CLISA — Capital/Financing Update 2005

May 16, 2005

CLISA – Compañía Latinoamericana de Infraestructura & Servicios S.A.

[LOGO]

Offer to Exchange

for any and all outstanding

11⅝% Guaranteed Senior Notes due 2004

144A (Global)
CUSIP No. 20445PAA3

Regulation S (Global)
ISIN No. USP3063XAA65

The Exchange Offer will expire at 5:00 p.m., New York time, on February 25, 2003, unless we extend it, which time is referred to as the Expiration Date.

We are hereby offering holders of our 11⅝% Guaranteed Senior Notes due June 1, 2004, or the Existing Notes, the opportunity to participate in our exchange offer, or the Exchange Offer, and to receive for each U.S.$1,000 principal amount of Existing Notes tendered by you U.S.$1,000 principal amount of our 6% Guaranteed Senior Notes due 2012, or the New Notes, plus, in lieu of accrued and unpaid interest on the Existing Notes to, but not including, the settlement date for the Exchange Offer, at your option, either (i) a cash payment of U.S.$40 and an additional U.S.$40 principal amount of New Notes or (ii) an additional U.S.$80 principal amount of New Notes.

The Exchange Offer is subject to certain conditions, including the requirement that we receive valid tenders to exchange at least 95% of the Existing Notes for the New Notes offered hereby.

Until the Comisión Nacional de Valores, the Argentine National Securities Commission, or the CNV, approves the issuance of the New Notes in Argentina and the exchange offer, any tender of the Existing Notes will be deemed to constitute a non-binding indication of interest to exchange the Existing Notes for the New Notes. The non-binding indication of interest will be converted automatically into an effective tender of such Existing Notes upon receipt of the CNV’s authorization, unless the tender has been withdrawn earlier. If the CNV’s authorization is not obtained prior to the Expiration Date, we may extend the Expiration Date.

The New Notes will be rated in Argentina by Standard & Poor’s International Ratings LLC, Argentine Branch, or Standard & Poor’s.

Due to economic conditions in Argentina and our financial condition, if you do not participate in the Exchange Offer you risk non‑payment of principal and interest on your Existing Notes.

If you would like to tender your Existing Notes in the Exchange Offer, you may do so through The Depository Trust Company’s, or DTC, Automated Tender Offer Program, and/or ATOP, or by following the instructions that appear later in this Offering Memorandum and in the related Letter of Transmittal, if applicable.

Both acceptance and rejection of the Exchange Offer involve a high degree of risk. See “Risk Factors” beginning on page __ for a discussion of some of the risks you should consider in evaluating the Exchange Offer.

We have not registered, and do not intend to register, the New Notes under the United States Securities Act of 1933, as amended, or the Securities Act, or with any securities regulatory authority of any state or other jurisdiction of the United States. The Exchange Offer will only be made, and the New Notes are only being offered or issued (i) to qualified institutional buyers, as that term is defined in Rule 144A under the Securities Act (“qualified institutional buyers” or “QIBs”), in compliance with Rule 144A, (ii) outside the United States within the meaning of Regulation S under the Securities Act, and (iii) to a limited number of accredited investors, as that term is defined in Rule 501 under the Securities Act (“accredited investors”), in a non-public transaction in reliance upon an exemption from the registration requirements of the Securities Act. Only eligible investors are authorized to receive or review this Offering Memorandum or to participate in the Exchange Offer. For a description of restrictions on resale or transfer of the New Notes, see “Transfer Restrictions.” Simultaneously with the Exchange Offer, in Argentina only, we are conducting a public offering of the New Notes to be subscribed for cash in compliance with the requirements of the CNV and Regulations S under the Securities Act.

The Exclusive Dealer Manager for the Exchange Offer is:

Banc of America Securities LLC

The date of this Offering Memorandum is January 27, 2003

IMPORTANT NOTICE

THIS OFFERING MEMORANDUM CONTAINS IMPORTANT INFORMATION ABOUT US AND SIGNIFICANT RECENT DEVELOPMENTS IN ARGENTINA. SOCIAL, POLITICAL, ECONOMIC AND LEGAL CONDITIONS IN ARGENTINA ARE CHANGING DAILY, AND WE CANNOT ANTICIPATE WITH ANY DEGREE OF CERTAINTY HOW AND TO WHAT EXTENT THOSE CHANGING CONDITIONS WILL HAVE AN IMPACT ON OUR OPERATIONS OR AFFECT THE FUTURE OF THIS EXCHANGE OFFER. INVESTORS IN THE SECURITIES OFFERED BY THIS OFFERING MEMORANDUM ARE MADE AWARE OF THE UNCERTAINTIES REGARDING OUR FUTURE OPERATIONS AND FINANCIAL CONDITION AND THE SIGNIFICANT RISKS ASSOCIATED WITH THEIR DECISION TO PARTICIPATE IN THE OFFER. YOU SHOULD UNDERSTAND THAT YOUR TENDER FOR THE NEW NOTES OR YOUR FAILURE TO EXCHANGE YOUR EXISTING NOTES INVOLVES A HIGH DEGREE OF RISK, INCLUDING THE SIGNIFICANT POSSIBILITY OF LOSS OF YOUR ENTIRE INVESTMENT IN THE NEW NOTES. SEE “RISK FACTORS.”

In this Offering Memorandum, except where the context otherwise requires, the terms “we,” “us,” “our” and similar terms refer to Clisa – Compañía Latinoamericana de Infraestructura & Servicios S.A., together with its consolidated subsidiaries. Any reference to “Clisa” refers to Clisa – Compañía Latinoamericana de Infraestructura & Servicios S.A.

You should only rely on the information contained in this Offering Memorandum. We have not, and the Exclusive Dealer Manager has not, authorized any other person to provide you with different information. If anyone provides you with different or inconsistent information, you should not rely on it. You should assume that the information appearing in this Offering Memorandum is accurate as of the date on the front cover of this Offering Memorandum only. Our business, financial condition, results of operations and prospects may have changed since that date.

This Offering Memorandum is being distributed on a confidential basis to a limited number of QIBs, persons outside the United States and accredited investors for informational use solely in connection with the Exchange Offer. Its use for any other purpose is not authorized. This Offering Memorandum may not be copied or reproduced in whole or in part nor may it be distributed or any of its contents disclosed to anyone other than the prospective holders of New Notes to whom it is submitted other than in Argentina as required by the CNV and the Bolsa de Comercio de Buenos Aires, or the Buenos Aires Stock Exchange.

When issued, the New Notes will constitute Obligaciones Negociables under Law 23,576 of Argentina (as amended by Law 23,962) and will be entitled to the benefits and subject to certain procedural requirements set forth therein. See “Argentine Taxation.” In order to make the public offering of the New Notes in Argentina, we require authorization from the CNV. If this authorization is obtained, it will only mean that the informational requirements of the CNV with respect to us and to the issuance of the New Notes have been satisfied at such time. The CNV will not issue an opinion with respect to the information contained in this Offering Memorandum or any supplement hereto. Offers in Argentina of the New Notes are being made concurrently by a separate but substantially similar offering memorandum in Spanish. Registration of the New Notes with the CNV does not imply any certification as to the investment quality of the New Notes, our solvency or the accuracy or completeness of the information contained herein.

We do not intend this Offering Memorandum to provide the basis of any credit or other evaluation nor should it be considered as a recommendation by us or the Exclusive Dealer Manager named on the cover page hereof that any recipient of this Offering Memorandum or any other such information purchase any of the New Notes. You are advised to make, and shall be deemed to have made, your own independent investigation of our financial condition and affairs and your own appraisal of our creditworthiness. The Exclusive Dealer Manager expressly does not undertake to review our financial condition or affairs during the life of the Existing Notes or the New Notes or to advise any investor in the New Notes of any information coming to its attention.

This Offering Memorandum does not constitute an offer to sell or a solicitation of an offer to buy any Existing Notes or New Notes in any jurisdiction to any person to whom it is unlawful to make the offer or solicitation in such jurisdiction, nor does this Offering Memorandum constitute an invitation to subscribe for or purchase any Existing Notes or New Notes. The distribution of this Offering Memorandum or any part of it, and the offering, sale and delivery of the New Notes in certain jurisdictions, may be restricted by law. We and the Exclusive Dealer Manager require persons into whose possession this Offering Memorandum comes to inform themselves about and to observe any such restrictions. For a description of certain further restrictions on offers, sales and deliveries of New Notes and on the distribution of this Offering Memorandum and other offering material relating to the Notes, see “Transfer Restrictions.”

