costs
and higher prices, gross profit grew 57%, totaling R$ 369
million, with a gross margin of 45% against 40% in 2Q02.

Operating profits before financial results (EBIT) reached R$ 170
million in 2Q02 (R$ 90 million in 2Q02). Operating margin jumped
from 15% to 21%.

It should be noted that General & Administrative Expenses include
non-recurrent disbursements in the amount of R$ 40.5 million
related to the investment agreement involving Riocell.

EBITDA

Cash generation (EBITDA) reached R$ 297 million in 2Q03, up 75%
from 2Q02. However, this figure fell 18% when compared to 1Q03
due to a weaker demand in the domestic market.

Below is a breakdown of the Company's EBITDA by business line
over the period. The packaging segment comprises packaging paper,
corrugated boxes and multiwall bags (Brazil).

FINANCIAL RESULT AND INDEBTEDNESS

Net financial expenses totaled R$ 149 million in 2Q03 (R$ 323
million in 2Q02). Net currency variations generated a R$ 33
million gain against a R$ 246 million loss in 2Q02.

Gross debt declined from R$ 2,941 million in late 2002 to R$
2,811 million in June 2003. Forty-five per cent (45%) of this
amount refers to long-term debts with terms to maturity extending
to 2010.

Foreign currency debt represents 34% of Klabin's total
indebtedness, 42% of which refers to trade finance.

With the anticipated redeem of the debentures issued by Riocell,
owned by Klabin, the Company's net debt closed 2Q03 at R$ 2,077
million, down 27% from the end of 2002. Current net debt
corresponds to 48% of total capitalization (72% in 2Q02).

The net debt/EBITDA ratio improved significantly from 3.8x in
2Q02 to 1.6x in 2Q03.

The Company's hedge position as at June 30, 2003 was US$ 111
million.

NET PROFIT

Net Profit amounted to R$ 1,031 million in 2Q03, reflecting non-
operating revenues of R$ 1,026 million, mainly related to capital
gains due to a change in the stake on investments in Riocell and
Norske Skog Klabin.

BUSINESS PERFORMANCE

PACKAGING PAPER - Sales volume reached 170 thousand tons in 2Q03,
up 26% from 2Q02, while net revenue rose 68% to R$ 261 million.
With regard to exports, a noteworthy event was the recovery of
the Argentinean market. Sales to this specific market over the
period exceeded the levels attained before the economic crisis.
As for the domestic market, the positive evolution of packaging
cardboard sales despite the unfavorable market conditions in this
segment resulted from productivity gains and the development of
new applications as a means to secure customer loyalty.
Kraftliner production on machine # 6 as of April also helped to
improve the performance of packaging paper sales in the second
quarter of 2003.

CORRUGATED BOXES- Economic activity remained sluggish in Brazil
and affected the sale of non-durable consumer goods, which
account for 60% of Klabin's output of corrugated boxes. The sales
volume of corrugated boxes totaled 89 thousand tons in 2Q03, down
30% from 2Q02. Net revenue amounted to R$ 183 million, up 21%
from 2Q02. For strategic purposes, Klabin has sought to preserve
the contribution margin of this business line by optimizing
selling prices and operating costs.

MULTIWALL BAGS - Sales volume totaled 28 thousand tons in 2Q03,
down 5% from 2Q02. Decreased sales to the domestic market on
account of the general slowdown in Brazil's economy were offset
by increased exports. Thanks to the prices practiced
internationally and to an adjustment to domestic prices at the
beginning of the year, net revenue improved 40%, totaling R$ 77
million in 2Q03.

MARKET PULP - Now that the GuaĦba (RS) mill operating at full
capacity, sales volume jumped 29% to 61 thousand tons in 2Q03.
Net revenue reached R$ 85 million, up 79% from 2Q02.

DISSOLVING PULP - After the annual downtime for maintenance in
1Q03, productivity improved and the plant began to produce 10
thousand tons of dissolving pulp per month. Sales volume amounted
to 29 thousand tons, with total output already sold up to July
2004. Financially, favorable external market conditions allowed
average prices to rise 39%, resulting in a net revenue of R$ 46
million.