An application for listing of the New Notes will be submitted to the Buenos Aires Stock Exchange.

The New Notes (other than New Notes issued to accredited investors in certificated form) will be designated eligible for trading in the PORTAL market.

We reserve the right to extend, delay, accept, amend or terminate the Exchange Offer and to determine satisfaction of the conditions of the Exchange Offer in our sole discretion, except as set forth herein. See “The Exchange Offer — Conditions to the Exchange Offer.”

Each purchaser of New Notes sold outside the United States in reliance on Regulation S will be deemed to have represented that it is not purchasing the New Notes with a view to the resale, distribution or other disposition thereof to a U.S. person or in the United States. Except as otherwise indicated, terms used in this paragraph have the meanings given to them by Regulation S. For a description of these and certain further restrictions on offers and sales of the New Notes, see “Transfer Restrictions.”

The information provided herein with respect to Argentina and its economy is based upon publicly available information, and we do not make any representation or warranty with respect thereto. Neither Argentina, nor any agency or political subdivision thereof, in any way guarantees, and its credit does not otherwise back, our obligations in respect of the Existing Notes or the New Notes.

UK LEGAL MATTERS

This Offering Memorandum is not being distributed to or directed at persons in the United Kingdom who are not “Relevant UK Persons,” subject to the terms and conditions hereof. For these purposes, “Relevant UK Persons” are persons whose ordinary activities involve them in acquiring, holding, managing or disposing of investments (as principal or agent) for the purposes of their businesses. Any person in the UK who is not a Relevant UK Person should not act or rely on this Offering Memorandum or any of its contents. Any person in the UK who submits a Letter of Transmittal or instructs any person to send a Letter of Transmittal on its behalf represents to us, the Exclusive Dealer Manager, the Exchange Agent, the Information Agent and the Trustee that it is a Relevant UK Person.

THE NEW NOTES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION, OR THE SEC, OR THE SECURITIES COMMISSION OF ANY STATE OF THE UNITED STATES, NOR HAS THE SEC OR THE SECURITIES COMMISSION OF ANY STATE OF THE UNITED STATES PASSED UPON THE ACCURACY OR ADEQUACY OF THIS OFFERING MEMORANDUM. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

Our fiscal year ends on June 30 of each year. Unless the context otherwise requires, references in this Offering Memorandum to a year refer to our fiscal year and references to calendar year refer to the calendar year being referred to.

TABLE OF CONTENTS

Page

IMPORTANT NOTICE i

UK LEGAL MATTERS ii

DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS iv

PRESENTATION OF FINANCIAL AND OTHER INFORMATION iv

SUMMARY 1

RISK FACTORS 13

RECENT DEVELOPMENTS IN ARGENTINA 28

SELECTED CONSOLIDATED FINANCIAL DATA 31

THE EXCHANGE OFFER 34

EXCHANGE RATES 45

COMMITMENT OF OUR CONTROLLING SHAREHOLDER 47

CAPITALIZATION 47

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 48

BUSINESS 72

MANAGEMENT 104

PRINCIPAL SHAREHOLDERS 107

CERTAIN TRANSACTIONS WITH RELATED PARTIES 108

DESCRIPTION OF THE EXISTING NOTES 110

DESCRIPTION OF THE NEW NOTES 142

TRANSFER RESTRICTIONS 170

U.S. FEDERAL INCOME TAXATION 174

ARGENTINE TAXATION 180

INDEPENDENT ACCOUNTANTS 183

LEGAL MATTERS 183

WHERE YOU CAN FIND MORE INFORMATION 183

SERVICE OF PROCESS AND ENFORCEMENT OF CIVIL LIABILITIES 184

INDEX TO FINANCIAL STATEMENTS F-1

ANNEX A — PRINCIPAL DIFFERENCES BETWEEN ARGENTINE GAAP AND U.S. GAAP A-1

DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS

Certain of the matters discussed under “Summary,” “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Business” and elsewhere in this Offering Memorandum contain certain forward‑looking statements concerning our operations, economic performance and financial condition, including, among other things, our business strategy. These statements are based on our expectations and are subject to various risks and uncertainties.

All statements other than statements of historical facts and data contained in this Offering Memorandum, including, without limitation, statements regarding our future financial position, business strategy, budgets, projected costs, and plans and objectives of management for future operations, are forward-looking statements. In addition, forward-looking statements generally can be identified by the use of forward-looking terminology such as “may,” “will,” “expect,” “intend,” “estimate,” “anticipate,” “believe” or “continue” or the negative thereof or variations thereon or similar terminology. Although we believe that the expectations reflected in such forward-looking statements are reasonable, we do not provide any assurance with respect to such statements. Such statements involve risks and uncertainties that could significantly affect expected results. Factors that could cause actual results to differ materially and adversely include, but are not limited to:

• changes in general economic, business, political or other conditions in Argentina or Latin America;
• changes in capital markets in general that may affect policies or attitudes towards Argentina or Argentine companies;
• unexpected developments in certain existing litigation;
• unanticipated increases in financing and other costs or the inability to obtain additional debt or equity financing on attractive terms; and
• the factors discussed under “Risk Factors” below.

You should not place undue reliance on such statements, as they are based only on current expectations. Our independent public accountants have not examined or compiled the forward-looking statements and, accordingly, do not provide any assurance with respect to such statements. These cautionary statements should be considered in connection with any written or oral forward-looking statements that we may issue in the future. We do not undertake any obligation to release publicly any revisions to such forward-looking statements after completion of this Exchange Offer to reflect later events or circumstances or to reflect the occurrence of unanticipated events.

PRESENTATION OF FINANCIAL AND OTHER INFORMATION

In this Offering Memorandum, references to “U.S.$,” “dollars” and “U.S. Dollars” are to United States dollars and references to “Ps.,” “pesos” or “Pesos” are to Argentine Pesos. We maintain our books and records in Pesos and prepare our financial statements in conformity with generally accepted accounting principles in Argentina, or Argentine GAAP. See “Selected Consolidated Financial Data,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the Consolidated Financial Statements (as defined herein).

Included in this Offering Memorandum are our consolidated audited financial statements as of and for the fiscal years ended June 30, 2002, 2001 and 2000, or the Consolidated Financial Statements, and our consolidated unaudited interim financial statements as of and for the three-month periods ended September 30, 2002 and 2001, or the Interim Financial Statements. Our Consolidated Financial Statements and Interim Financial Statements that form part of this Offering Memorandum are presented in Pesos, and are prepared in accordance with Argentine GAAP. Argentine GAAP differs in certain respects from generally accepted accounting principles in the United States, or U.S. GAAP, which might be material to the financial information presented in this Offering Memorandum. Such differences involve methods of measuring the amounts shown in the Consolidated Financial Statements and in the Interim Financial Statements, as well as additional disclosure required by U.S. GAAP. We have made no attempt to quantify the impact of those differences or to disclose any additional information required under U.S. GAAP. In making an investment decision, you must rely upon your own examination of us, the terms of the Exchange Offer and our financial information. Potential investors should consult their own professional advisors for an understanding of the differences between Argentine GAAP and U.S. GAAP, and how those differences might affect the financial information presented in this Offering Memorandum. For a description of the differences between Argentine GAAP and U.S. GAAP as they relate to us, see “Annex A — Principal Differences Between Argentine GAAP and U.S. GAAP.”

Our Consolidated Financial Statements and our Interim Financial Statements have been prepared on the assumption that we will continue as a going concern. Our independent auditors have issued a report stating that we were negatively impacted by the continued deterioration of the Argentine economy, the devaluation of the Peso and the government’s adoption of various economic measures. In view of these circumstances, we have not been able to comply with certain covenants contained in certain of our loan agreements and, as a result, some of our creditors could demand the accelerated repayment of our debt. Management is in the process of implementing an action plan to mitigate the negative effects caused by the circumstances described above. However, we cannot assure you that we will be able to successfully implement the plan and obtain the necessary financial resources to repay or refinance our debt. These circumstances raise substantial doubts as to our ability to continue as a going concern. Our Consolidated Financial Statements and our Interim Financial Statements do not include any adjustments that might result from the outcome of this possibility. See “Risk Factors — Risks Related to Us.”

Real gross domestic product data for Argentina and for certain Argentine economic sectors are based upon information and statistics published by the Banco Central de la República Argentina, the Argentine Central Bank, or the Central Bank, and the Ministerio de Economía y Obras y Servicios Públicos, or the Ministry of Economy and Public Works and Services, or MEYOSP. The information presented in this Offering Memorandum and identified as having been extracted from publications of the Central Bank and the Ministry of Economy and such other sources has been presented on the authority of such public documents. We do not accept responsibility in respect of the accuracy or the completeness of such information set forth in this Offering Memorandum or in respect of any event that would affect the accuracy or completeness of such information. In addition, the federal government of Argentina does not publish definite data regarding the markets in Argentina served by our businesses, and limited market information is available from private independent sources. Accordingly, substantially all of the information contained herein regarding sales and market share and marketing data in different regions and territories has been computed by us and is based upon statistics accumulated and certain assumptions made by us. Additional data, including population and certain market data, were obtained from third‑party sources. To the extent that estimates are contained in this Offering Memorandum, our management believes that such estimates, which are based on internal analyses, are reliable; however, such estimates have not been confirmed by independent sources and no assurance can be given as to the accuracy of such market information, additional data or estimates.

Argentine Convertibility Law No. 23,928 and its Regulatory Decree No. 529/91, known as the Convertibility Law, which became effective on April 1, 1991, required the Central Bank to sell U.S. Dollars at a rate of Ps.1.00 per U.S.$1.00. On August 22, 1995, the federal government published Decree No. 316/95, which eliminated the requirement that financial information at any date or for any period after August 31, 1995 be restated for inflation. Pursuant to such decree, the CNV issued its General Resolution No. 272, which eliminated such requirement with respect to those companies, such as us, that are subject to its jurisdiction. On January 11, 2002, the exchange rate in the free market began to float for the first time since April 1991, causing a significant devaluation of the Peso. As a result, in 2002, the federal government published Decree No. 1269/02, which repealed Decree No. 316/95, and reestablished the inflation restatement of financial information. Shortly thereafter, the CNV, through General Resolution No. 415/02, provided for the resumption of inflation restatement of financial information beginning on January 1, 2002, and for the conversion of all entries prior to January 1, 2002 into currency valued as of December 31, 2001.

Certain amounts that appear in this Offering Memorandum (including percentage amounts) may not add up due to rounding. The exchange rate on December 31, 2001 was Ps.1.00 = U.S.$1.00, and on January 24, 2003 was Ps.3.16 = U.S.$1.00. See “Exchange Rates.”

SUMMARY

This Offering Memorandum contains important information about us and significant recent developments in Argentina. It may not contain all of the information that is important to you. We urge you to read carefully and review the entire Offering Memorandum to fully understand the terms of the New Notes and the Exchange Offer.

Our Business

We are one of the leading Argentine infrastructure development and management companies. We are comprised of three major operating segments: mass transportation management, toll road management and construction. In addition, we are engaged, only in two waste management projects. In June 2000 and July 2000, in a series of transactions, we sold the majority of our assets relating to the waste management segment. For the year ended June 30, 2002, we generated, on a consolidated basis, revenues of Ps.617.9 million and Adjusted EBITDA of Ps.123.1 million.

Mass Transportation Management. We conduct our mass transportation management business through Metrovías S.A., or Metrovías, our subsidiary, in which we own approximately 73% of the capital stock. Metrovías has a concession contract through 2017 to operate and manage a commuter railroad, which carries approximately 21 million paying passengers per year, and the entire Buenos Aires subway system, which carries approximately 230 million paying passengers per year. The Buenos Aires subway system is a 40‑kilometer network comprised of five separate lines, which run within downtown Buenos Aires and between the downtown area and outlying commuter railway stations, serving densely populated areas. Metronec S.A., or Metronec, a company under our control, is responsible for the commercial activities of the areas within the domain of the concession contract for Metrovías, known as the Metrovías Concession Contract. These commercial activities include, among others, the leasing of shops and advertising space offered in the stations, cars and properties covered by the Metrovías Concession Contract, the rental of fiber optical cables throughout the tunnels (a business which is developed through CPS Comunicaciones S.A., a subsidiary of Metronec), the rental of spaces for the installation of antennas for cellular telephone communications, the commercial exploitation of shops in the stations for the sale of various items, such as photography machines, rolls of film, telephone cards, lottery games, and the development of a refillable money card, called “subtecard.”

Toll Road Management. We have ownership interests in nine companies that have been granted concession contracts to operate toll roads. Seven of these companies operate toll roads in Argentina consisting of 2,275 kilometers of highways averaging approximately 197,000 toll transactions per day, without including the concession contract awarded to Puentes del Litoral to build and operate a bridge over the Paraná river connecting the cities of Rosario (province of Santa Fe) and Victoria (province of Entre Ríos). Of these nine companies, two are commuter roads that lead to the city of Buenos Aires, through Coviares S.A., or Coviares, and Covimet S.A., or Covimet. We are the operating manager of four of the toll road concessions and our construction segment has acted as a contractor on the construction projects for many of the toll road concessions. In addition to our operations in Argentina, we have interests in a concessionaire that manages a toll road in Brazil, which averages approximately 15,200 toll transactions per day.

Our interests in toll road concessions are held, directly or indirectly, by Caminos Australes S.A., or Caminos, Benito Roggio e Hijos S.A., or BRH, and Polledo S.A., or Polledo.

Construction. We are one of the largest construction companies in Argentina. Our numerous completed construction projects include the IBM Building in Buenos Aires, the Sheraton Hotel in Buenos Aires, the International Airport in Santiago, Chile, the Piedras Moras Water Dam in the province of Córdoba, the Chateau Carrera Córdoba Soccer Stadium in the province of Córdoba, the Telecom building in Buenos Aires, the West Access Road, in Buenos Aires, the Conrad Hilton Hotel and Casino in Punta del Este, Uruguay, the port facility in the province of Santa Cruz, a city beltway in the city of Córdoba, the Pichi Picún Leufú hydroelectric dam in the province of Neuquén and the installation of antennas for cellular telephone communications throughout Argentina for Compañía de Teléfonos del Interior (CTI), among others.

Summary Consolidated Financial Data and Other Information

The following tables present our selected consolidated financial data and other information for the periods indicated. The information as of and for the years ended June 30, 2002, 2001 and 2000 and as of and for the three-month periods ended September 30, 2002 and 2001 has been derived from, should be read in conjunction with and is qualified in its entirety by reference to our Consolidated Financial Statements and related notes thereto audited by PricewaterhouseCoopers and our Interim Financial Statements and related notes thereto reviewed by PricewaterhouseCoopers, which are included elsewhere in this Offering Memorandum.