TISSUE - Sales volume amounted to 32 thousand tons, down 18% from
2Q02 due to the loss of purchasing power among Brazilians and the
increasing sales of cheaper brands. Thanks to price adjustments
and new launches, net revenue advanced 22%, totaling R$ 138
million.

PRINTING & WRITING PAPER - Sales volume amounted to 7 thousand
tons in 2Q03, up 18% from 2Q02. Net revenue rose 61% from 2Q02,
closing the period at R$ 17 million.

WOOD - Klabin sold 619 thousand tons of pinus and eucalyptus logs
to third parties in 2Q03, 7% more than the amount registered in
2Q02. Net revenue improved 35%, totaling R$ 52 million.

SALES BY MARKET - Export volumes grew 24% to 213 thousand tons in
2Q03. Their share in total sales volume expanded from 39% in 2Q02
to 51% in 2Q03. In 1H03, exports totaled 414 thousand tons, and
revenue of R$ 690 million.

By conquering new markets and new customers, Klabin increased its
export revenues by 62% to R$ 335 million, when compared to 2Q02.
Exports generated US$ 112 million in 2Q03, totaling US$ 214
million in the semester.

CAPITAL EXPENDITURES

Capital expenditures totaled R$ 54 million in 2Q03 and R$ 100
million in the first half of the year. Major capital investments
included: R$ 27 million in the recycling plant at Correia Pinto
(SC), R$ 13 million in the revamping of machine # 6 for the
production of packaging paper at Monte Alegre (PR), and R$ 9
million in the pulp plant at GuaĦba (RS).

CAPITAL MARKETS

Klabin's preferred shares (KLBN4) ended the trading session held
on June 30, 2003 quoted at R$ 2.95. They appreciated 61% in 2Q03
while the Sao Paulo Stock Exchange Index [Ibovespa] rose 15%. Of
all the stocks that integrate the Ibovespa, KLBN4 ranked first in
terms of profitability in the first semester of 2003, with
accumulated earnings of 186%. In addition to integrating the
Ibovespa, Klabin is also classified by the Sao Paulo Stock
Exchange [Bovespa] as a Level 1 corporation in terms of Corporate
Governance.

There were altogether 8,235 transactions in 2Q03, involving 88.9
million preferred shares and a daily traded volume of R$ 3.6
million.

INVESTMENT AGREEMENT - RIOCELL

On 06/30/03, Aracruz fully subscribed a capital increase in
Riocell, in the amount R$ 1,758.7 million or US$ 610.5 million.
Subsequently, Riocell redeemed debentures of its own worth R$
632.6 million, held by Klabin.

SUBSEQUENT EVENT

On 07/02/03, Riocell acquired R$ 1,126.1 million worth of stocks
of its own held by Klabin. With the new cash, Klabin paid off
financing contracts in the amount of R$ 1,306.3 million. The
table below shows the Company's preliminary position in terms of
indebtedness after such payments.

CONTACT:  KLABIN
          Ronald Seckelmann, Diretor Financeiro e de RI
          Luiz Marciano Candalaft, Gerente de RI
          Tel: (11) 3225-4045
          Email: marciano@klabin.com.br

          THOMSON FINANCIAL
          Paulo Roberto Esteves
          Tel: (11) 3897-6466
          Email: paulo.esteves@thomsonir.com.br



POWER DISTRIBUTORS: To Get Financial Aid From Government
--------------------------------------------------------
Brazil's Mines and Energy Minister Dilma Rousseff confirmed
Tuesday that the government is working on a scheme to
recapitalize troubled distributors as part of efforts to
revitalize Brazil's power sector, relates Dow Jones.

But according to the minister, only power distributors with
short-term debt problems and are grappling with dwindling
consumption will be included in the government-led financial aid
package.

"Companies that don't conform to this typical case won't
participate," Rousseff said.

"There isn't a definition of the amount of this package yet, but
I can say it will be an effort involving private banks which are
key creditors, companies' shareholders and the development bank
BNDES," Rousseff said.

"But the structure of this effort is not that of a rescue
package," the minister added, stressing that the government wants
to help companies improve their credit ratings as part of the
financing aid deal.

Rousseff said a possible financing tool in the plan would be
debentures or other debt instruments, which private banks, the
BNDES and local pension funds would buy in the companies.