		Three-month period ended September 30,							Year ended June 30,
			2002				2001				2002		2001						2000
		(In millions of Pesos, except for financial ratios)
Income Statement Data
Net sales:
	Mass Transportation Management	39.7				128.0				363.1					526.4			445.5
	Toll Road Management	17.6				33.7				90.2					76.2			76.9
	Construction .	40.9				55.8				148.3					239.7			415.9
	Others	6.1				5.2				30.1					22.4			53.6
	Adjustments and eliminations	(3.3)				(3.0)				(13.7)					(12.3)			(60.3)
	Total net sales	Ps. 100.9				Ps. 219.7				Ps. 617.9					Ps. 852.4			Ps. 931.6
Operating (loss)/income:
	Mass Transportation Management	(1.2)				5.0				7.0					33.7			47.7
	Toll Road Management	(2.6)				12.3				5.0					(10.3)			(1.9)
	Construction	27.3				(5.9)				(18.8)					(37.2)			(30.7)
	Others	(0.1)				0.3				2.4					(15.2)			26.1
	Adjustments and eliminations	0.2				0.5				1.7					3.7			(30.0)
	Total operating income (loss)	Ps. 23.7				Ps. 12.2				Ps. (2.8)					Ps. (25.4)			Ps. 11.2
	Operating income (loss) per share	0.25				0.13				(0.03)					(0.26)			0.12
Other income and expenses, net		(1.4)				0.1				(26.5)					116.8			33.6
Net income in affiliated companies		15.0				8.6				23.5					3.5			16.8
Financing (expense) income:
	generated by assets	(40.2)				2.9				(252.0)					20.2			21.4
	generated by liabilities	54.8				(27.3)				(20.3)					(97.7)			(70.5)
Income (loss) before income taxes and Minority interest		Ps. 51.9				Ps. (3.5)				Ps. (278.0)					Ps. 17.5			Ps. 12.5
Income tax		(4.3)				(4.0)				(29.0)					(9.0)			(17.7)
Minority interest		3.3				(5.2)				33.6					0.7			(5.6)
Net income (loss)		Ps. 50.9				Ps. (12.7)				Ps. (273.4)					Ps. 9.1			Ps. (10.8)
Balance Sheet Data
Net working capital		Ps. 4.6				Ps. 87.9		Ps. 87.9		Ps. (8.7)					Ps. 87.8			Ps. 131.4
Property, plant and equipment, net		179.6				245.0		245.0		198.6					250.8			247.8
Total assets		993.1				1.477.4		1.477.4		1.052.1					1.425.5			1.325.7
Total Debt (2)		549.9				456.1		456.1		623.8					463.6			475.9
Long-term Debt		449.9				264.3		264.3		516.5					294.6			285.5
Capital leases		—				—		-		—					—			—
Minority interest		1.6				45.9		45.9		(6.0)					41.2			59.4
Shareholders’ equity		Ps. 1.7				Ps. 211.9		Ps. 211.9		Ps. (49.1)					Ps. 224.7			Ps. 216.0
Cash Flow Data
Net cash provided by (used in) operating activities		39.7				50.6				131.4					58.3			(17.2)
Net cash used in (provided by) investing activities		(5.8)				(15.4)				(45.1)					71.3			(31.6)
Net cash used in (provided by) financing activities		(31.3)				(36.1)				(158.3)					(88.5)			32.1
Other Financial Data
Adjusted EBITDA (1)		Ps. 52.0				Ps. 62.8				Ps. 123.1					Ps. 66.6			Ps. 95.1
Depreciation and amortization		25.8				25.7				101.1					97.3			85.9
Interest expense (2)		21.3				26.2				99.8					83.3			66.6
Ratio of Adjusted EBITDA to interest expense		2.4				2.4				1.2					0.8			1.4
Ratio of total debt to Adjusted EBITDA		*				*				5.1					7.0			5.0
Liquidity ratio (3)		1.0				1.1				1.0					1.1			1.2
Indebtedness ratio (4)		578.2				5.8				*					5.2			4.9
Solvency ratio (5)		0.0				0.2				*					0.2			0.2
Non-current asset to total asset ratio (6)		0.7				0.5				0.7					0.5			0.5
Profitability ratio (7)		*				*				(3.11)					0.04			(0.05)

__________________________

(1) Adjusted EBITDA means, with respect to any period, the Consolidated Net Income of the Issuer and the Restricted Subsidiaries for such period, (A) increased (to the extent deducted in calculating Consolidated Net Income) by the sum of: (i) all income taxes of the Issuer and the Restricted Subsidiaries paid or accrued in accordance with Argentine GAAP for such period (other than income taxes attributable to extraordinary, unusual or nonrecurring gains or losses); (ii) all financial results of the Issuer and the Restricted Subsidiaries paid or accrued for such period (including amortization of original issue discount and interest with respect to Capitalized Lease Obligations), if negative; (iii) all depreciation expense of the Issuer and the Restricted Subsidiaries; (iv) amortization expense of the Issuer and the Restricted Subsidiaries, including, without limitation, amortization of capitalized debt issuance costs; (v) deferred toll revenue of the Issuer and the Restricted Subsidiaries; (vi) adjustments to Consolidated Net Income for interests of minority shareholders in Restricted Subsidiaries; (vii) any other extraordinary noncash charges of the Issuer and the Restricted Subsidiaries, to the extent deducted in determining the Consolidated Net Income of the Issuer, and (viii) other income, net (if negative), and (B) reduced (without duplication) by the sum of (i) the aggregate amount of dividends or other distributions actually paid to minority shareholders of Restricted Subsidiaries, (ii) financial results of the Issuer and the Restricted Subsidiaries (if positive), (iii) charges for the reversal of the revaluation reserve of the Issuer and the Restricted Subsidiaries, (iv) amortization of negative goodwill and (v) other income, net (if positive), all determined on a consolidated basis in accordance with Argentine GAAP.

1. Interest expense means the consolidated interest expense accrued on all of our debt (including capitalized interest) and that of our consolidated subsidiaries without giving effect to changes in the purchasing power of the currency (i.e., inflation accounting) and any other financial results generated by our liabilities and those of our consolidated subsidiaries in accordance with Argentine GAAP.
2. Liquidity means current assets to current liabilities.
3. Indebtedness means liabilities to shareholders’ equity.
4. Solvency means shareholders’ equity to liabilities.
5. Non-current asset to total asset ratio means non-current assets to total assets.
6. Profitability means income for the relevant year to yearly average shareholders’ equity.

* Not provided.

Summary of the Exchange Offer

Securities for Which We Are Making

This Exchange Offer U.S.$100,000,000 aggregate principal amount of 11⅝% Guaranteed Senior Notes due 2004.

Securities Offered Under This Exchange Offer U.S.$1,000 principal amount of our 6% Guaranteed Senior Notes due 2012 for each U.S.$1,000 in principal amount of Existing Notes, plus, in lieu of accrued and unpaid interest on the Existing Notes to, but not including, the settlement date for the Exchange Offer, at your option, either (A) a cash payment of U.S.$40 and an additional U.S.$40 principal amount of New Notes or (B) an additional U.S.$80 principal amount of New Notes.

You do not have to tender all of your Existing Notes to participate in this Exchange Offer; provided, however, that in the event holders do not tender Existing Notes in an aggregate amount at least equal to the minimum participation required for consummation of this Exchange Offer (see below), the Exchange Offer will not be consummated as to any tenders.

Subject to the satisfaction or waiver of specified conditions, we will exchange the New Notes for all of the Existing Notes that are validly tendered prior to the Expiration Date and accepted by us. We will issue the New Notes in exchange for corresponding Existing Notes, if the Exchange Offer is consummated, on the fifth business day following the Expiration Date, or as soon as practicable thereafter.

Simultaneously with the Exchange Offer in Argentina, we are conducting an offer of the New Notes pursuant to the rules and regulations of the CNV.

Conditions to the Exchange Offer The Exchange Offer and the issuance of the New Notes is subject to approval by the CNV.

Our obligation to complete the Exchange Offer is subject to the condition that we receive valid and unrevoked tenders representing at least 95% in aggregate outstanding principal amount of the Existing Notes.

For information about other conditions to our obligation to complete the Exchange Offer, see “The Exchange Offer — Conditions to the Exchange Offer.”

Commitment of our Controlling Shareholder Roggio S.A., or Roggio, our controlling shareholder, has entered into agreements to acquire approximately 72% of the Existing Notes. Roggio has agreed to tender such Existing Notes into the Exchange Offer. If the Exchange Offer is successful, it will deliver any New Notes received in the Exchange Offer to us in settlement of certain intercompany obligations. See “Commitment of our Controlling Shareholder.”

Expiration Date The Exchange Offer will expire at 5:00 p.m., New York time, on February 25, 2003, unless we extend the Exchange Offer. We do not currently intend to extend the Expiration Date.

Minimum Tenders Existing Notes may be exchanged only in minimum denominations of U.S.$1,000 and integral multiples of U.S.$1,000 in excess thereof; provided, however, that if any holder’s total holdings of Existing Notes total less than U.S.$1,000, such holder may tender such lesser amount of Existing Notes so long as all of such holder’s Existing Notes are tendered. New Notes in global form will be issued, on an aggregate basis, directly to the DTC participant acting as custodian of the holder’s Existing Notes except in the case of New Notes issued to accredited investors, which will be in certificated form.

Restrictions on Issuance and Transfer We have not registered the New Notes under the Securities Act. Accordingly, the New Notes are only being offered or issued (i) in the United States, to qualified institutional buyers, as that term is defined in Rule 144A under the Securities Act, (ii) outside the United States in reliance upon Regulation S, and (iii) to a limited number of accredited investors, as that term is defined in Rule 501 under the Securities Act, in a non-public transaction in reliance upon an exemption from the registration requirements of the Securities Act. A Letter of Transmittal will be distributed in connection with the Exchange Offer to the holders of the Existing Notes. The Letter of Transmittal includes a certification that the holders of the Existing Notes will be required to complete and return, if such holder qualifies to participate in the Exchange Offer as an accredited investor. Only holders who have certified through submission of an Agent’s Message and/or in the Letter of Transmittal that they duly qualify under clause (i), (ii) or (iii) above are authorized to participate in the Exchange Offer. For a description of restrictions on the resale or transfer of the New Notes, see “Transfer Restrictions.”

Settlement Date Fifth business day following the Expiration Date, or as soon as practicable thereafter.

Taxation We believe that the exchange of Existing Notes for New Notes in the Exchange Offer will be treated as a recapitalization for U.S. federal income tax purposes, but such position is not certain. As a recapitalization, gain or loss generally will not be recognized on the exchange of Existing Notes for New Notes pursuant to the Exchange Offer. Notwithstanding the treatment of the Exchange Offer as a recapitalization, amounts received by a holder that are attributable to accrued but unpaid interest on the Existing Notes will be treated as interest, and will be taxable accordingly, for U.S. federal income tax purposes. The New Notes will be issued with original issue discount for U.S. federal income tax purposes. Non-Argentine beneficiaries are exempted from Argentine income tax on capital gains derived from the exchange or disposition of the Existing Notes.

Procedures for Tendering Existing Notes If you wish to accept the Exchange Offer and your Existing Notes are held by a custodial entity such as a bank, broker, dealer, commercial bank, trust company, custodian or other nominee, only that custodial entity can tender your Existing Notes. In that case, you must instruct your custodial entity to tender your Existing Notes on your behalf pursuant to the procedures of the custodial entity. Please give ample time to allow such person to process your instructions and meet the deadline for delivery to the Exchange Agent of Letters of Transmittal or Agent’s Message. To ensure timely receipt of your instructions, please check with your broker, dealer, commercial bank, trust company, custodian or other nominee for clarification as to the processing time required and deliver the appropriate materials well before that time. If the broker, dealer, commercial bank, trust company, custodian or other nominee does not have adequate time to process your instructions, your Existing Notes may not be tendered and your tender may not be delivered.

Pursuant to authority granted by DTC, if you are a DTC participant that has Existing Notes credited to your DTC account and thereby a holder of record by DTC’s nominee, you may directly tender your Existing Notes as if you were the record holder. Accordingly, references herein to record holders include DTC participants with Existing Notes credited to their accounts. Within two business days after the date of this Offering Memorandum, the Exchange Agent will establish accounts with respect to the Existing Notes at DTC for purposes of the Exchange Offer. See “The Exchange Offer — Procedures for Tendering Existing Notes.”

If you are a DTC participant and you are tendering your Existing Notes pursuant to the procedure for book-entry transfer under DTC’s ATOP, you must transmit your acceptance to DTC, which will verify the acceptance and execute a book-entry delivery to the Exchange Agent’s account at DTC in accordance with DTC’s procedure for such transfer. Alternatively, you may complete, sign and have authenticated (as described below) the Letter of Transmittal and deliver it to the Exchange Agent at the address or fax number set forth on the back cover of this Offering Memorandum and on the face of the Letter of Transmittal.

The Exchange Agent and DTC have confirmed that the Exchange Offer is eligible for DTC’s ATOP. Accordingly, DTC participants may electronically transmit their acceptance of the Exchange Offer by causing DTC to transfer their Existing Notes to the Exchange Agent in accordance with DTC’s ATOP procedures for transfer. Accredited Investors must also deliver to the Exchange Agent a properly completed, executed and authenticated Letter of Transmittal referencing the Voluntary Offering Instruction, or VOI, identification of any related “Agent’s Message.” DTC will then send the Agent’s Message to the Exchange Agent for their acceptance. Although delivery of Existing Notes of Accredited Investors may be effected through book-entry at DTC, the Letter of Transmittal with the Required Authentication, referencing the VOI identification of any related Agent’s Message and any other required documents, must be transmitted to and received by the Exchange Agent.

Withdrawal of Tenders You may withdraw tenders of Existing Notes pursuant to the Exchange Offer at any time on or before the date on which we obtain CNV approval for the Exchange Offer and the issuance of the New Notes. Tenders of Existing Notes may not be withdrawn subsequent to that time unless the Exchange Offer is extended and we grant you withdrawal rights. See “The Exchange Offer — Withdrawal of Tenders.”

Consequences of Failure to Exchange If you fail to tender your Existing Notes in the Exchange Offer, you risk non-payment of principal of and interest on the Existing Notes. In addition, the trading market for your Existing Notes could become more limited and could cease to exist altogether. A more limited market might adversely affect the liquidity, market price and price volatility of the Existing Notes. For a description of some of the consequences of a failure to exchange the Existing Notes, see “Risk Factors — Risks Related to the Exchange Offer — We may be unable to pay interest and other amounts due on the Existing Notes.”

Exchange Agent and Representative of the

Exchange Agent in Argentina The Bank of New York is the Exchange Agent for the Exchange Offer and has appointed Banco Río de la Plata S.A. as its representative in Argentina. The address and telephone number of the Exchange Agent and its representative can be found on the back cover page of this Offering Memorandum.

Exclusive Dealer Manager Banc of America Securities LLC is the Exclusive Dealer Manager for the Exchange Offer. The address and telephone number of the Exclusive Dealer Manager can be found on the back cover page of this Offering Memorandum. Solicitation in Argentina will be conducted through Bank of America N.A., Buenos Aires branch.

Information Agent D.F. King & Co. is serving as information agent for the Exchange Offer. You can find the address and telephone number for the information agent on the back cover page of this Offering Memorandum.

Summary of the New Notes

Issuer Clisa – Compañía Latinoamericana de Infraestructura & Servicios S.A.

Guarantors Benito Roggio e Hijos S.A. and Caminos Australes S.A.

Final Maturity of the New Notes June 1, 2012.

Amortization The principal amount of the New Notes will be paid in five equal annual installments, commencing on June 1, 2008.

Interest Beginning on the Settlement Date, the New Notes will bear interest at an annual rate of 6%, payable in cash semi‑annually in arrears on each June 1 and December 1, through their final maturity. Interest on the New Notes will be calculated on the basis of a 360-day year consisting of twelve 30-day months.

Additional New Notes in Lieu of Interest On each interest payment date in 2003 and 2004, we may, at our option (provided that we are not in default on the payment of principal and interest on the New Notes), elect to pay up to one-half (1/2) of the accrued and unpaid interest due and payable on such interest payment date by delivering additional New Notes with a principal amount equal to the portion of the interest not paid in cash.

Ranking The New Notes will be our senior unsecured obligations. The New Notes will rank equally in right of payment with all of our other unsecured and unsubordinated obligations. The New Notes will effectively rank junior to any of our secured indebtedness to the extent of the assets that secure such secured indebtedness.

Restrictive Covenants The indenture governing the New Notes will contain covenants that will limit our ability and that of certain of our subsidiaries to sell assets, enter into transactions with affiliates, incur additional indebtedness, make certain restricted payments, change control or incur or suffer to exist liens on assets to secure indebtedness (unless the New Notes are secured equally and ratably). These covenants will vary from those contained in the Existing Notes. For a summary of these differences, see “― Principal Differences Between the New Notes and the Existing Notes.”

Events of Default The occurrence of an event of default under the Existing Notes will not be deemed to be an event of default under the New Notes. For a discussion of events that will permit acceleration of the payment of the principal of and accrued interest on the New Notes, see “Description of the New Notes — Events of Default.”

Securities Law Restrictions The New Notes may not be offered or sold within the United States or to or for the benefit of U.S. persons, except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. The New Notes may be publicly offered in Argentina in accordance with Argentine Law No. 17,811 and the CNV regulations thereunder. For a description of restrictions on the resale or transfer of the New Notes, see “Transfer Restrictions.”

Guarantees Payments of principal of, and interest and premium and Additional Amounts, if any, on the New Notes will be jointly and severally, irrevocably and unconditionally guaranteed by the Guarantors. See “Description of the New Notes — Ranking and Guarantees.”