She didn't provide more details nor a timeframe for the deal.

Distributors seeking financial aid will be dealt with on a case-
by-case basis, Rousseff explained.


USIMINAS: Gets $29.7M Loan From Brazil's Development Bank
---------------------------------------------------------
Brazil's federal development bank BNDES decided to provide
Usiminas a BRL87.2-million (US$29.7mn) loan, reports Business
News Americas. The loan will be used to increase steel production
capacity and co-generation at the Company's plant in Ipatunga,
Minas Minas Gerais state. According to BNDES, the Company's total
investments in the project will total 192.7mn reais.

Usiminas is banking on the project to be able to export steel
plates and increase its annual liquid steel output to 5Mt from
4.7Mt.

CONTACT:  Usinas Siderurgicas de Minas Gerais Usiminas PN A
          Rua Prof. Jose Vieira de
          Mendonca, 3011
          Engenheiro Nogueira
          31310-260 Belo Horizonte - MG
          Brazil
          Tel  +55 31 3499-8000
          Fax  +55 31 3499-8475
          Web  http://www.usiminas.com.br
          Contact:
          Jose Augusto Muller de Oliveira Gomes, Chairman


VARIG-TAM: Merger Back On Track
-------------------------------
A Rio de Janeiro court annulled a recent decision to reinstate
Gilberto Rigoni, the evicted head of Varig main shareholder
Fundacao Rubem Berta (FRB). As such, efforts to merge the
struggling Brazilian carriers TAM and Varig are in the works once
again.

Reed Business Information recalls that Rigoni was removed in May
from his post, but was subsequently reinstated following a
preliminary court decision. His reinstatement held up the merger
since Rigoni is against the operation.

Stating that the June merger agreement "contained an entirely
unacceptable 5% FRB shareholding in the new airline", Rigoni
argues that the merger is unnecessary and that there are other
viable solutions to bail out Varig from its financial
predicament.

This prompted local analysts to voice concerns that the impasse
could result in postponement of the merger well into the fourth
quarter, if not an outright end to negotiations.

At the same time, Infraero, Brazil's airport authority and a
Varig creditor, which was angered by the turn of events, urged
the government to step up pressure on the carrier to merge with
TAM.

The court decision that voided Rigoni's reinstatement has cleared
the way for Varig's merger with TAM. Nevertheless, the signing of
the final agreement has not been scheduled. Government sources
say however that the event should occur in August.

CONTACT:      VARIG (Viacao Aerea Rio-Grandense, S.A.)
              Rua 18 de Novembro No. 800, Sao Joao
              90240-040 Porto Alegre,
              Rio Grande do Sul, Brazil
              Phone: (51) 358-7039/7040
                     (51) 358-7010/7042
              Fax: +55-51-358-7001
              Home Page: www.varig.com.br/english/
              Contacts:
              Dorival Ramos Schultz, EVP Finance and CFO
              E-mail: dorival.schultz@varig.com.br

              Investor Relations:
              Av. Almirante Silvio de Noronha,
              n  365-Bloco "B" - s/458 / Centro
              Rio de Janeiro, Brazil

              TAM
              Daniel Mandelli Martin, President
              Buenos Aires
              Tel. (54) (11) 4816-0001
              URL: www.tam.com.br



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

ENDESA CHILE: Applies Electricity Law, Deposits Funds to Proceed
----------------------------------------------------------------
Endesa Chile deposited Monday in the current account of the Santa
B rbara Court the amounts of the indemnities set by the
Commission of Wise Men in the context of the legal proceedings
brought to implement the electricity rights of way necessary for
the development of the Ralco hydroelectric project.

These deposits are for the four Pehuenche owners who have not
exchanged their lands, in contrast to the other 89 indigenous
people who reached agreement with the company.

The amounts deposited and which were determined in accordance
with the Electricity Law, were below those voluntarily offered by
Endesa Chile.

The legal indemnity therefore is at disposal of the owners.
Following this deposit, Endesa Chile will ask the court to take
possession of the lands in question.



=============
E C U A D O R
=============

PETROECUADOR: Likely To Meet Production Goal In 2003 Budget
-----------------------------------------------------------
Ecuador's state oil company Petroecuador is likely to meet the
76.8 million barrel (mb) production goal set out in the 2003
budget, company president Pedro Espin said, contradicting a
previous statement by a different company source.

The other source previously said that the Company would have to
cut its annual production target to 74mb due to lower production
during the workers strike, drilling delays, and a leak in the
Sote pipeline in May.

But according to Espin, Petroecuador has returned to normal
levels of crude production - nearly 210,000 barrels a day (b/d).
This would enable the government to meet the 76.8mb production
goal set out for this year's budget.



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

ENRON: Report Unveils Questionable Payments Made To Businessmen
---------------------------------------------------------------
Enron Corp., the world's biggest energy trader before it
collapsed in bankruptcy in 2001, used World Bank and U.S.
government agency funds to make at least US$17 million in
"questionable" payments to Guatemalan businessmen who helped win
approval for the first privately owned power plant in Central
America.

This was revealed by the U.S. Senate Finance Committee in a 506-
page report obtained by Bloomberg News. Accordingly, Enron
disguised the payments from 1992 to 1995 as fuel costs to reduce
its U.S. and Guatemalan tax liability.

The Guatemala project came years before Enron went bankrupt after
admitting it hid US$1.2 billion in losses through hundreds of
off-the-books partnerships.

Senators who commissioned the report said it illustrated that
more corporate oversight is needed.

"Maybe there needs to be some change in law to make sure we put
an end to this kind of abuse by companies like Enron," Finance
Committee Chairman Charles Grassley, an Iowa Republican, said in
an interview on Bloomberg Television.

Grassley said he would hold hearings in the fall.



=============
J A M A I C A
=============

AIR JAMAICA: Seeks New Marketing, Sales VP
------------------------------------------
Troubled airline Air Jamaica is seeking for a new Vice President
of Marketing and Sales, reports RadioJamaica.Com, citing the
airline's CEO Christopher Zacca. The current holder of the
office, Allen Chastanet, will step down from the post effective
August 31 this year to pursue personal business interests. The
report indicates that Mr. Chastanet will reportedly in involved
in a new 20-room hotel in St. Lucia.

Mr. Chastanet said that he is proud of his achievements over the
past eight years. Mr. Zacca praised the outgoing Vice President
for the contribution he made to Air Jamaica. He added that Mr.
Chastanet helped make the airline a force to be reckoned with in
the travel industry.

Mr. Chastanet joined Air Jamaica in 1995, after serving as
Director of Tourism for St. Lucia.  He introduced several
marketing tools to the airline including the Air Jamaica Jazz and
Blues Festival.

CONTACT:  Air Jamaica
          4 St. Lucia Avenue
          Kingston 5,
          Jamaica
          Phone: 876/922-3460
          Fax: 929-5643
          E-mail: webinfo@airjamaica.com


NCB JAMAICA: Long-Term Foreign Currency Rating Lowered to 'B'
-------------------------------------------------------------
Standard & Poor's Ratings Services said Tuesday that it lowered
its long-term foreign currency credit rating and CD rating on
National Commercial Bank Jamaica Ltd. (NCB) to 'B' from 'B+'. The
outlook is stable. At the same time, the 'B+' long-term local
currency credit rating and CD rating on NCB was affirmed. The
outlook is stable.

"The rating action on the foreign currency rating follows a
similar action taken on Jamaica's sovereign credit ratings, and
reflects NCB's significant exposure to Jamaica's sovereign risk,
with most of the bank's assets represented by government
securities," said credit analyst David Olivares.

The foreign currency outlook reflects the sovereign foreign
currency outlook. The outlook on local currency ratings reflects
that the bank's steps toward improving its financial profile are
expected to continue.

Analyst:  David Olivares
          Mexico City
          Phone: (52) 55-5279-2006

          Ursula M Wilhelm
          Mexico City
          Phone: (52) 55-5279-2007


PAJ: Continued Losses Prompt Ferry Service Termination
------------------------------------------------------
The Port Authority of Jamaica (PAJ) decided to discontinue the
ferry service that runs along the Kingston Harbour into the
capital city on September 1 following losses of $12 million a
year, says the Jamaica Observer. Once the service is
discontinued, the Port Authority plans to sell or lease the two
45-foot vessels to anyone who is interested in continuing the
service.