Approvals In order to make a public offering of the New Notes in Argentina, we require authorization from the CNV. Until authorization is obtained from the CNV, any tender of the Existing Notes in Argentina will be deemed to constitute a nonbinding indication of interest to exchange the Existing Notes for the New Notes. The nonbinding indication of interest will be converted automatically into an effective tender of such Existing Notes upon receipt of the CNV’s authorization, unless the tender has been withdrawn earlier. If the CNV’s authorization is not obtained prior to the Expiration Date, we will extend the Expiration Date.

Form and Denomination The New Notes will be issued only in the form of (i) one or more Rule 144A global notes (the “Rule 144A Global Notes”) in respect of New Notes offered and sold to QIBs, (ii) one or more Regulation S global notes (the “Regulation S Global Notes”) in respect of New Notes offered outside the United States in reliance on Regulation S and (iii) one or more certificated notes to accredited investors (the “Certificated Notes”). See “Description of the New Notes — Book-Entry, Delivery and Form.” Each global note will be deposited with DTC, in each case for credit to the account of a direct or indirect participant of DTC. Investors in the global notes who are participants in DTC may hold their interests in the global notes directly through DTC. Investors in the global notes who are not participants in DTC may hold their interest indirectly through organizations that are participants in DTC. Interests in the global notes will be shown on, and transfers thereof will be effected only through, records maintained by DTC and its participants, including Euroclear and Clearstream, Luxembourg. Certificated Notes cannot be traded through the facilities of DTC.

The New Notes will be issued in denominations of U.S.$1.00 and multiples thereof.

Except for Certificated Notes issued to accredited investors or as set forth under “Description of the New Notes — Certificated New Notes,” participants and indirect participants will not be entitled to receive physical delivery of definitive New Notes or to have New Notes issued and registered in their names and will not be considered the owners or holders of the New Notes under the indenture relating to the New Notes.

Listing We are applying to have the New Notes listed on the Buenos Aires Stock Exchange, and we will use all reasonable commercial efforts to cause such listing to be maintained.

Issuance of New Notes for Payment of

Interest Due In connection with the payment of interest under the New Notes, in lieu of cash, we may, from time to time, without your consent, issue New Notes to you, according to the provisions of this Offering Memorandum that will be consolidated and form a single series with the outstanding New Notes. See “Description of the Notes — Issuance of New Notes for Payment of Interest Due.”

Rating The New Notes will be rated in Argentina by Standard & Poor’s.

PORTAL The New Notes (other than New Notes issued to accredited investors in certificated form) will be designated eligible for trading in the PORTAL market of the NASD.

Governing Law New York State.

Trustee The Bank of New York.

Co-Trustee in Argentina Banco Río de la Plata S.A.

Registrar, Principal Paying

Agent and Transfer Agent The Bank of New York.

Co-Registrar in Argentina Banco Río de la Plata S.A.

Principal Differences Between the New Notes and the Existing Notes

The terms and conditions of the New Notes will be similar to the Existing Notes, with the principal differences relating to the following:

• the rate of interest;
• the amortization schedule;
• the maturity date;
• the optional redemption by us at any time at par;
• the reporting requirements, which will be in the form of an English translation of the Argentine GAAP financial statements, together with the report by an internationally recognized independent accounting firm;
• certain provisions concerning limitations on additional indebtedness, which are subject to a limitation of a 2.75 to 1.0 Consolidated EBITDA Coverage Ratio, if not considered as “Permitted Indebtedness;”
• the conditions involving payments to certain subsidiaries, which will be permitted under certain circumstances;
• the cross-default provisions as described under “Description of the New Notes,” which will provide that the Existing Notes will be excluded from the cross-default provisions of the New Notes, so that a payment default on the Existing Notes does not result in a cross-default on (or become the basis for cross-acceleration of) the New Notes;
• the addition of certain permitted encumbrances, particularly in connection with certain Permitted Indebtedness;
• the deletion of certain additional guarantees by subsidiaries;
• the deletion of limitations of restrictions affecting dividends and other payments by subsidiaries;
• the deletion of limitation on issuance of shares by subsidiaries;
• the conditions involving asset sales;
• the deletion of the unrestricted subsidiary designation; and
• certain provisions relating to the limitation on consolidation, mergers and sales of assets.

RISK FACTORS

You should carefully consider the risks described below, in addition to the other information contained in this Offering Memorandum, before determining whether to keep your Existing Notes or to exchange your Existing Notes for the New Notes. We also may face additional risks and uncertainties that are not presently known to us, or that we currently do not deem relevant, which may impair our business.

In general, you take more risk when you invest in the securities of issuers in emerging markets such as Argentina than when you invest in the securities of issuers in the United States and certain other markets. In addition, social, political, economic and legal conditions in Argentina are changing daily, and those changes have materially adversely affected our financial condition and results of operations over the past year. We cannot anticipate with any degree of certainty how and to what extent those changing conditions will continue to impact our operations and adversely affect our future. Participants in the Exchange Offer are made aware of the uncertainties regarding our future operations and financial condition and of the risks associated with such events.

Risks Related to Argentina

Overview

The Guarantors and we are each an Argentine sociedad anónima and substantially all of our and their facilities are presently located in Argentina. Accordingly, the quality of our and our Guarantors’ assets, and our and our Guarantors’ financial condition and results of operations depend to a significant extent on macroeconomic, social and political conditions prevailing in Argentina. The Argentine economy has experienced significant volatility in recent decades, characterized by periods of low or negative growth and high and variable levels of inflation. In 1988, 1989 and 1990, the annual inflation rates were approximately 488%, 5,024% and 1,444%, respectively, based on the consumer price index and approximately 532%, 5,486% and 898%, respectively, based on the wholesale price index. As a result of inflationary pressures, the Argentine currency was devalued repeatedly during the 1960s, 1970s and 1980s, and macroeconomic instability led to broad fluctuations in the real exchange rate of the Argentine currency relative to the U.S. Dollar. To address these pressures, the federal government implemented various plans and a number of exchange rate systems during these periods. Prior to December 1989, the Argentine foreign exchange market was subject to exchange controls.

In April 1991, the federal government launched a plan aimed at controlling inflation and restructuring the economy, by enacting Law No. 23,928, know as the Convertibility Law. The Convertibility Law fixed the exchange rate at one Peso per U.S. Dollar and required that the Central Bank maintain reserves in gold and foreign currency at least equivalent to the monetary base. Following adoption of the Convertibility Law, inflation declined steadily and the economy experienced growth through most of the period from 1991 to 1997. In the fourth quarter of 1998, however, the Argentine economy entered into a recession that caused the gross domestic product to decrease by 3.0% in 1999, 0.5% in 2000 and an estimated 4.4% in 2001. Beginning in the second half of 2001, Argentina’s recession worsened significantly, precipitating the political and economic crisis described in greater detail below.

Argentine authorities have implemented a number of monetary and currency exchange control measures, public spending reduction policies, and measures to restructure its external debt, among others, which proved unsuccessful. At the end of 2001, Argentina had a serious imbalance between public revenue and spending, and did not have access to credit (including from multilateral agencies). Extreme illiquidity in the economy led to a sharp contraction of the gross product in the last months of 2001. The gross domestic product for 2001 fell by approximately 4.9%. On January 7, 2002, the Argentine Congress, or the Congress, approved the Public Emergency and Foreign Exchange System Reform Law No. 25,561, known as the Public Emergency Law, which amended the currency board that had pegged, statutorily, the Peso at parity with the U.S. Dollar since enactment of the Convertibility Law in 1991.

The main economic measures adopted by the federal government consisted on, among others, (i) the implementation of a dual exchange rate whereby export and certain import transactions would be governed by a fixed, official exchange rate of Ps.1.40 to U.S.$1.00, while all other transactions would be governed by a floating rate to be set freely by the exchange market, with occasional intervention by the Central Bank, (ii) restrictions on the purchase of foreign currency, requiring that all purchases of foreign currency be made exclusively with cash, (iii) the conversion of all U.S. Dollars and foreign currency-denominated bank deposits into Peso-denominated bank deposits at an exchange rate of Ps.1.40 per U.S. Dollar or its equivalent in other foreign currency and (iv) the conversion of all U.S. Dollar- and foreign currency-denominated debts with the financial system into Peso-denominated debts at an exchange rate of Ps.1.00 per U.S. Dollar or its equivalent in other foreign currency.