Meanwhile, Phillip Paulwell, a member of Parliament for East
Kingston, and his constituents in Port Royal, are adamant that
the ferry service should continue operating despite the losses.
Paulwell believes that an alliance between the community of Port
Royal and the private sector could keep the two boats sailing.

"The service, if marketed properly could be a major money
spinner. The service could be expanded to offer trips to
Portmore, Lime Cay and Port Royal," Paulwell told the Observer
yesterday. "The ferry is a part of the culture of Port Royal and
I am committed to putting a proposal on the table."

But according to Byron Lewis, the PAJ's vice-president of special
projects, the ferry service has long been subsidized by the
authority, from as far back as when there was no suitable means
of transportation to and from Port Royal. But since the Jamaica
Urban Transit Company (JUTC) buses have come on-stream, the
already meager number of passengers who take the ferry has
dwindled even further, Lewis explained.

"Now that the JUTC has deployed stable and convenient transport,
the passenger load has dropped by 50 per cent," the PAJ official
said. It is not feasible, he argued, to continue subsidizing the
underutilized service at taxpayers' expense.



===========
M E X I C O
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AHMSA: Reports Widening Losses in the 1H03
------------------------------------------
Losses at Mexican steelmaker AHMSA continue to widen as it
struggles to emerge from bankruptcy. According to a Business News
Americas report, AHMSA, which is controlled by Mexico's GAN
group, registered a first half loss of MXN590 million
(US$56.2mn), compared with a loss of MXN192 million in the
equivalent period of last year.

In a statement to the Mexico City stock exchange, the Company
revealed that sales revenues came in at MXN6.31 billion
(US$601mn) in the first six months of this year, up from MXN5.19
billion in the comparable period last year.

Monclova-based AHMSA has capacity of 3Mt/y and describes itself
as Mexico's biggest integrated steelmaker. It also has coal and
iron ore mines. The Company has been operating under a form of
bankruptcy protection in the last four years.

CONTACT:  AHMSA
          Prolongacion B. Juarez s/n,
          Monclova , Coahuila 25770
          Mexico
          http://www.AHMSA.com
          Phone: +52 86 33 81 72
          Fax: +52 86 33 65 66
          Contacts:
          Alonso Ancira Elizondo, CEO, Vice Chairman, Pres/CEO
          Jorge Ancira Elizondo, Chief Financial Officer
          Manuel Ancira Elizondo, Chief Operating Officer


GRUPO IUSACELL: Movil Access Concludes Tender Offers
----------------------------------------------------
- At the closing of the offers, 74.658% of the total Grupo
Iusacell Stock was tendered-

Movil Access, S.A. de C.V., a Mexican telecommunications service
provider, subsidiary of Biper, S.A. de C.V. (BMV: MOVILAB), a
Grupo Salinas company, announced Tuesday that it has concluded an
offer to purchase in the United States for cash the outstanding
Series V Shares and American Depositary Shares ("ADSs") of Grupo
Iusacell, S.A. de C.V. (BMV: CEL; NYSE: CEL), a provider of
wireless communication services in Mexico. Movil Access also
concluded its offer in Mexico to purchase for cash the
outstanding Series V Shares and Series A Shares of Grupo Iusacell
on substantially the same terms as the Series V Shares and ADSs
in the U.S. offer.

The U.S. offer expired Tuesday at 5:00 P.M., New York City time
(4 P.M. Mexico City time). As of the expiration date, 415,769,557
Series V shares and 961,292,484 Series A shares were validly
tendered in the Mexican offer and accepted for payment and
130,890 ADSs (including pursuant to notices of guaranteed
delivery) were validly tendered in the U.S. offer and accepted
for payment. Each ADS represents one hundred Series V Shares.
Assuming all ADSs subject to guaranteed delivery have been
received, Movil Access now owns 74.658% of all outstanding
capital stock of Grupo Iusacell. Citigroup acted as advisor to
Movil Access in the successful completion of the offers.

"We are thrilled with the sight of a great challenge. During the
last month we have performed a thorough evaluation of Iusacell
and we feel prepared to undertake the next step in the company's
turnaround. This will not be the first time that Grupo Salinas
tackles such an enormous task," said Gustavo Guzman, company CEO
of Grupo Iusacell. "Returning Iusacell to profitability won't
happen overnight, but we are working hard to secure the company's
future. Success will demand a lot of determination from
management and employees; but it will also require commitment and
patience from other stakeholders."

In addition, Movil Access announced, on July 25, 2003, that it
received approval from the Federal Communications Commission
("FCC") to acquire a controlling interest in Iusatel USA, Inc.,
holder of an authorization to provide international global resale
and facilities-based telecommunications services, pursuant to
Section 214 of the Communications Act. The FCC approval was
effective as of July 26, 2003.

This press release is for information purposes only and is not an
offer to buy or the solicitation of an offer to sell any
securities. The solicitation and the offer to buy Grupo
Iusacell's capital stock is only made (i) in the U.S., pursuant
to the Offer to Purchase and related materials that Movil Access
will file with the U.S. Securities and Exchange Commission
Tuesday and (ii) in Mexico, pursuant to the Oferta Publica de
Compra and related materials that Movil Access filed with the
Mexican Comision Nacional Bancaria y de Valores. Shareholders
should read the relevant materials carefully because they contain
important information, including the terms and conditions of the
offers. Shareholders can obtain the U.S. Offer to Purchase and
related materials free at the SEC's website at www.sec.gov , from
D.F. King, the information agent for the U.S. offer at (800) 431-
9643, or from Movil Access. Similarly, stockholders can obtain
the Mexican Oferta Publica de Compra and related materials free
at the Bolsa Mexicana de Valores website at www.bmv.com.mx.

Company Profile

Grupo Salinas is a group of Mexican companies owned or controlled
by the family of Ricardo Salinas Pliego. Grupo Salinas includes
TV Azteca, Elektra, Unefon, Biper, Todito.com, Telecosmos and
Movil Access. Movil Access provides personal communication
services of narrow band, or "two-way paging," commercially known
as the "portable e-mail service," and the marketing and/or sale
of personal interactive communication terminals. Biper is in the
telecommunication service provider business.


MEXICANA AIRLINES: Flight Booking Agreement with AAI Extended
-------------------------------------------------------------
Airline Automation Inc. (AAI) announces that Mexicana Airlines
has signed a two-year contract acquiring AAI's duplicate PNR
management service, called Super Dupe Snooper(TM), and extended
AAI's Flight Booking services agreement through the end of 2005.

"AAI's services vastly improve our productivity and profitability
by continually coming up with new and innovative ways to improve
the quality of our reservations," said Salvador Almaraz,
Mexicana's distribution systems director.

AAI's automated flight booking application gives Mexico City-
based Mexicana the ability to manage ticketing time limit rules
on bookings made through the Global Distribution System (GDS).

Improved management of ticketing time limits increases the number
of ticketed reservations, dramatically reducing the variability
of no-show levels, reducing spoilage, reducing spillage, and
increasing the onboard load factor on sold-out flights. In
addition, PNRs with fictitious names are identified, and
duplicate segments are identified and cancelled by the automated
process.

With AAI's Flight Booking system, airlines have the ability to
create their own customized business rules to get the greatest
benefit from the flight booking service. Rules can be based on
flight number, market, class of service, date of travel, date of
booking, OSI messages, point of sale, status code, frequent flyer
status, GDS or any combination.

And, in addition to Flight Booking, Mexicana acquired AAI's Super
Dupe Snooper(TM) -- which replaces a labor-intensive, in-house
process for Mexicana, significantly enhancing Mexicana Airlines'
existing capabilities to detect and remove duplicate
reservations, dramatically reducing the variability of no-show
levels and reducing seat spoilage. Most importantly, it frees up
inventory for those customers who wish to travel on popular
flights that may have been previously sold out.

AAI's Super Dupe Snooper(TM) application compares all new PNRs to
all existing PNRs in the Mexicana PNR database looking for PNRs
with identical or similar names. Once PNRs with matching names
are identified, the itinerary logic compares the itineraries to
determine if there is any overlap, duplication or if the
itineraries are non-chronological. In addition, AAI's Super Dupe
Snooper(TM) identifies a duplicate between a PNR with one person
and a PNR with more than one person, and will reduce and divide
the record accordingly.