Since Argentina defaulted on its foreign debt in late December 2001, all traditional sources of financing to stimulate recovery, especially the external sources customarily relied upon for any significant restoration and comprehensive debt restructuring, have been, and remain, primarily inaccessible. Foreign governments have voiced support for the general orientation of recent measures, but have indicated that all assistance is to be supplied through multilateral lending institutions, particularly the International Monetary Fund, or the IMF. The federal government is currently instituting economic and political reforms to allay IMF concerns. On November 14, 2002, the federal government defaulted on U.S.$805.0 million in principal due on external indebtedness to the World Bank and only paid U.S.$77.0 million to cover interest. The federal government did not make the December 14, 2002 deadline for the payment of principal on this loan with the IMF.

Notwithstanding the foregoing, the federal government and the IMF continued their talks in order to reach a financial agreement. One of the main conditions imposed by the IMF to reach an agreement was the payment by Argentina of the amounts due to the Interamerican Development Bank and the World Bank on November and December 2002. On January 17, 2003, Argentina made such payments and, on January 24, 2003, the IMF formally approved a transitional stand-by program for the renegotiation of Argentina’s debt with the IMF and international organizations for the amount of U.S.$16.1 billion, originally due in August 2003 and refinanced until 2008. Moreover, as part of the agreement, the IMF will disburse U.S.$1.0 billion paid last Friday by Argentina to settle the debts.

There can be no assurance that the measures announced so far will achieve their intended results, or that the political environment and social conditions currently prevailing in Argentina will enable the federal government to implement such measures over time or implement others favored by international investors and multilateral credit agencies. Even if such measures are established, there is no guarantee that they will be sufficient to encourage international investors and multilateral credit agencies to make new credit available to both the public and private sectors in Argentina. See also “Recent Developments in Argentina.”

Recent political and economic instability have paralyzed commercial activities

Following his presidential election in October 1999, Fernando De la Rua was confronted with the challenges of dealing with Argentina’s enduring economic recession and obtaining political consensus on critical issues related to the economy, public sector spending, legal reforms and social programs. However, he lacked the support of the Congress, which was controlled by the opposition (the Peronist party), and the cooperation of several provincial governors who were also Peronists. His political power was further weakened by disputes within his own party, which reached a peak with the resignation of his vice president in October 2000.

The De la Rua administration failed to address adequately the growing public sector deficit, both at the federal and provincial levels. As tax revenues dropped as a result of the recession, the public sector relied increasingly on financing from local and, to a lesser extent, foreign banks, effectively foreclosing private sector companies from bank financing. As the public sector’s creditworthiness deteriorated, interest rates increased to record highs, bringing the economy to a virtual standstill. Despite assurances to the contrary, on December 1, 2001, the federal government effectively froze bank deposits and introduced exchange controls restricting capital outflows. The measures were perceived as further paralyzing the economy for the benefit of the banking sector and caused increased social discontent, ultimately triggering the looting of stores throughout Argentina on December 19, 2001 and the resignation of the Minister of Economy, Domingo Cavallo, the following day. On December 21, 2001, after declaring a state of siege, President De la Rua resigned in the midst of an escalating political, social and economic crisis.

Following the resignation of interim president Rodriguez Saá only one week after his appointment, on January 1, 2002, the Legislative Assembly elected Peronist senator Eduardo Duhalde as president to serve the remaining term of former President De la Rua until December 2003.

At this time, the degree of internal and external support for the Duhalde administration remains unclear. President Duhalde has announced repeatedly his decision to resign effective May 25, 2003, and has called for early presidential elections to take place in March 2003 and any new administration to be scheduled to take office in May 2003. Currently, and as a result of an agreement reached between President Duhalde and most of the provinces’ governors, a new schedule for the general elections has been established by Decree No. 2,356/02 to take place on April 27, 2003. There is a great deal of uncertainty as to whether the presidential elections will take place in April 2003 or at a later date. Political protests and social disturbances continue, and to date the IMF and other multilateral and official sector lenders have indicated an unwillingness to provide financial aid until a sustainable economic program has been presented. It is unclear whether President Duhalde or his successor will have the necessary support to implement the reforms required to restore economic growth. The rapid and radical nature of the recent changes in the Argentine social, political, economic and legal environment, and the absence of a clear political consensus in favor of the new government or any particular set of economic policies, have created an atmosphere of great uncertainty that continues to negatively affect many of our commercial activities.

Argentina’s insolvency and recent default on its payment of public debt have deepened the current financial crisis

As of December 31, 2001, Argentina’s total gross public debt was approximately U.S.$144.5 billion. On December 23, 2001, President Rodriguez Saá declared the suspension of payments on certain of Argentina’s sovereign debt and President Duhalde ratified this measure on January 2, 2002. Resolution No. 73 issued by the Ministry of Economy (published in the Official Gazette on April 30, 2002) expressly provided that, with certain exceptions, public debt service payments be deferred until December 31, 2002 or until refinancing thereof has been completed should the latter occur prior to such date. Also, the restrictions on bank withdrawals imposed on December 1, 2002 and the consequent paralysis of economic activity caused a drastic fall in fiscal revenues.

In addition, the principal international rating agencies have repeatedly downgraded the rating of Argentina’s sovereign debt. On November 6, 2001, Standard & Poor’s lowered Argentina’s long-term local and foreign currency sovereign credit ratings from “CC” to “SD” (selective default). On February 12, 2002, the short-term local and foreign currency sovereign rating was lowered to “CD” from “SD.” On December 3, 2001, Fitch IBCA, Duff & Phelps lowered the ratings for the long-term debt from “CCC-” to “DDD” and the ratings for the short-term debt from “B” to “C.” On December 21, 2001, Moody’s Investors Service lowered Argentina’s foreign currency country ceiling for bonds to “Ca” from “Caa3,” indicating that the downgrade reflected rapidly deteriorating economic, financial and social conditions in Argentina.

The federal government’s insolvency, its default and its inability to obtain financing can be expected to affect significantly its ability to pay amounts due by it, including to us, as well as its ability to implement any reforms, thereby undermining the private sector’s ability to restore economic growth. As a result, Argentina is experiencing a deepening recession, unemployment and social unrest. These conditions suggest that our business, financial condition and results of operations will likely continue to be materially and adversely affected and that, in the short term, the federal government may not be able to fully perform under its many contracts with us.

The devaluation of the Peso creates greater uncertainty as to Argentina’s economic future

On January 7, 2002, the Congress enacted the Public Emergency Law, putting an end to 11 years of the U.S. Dollar-Peso parity under the Convertibility Law and eliminating the requirement that the Central Bank’s reserves in gold, foreign currency and foreign currency-denominated bonds be at all times equivalent to not less than 100% of the Pesos in circulation plus the Peso deposits of the financial sector with the Central Bank. The Public Emergency Law granted the Executive Branch the power to set the exchange rate between the Peso and foreign currencies and to issue regulations related to the foreign exchange market. On the same day, the Executive Branch established a temporary dual exchange rate system, a fixed rate for transactions subject to Central Bank approval, and import and export transactions at an exchange rate of Ps.1.40 per U.S. Dollar, and a floating rate to be freely determined by the market for all other transactions.

On January 11, 2002, after the Central Bank ended banking holidays that it had imposed since December 21, 2001, the exchange rate began to float for the first time since April 1991. Heightened demand for scarce U.S. Dollars caused the Peso in the long term to trade well above the Ps.1.40 per U.S. Dollar rate used by the federal government. As a result, the Central Bank intervened on several occasions by selling U.S. Dollars in order to support the Peso. However, the Central Bank’s ability to support the Peso by selling U.S. Dollars depends on its limited U.S. Dollar reserves and financial assistance from the IMF, which has not been forthcoming. During 2002, the Peso fluctuated significantly.

On February 3, 2002, the Executive Branch announced the elimination of the dual exchange rate in favor of a single floating rate for all transactions, and on the same day another banking holiday was imposed, preventing the conversion of Pesos until February 11, 2002. Furthermore, the Central Bank approved only a limited number of transactions involving the transfer of foreign currency abroad. Initially, the Central Bank implemented various measures to increase the supply of U.S. Dollars in the foreign exchange market and thereby control the depreciation of the Peso. Nevertheless, the Peso continued to lose ground against the U.S. Dollar, reaching a low point of Ps.3.90 per U.S. Dollar in June 2002. Since that date, the Peso has stabilized and recovered somewhat from those low levels, permitting the Central Bank to loosen some of its foreign currency restrictions, although no assurance can be given that such trends will continue. As of January 24, 2003, the Peso-U.S. Dollar exchange rate, as quoted by the Banco de la Nación Argentina, was approximately Ps.3.16 per U.S. Dollar.