AAI's Super Dupe Snooper(TM) process allows the carrier to handle
different levels of duplication in different ways. For example,
an identical name match and an identical itinerary in two
separate PNRs could be handled with auto-cancel, while a fuzzy
name match and a mirrored itinerary could be sent to a queue for
manual processing. In addition, customized handling of premium
tier frequent flyers is also possible.

AAI provides automated flight firming services from its state-of-
the-art computer facility in Tucson.

About Airline Automation

Airline Automation Inc. is an Application Service Provider (ASP)
delivering airlines and travel-related companies with innovative,
yet affordable, technology-based solutions since 1984. These
include reservations processing, flight firming, duplicate ticket
identification, e-ticket confirmation, flight schedule automation
systems, Internet booking engine, frequent flyer systems and
customer relationship management systems. Additional information
on Airline Automation is available at www.airauto.com.

About Mexicana Airlines

Mexicana Airlines serves more than 42 cities in North America and
nine cities internationally. For reservations go to
www.mexicana.com or call Mexicana's toll-free reservations line
at 01 800 50-220-00 in Mexico and 800-531-7921 in the United
States.

CONTACT:  Airline Automation Inc., Tucson
          Frank Arciuolo
          Phone: 520-577-6500, ext. 14
          Fax: 520-577-6600
          Home Page: http://www.airauto.com


SATMEX: Construction of Satmex 6 Suffers Setback
------------------------------------------------
Mexican satellite operator Satmex is facing delays in the
construction of Satmex 6, technical problems with the Ariane
launch vehicle, and difficulties restructuring its debts with
creditors, says Business News Americas.

The Company has US$320 million in debt due November 2004 and is
negotiating with bondholders to extend the term. It needs to
restructure its debts successfully in order for it to gain access
to US$280 million in loans pledged by the US's Ex-Im Bank and
French export financer Cofase for the construction of Satmex 6,
the payment of debts, and an insurance policy for the satellite.


SATMEX: Talks With Telesat Held Up Amid Disagreement
----------------------------------------------------
A disagreement between Satmex and Canadian satellite operator
Telesat is delaying negotiations over an orbital position for the
Satmex 6 satellite. According to Mexican daily El Finaciero, the
two sides are at odds over what constitutes harmful radio
interference.

"We at Satmex believe that our definition of harmful interference
is the correct one and we hope that Telesat is more flexible with
its demands. We are confident that we will be able to get the
authorization we are looking for," a Satmex executive told the
paper.

Satmex, Telesat and the governments of Canada and Mexico are
negotiating the swap of Satmex's 102.9 degrees West orbital
position for Canada's 114.9 degrees West to eliminate potential
interference.



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U R U G U A Y
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BANCO GALICIA: Several `Frozen Deposits' Holders Accept Plan
------------------------------------------------------------
Clients of Banco Galicia Uruguay, which own US$182.9 million of
deposits that have been trapped in bank vaults for the past 17
months, expressed interest in a proposal that would see them get
back their trapped deposits. The information was revealed by the
bank's Argentine sister, Banco de Galicia y Buenos Aires S.A., in
a filing with the Buenos Aires stock exchange, based on the
outcome of a survey undertaken to gauge clients' interest in
several new options for getting back trapped deposits.

According to a report released by Dow Jones, the survey was
launched June 17 and the feedback period closed July 15. Clients
were given the chance to exchange their deposits for government-
backed bonds, convertible bonds issued by the bank, fixed dollar
payments, or a mixture of all three. It came on top of an offer
made last December promising to return over nine years the money
that has been trapped in the bank since last February, says Dow
Jones.

There's an estimated US$1.2 billion of trapped deposits in bank
vaults.




               ***********


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 American is a daily newsletter
co-published by Bankruptcy Creditors' Service, Inc., Trenton, NJ,
and Beard Group, Inc., Washington, DC. John D. Resnick, Edem
Psamathe P. Alfeche and Oona G. Oyangoren, Editors.

Copyright 2003.  All rights reserved.  ISSN 1529-2746.

This material is copyrighted and any commercial use, resale or
publication in any form (including e-mail forwarding, electronic
re-mailing and photocopying) is strictly prohibited without prior
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Information contained herein is obtained from sources believed to
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