The federal government faces severe fiscal problems due to the devaluation. Peso-denominated tax revenues constitute the primary source of its earnings, but most of its financial liabilities are denominated in U.S. Dollars. Therefore, the federal government’s ability to honor its foreign and domestic debt obligations has been materially and adversely affected by the devaluation of the Peso. In March 2002, the federal government established taxes on exports at rates ranging from 10% to 20% depending on the product in order to increase its revenues. These collections are denominated in U.S. Dollars and are expected to make a significant contribution toward reducing the budget deficit. The adoption of additional spending cuts which would be required to repay the Argentine public debt and to balance the federal government’s budget after the devaluation will likely lead to further social unrest and political instability.

Past experience prior to the adoption of the Convertibility Law raises serious doubts as to the ability of the federal government to maintain a strict monetary policy and control inflation. In the past, inflation materially undermined the Argentine economy and the federal government’s ability to create conditions that would permit growth. We cannot estimate what the impact of inflation would be on our results of operations.

The stability of the Argentine financial system remains at risk

Deposit Withdrawal Limitations. Deposits in the Argentine banking system declined throughout 2001 and 2002, and, in the last quarter of 2001, a very significant amount of deposits were withdrawn from Argentine financial institutions as a result of increasing political instability and uncertainty. This run on deposits had a material adverse effect on the Argentine financial system as a whole. For the most part, banks suspended the disbursement of new loans and focused on collection activities to be able to pay their depositors. This resulted in the general unavailability of external or local credit and created a liquidity crisis, which triggered numerous payment defaults, which in turn have affected us.

To prevent a run on local banks, on December 1, 2001, the federal government of President De la Rua restricted the amount of money account holders could withdraw from banks and introduced exchange controls restricting capital outflows. These restrictions, known as the corralito, were suspended on December 2, 2002, and depositors at Argentine financial institutions are now permitted to withdraw funds from most of their accounts. The federal government indicated that the action was being taken due to perceived greater confidence in the Argentine financial system, stability of the Peso against the U.S. Dollar and sufficient liquidity of the financial system to permit withdrawals. Nonetheless, no assurance can be given that such conditions or requirements could not be reimposed in the future.

Involuntary Peso Conversions. On February 4, 2002, pursuant to Decree No. 214, the federal government established the compulsory conversion of U.S. Dollar-denominated liabilities into Peso-denominated liabilities, at an exchange rate of Ps.1.00 per U.S. Dollar, known as the pesification.

The corralito and the pesification have led to a very substantial decline of almost all commercial and financial activities, a decrease in spending and a significant increase in social unrest, which directly affected our activities and, as a consequence, our results of operations. The confidence of the Argentine public has weakened significantly as a result of the various measures that have been implemented by the federal government. On February 1, 2002, the Argentine Supreme Court declared that certain measures adopted by the federal government to prevent deposit withdrawals are unconstitutional. The federal government, however, has continued to enforce the corralito, although it has relaxed certain limitations to permit salary withdrawals. The Argentine financial system is currently at risk and, in the event the economic situation worsens, the prospects of economic recovery and political stability in Argentina would be materially affected.

Deterioration in the financial situation of our customers, and in the Argentine economy as a whole, adversely impact Argentina’s prospects for economic recovery and political stability, which, in turn, affects our results of operations.

Substantial inflation may continue to occur as a result of the repeal of the Convertibility Law

The federal government recorded a fiscal deficit of U.S.$7.3 billion, U.S.$6.9 billion and U.S.$8.8 billion in 1999, 2000 and 2001, respectively, and is expected to record a fiscal deficit of approximately U.S.$7.5 billion in 2002. The fiscal deficit is primarily the result of economic recession, the inability of the federal government to significantly reduce public spending and the lack of adequate tax collections, as well as a rising debt service burden. Furthermore, restrictions on bank withdrawals imposed on December 1, 2001 and the current economic crisis have caused tax collection to drop significantly (negative 16.6% year over year) in the first four months of 2002. However, tax collections improved in the following five months as a result of revenue from the recently created withholding tax on exports and the positive effect of inflation in certain tax items such as value added tax. Consequently, in the first nine months of 2002, tax collections increased 0.9% as compared to the same period in 2001.

On January 24, 2002, the federal government amended the charter of the Central Bank to allow the Central Bank to print currency without having to maintain a fixed and direct relationship with the foreign currency and gold reserves and to make short-term advances to the federal government to cover its anticipated budget deficits. There is considerable concern that, if the Central Bank prints currency to finance deficit spending and to improve the liquidity of financial institutions, it will likely trigger significant inflation. As of September 30, 2002, currency in circulation increased by Ps.3.9 billion (35.6%), consumer prices increased by 39.6% and wholesale prices increased by 121.2% since December 31, 2001. Argentina has a history of hyperinflation, which peaked in 1989, particularly during periods of fiscal deficit and social unrest. High inflation would likely deepen Argentina’s current economic recession.

After several years of price stability, the devaluation of the Peso has created pressures on the domestic price system that have generated inflation in 2002. Argentina’s experience demonstrates that domestic prices of goods and services are highly linked to the level of the exchange rate and its variations. Also, the expectation of increases in the exchange rate has triggered increases in domestic prices.

Although the value of the Peso has stabilized in recent months, we cannot assure you that this recovery of the exchange rate will be maintained. Failure to do so could result in increases in inflation rates, and very high inflation and hyperinflation episodes cannot be ruled out. High inflation would likely deepen Argentina’s current economic recession, but it is unclear how inflation would impact our operations. In the past, inflation has had a material adverse effect on economic growth. Economic downturns may result in decreasing demand for our services and in collection difficulties in respect of our accounts receivable, which may have a material adverse effect on our results of operations and financial position.

As of September 30, 2002, the accumulated wholesale price index for the nine-month period amounts to 121.2% and the accumulated retail price index amounts to 39.7%.

Exchange controls may prevent us from servicing our external debt obligations without Central Bank approval

The Argentine foreign exchange market was subject to exchange controls until December 1989, when a freely floating exchange rate was established for all foreign currency transactions. From 1989 to December 3, 2001, there were no foreign exchange controls preventing or restricting the conversion of Pesos into U.S. Dollars.

Since early December 2001, the federal government has imposed a number of monetary and currency exchange control measures that include restrictions on the free disposition of funds deposited with banks and tight restrictions on transferring funds abroad, with certain exceptions for transfers related to foreign trade and other authorized transactions, which were subject to approval by the Central Bank. In particular, Communication “A” 3,471 (as amended) required the prior approval of the Central Bank to transfer funds outside of Argentina to effect payment of principal or interest of financial obligations.

The Central Bank has gradually continued to loosen these restrictions by establishing additional exemptions from the requirement for authorization from the Central Bank in connection with transfers of funds abroad. On September 3, 2002, Communication “A” 3,712 was issued by the Central Bank setting forth another exemption to its prior approval in cases of certain foreign indebtedness operations regarding bonds and financial loans.

Most recently, on December 26, 2002 and January 16, 2003, the Central Bank issued Communication “A” 3,843 and Communication “A” 3,866, providing that the Central Bank’s prior authorization will not be required for the transfer of funds abroad to make the payments of principal and/or interest, as the case may be, if the following conditions are complied with:

(a) For payments of principal under outstanding and past due financial debt, all of the following conditions must be met:

• Payments of principal shall be made pursuant to a refinancing agreement entered into between the debtor and the creditor after January 2, 2003.
• Such refinancing agreement must provide for payments of principal not to exceed: (a) 10% paid as of the date of entering into such refinancing agreement; (b) 5% paid within the following six months; and (c) 5% paid within 12 months as from the date of entering into such refinancing agreement.
• The refinancing of the principal outstanding (excluding the 10% paid upon entering into the refinancing agreement) must have an average life of at least five years more than the average life of the original principal outstanding.
• The financial debt must relate to: (a) notes, bonds and commercial paper; (b) syndicated loans with foreign banks; (c) financial loans with foreign banks which are neither secured by assets of the debtor located outside of Argentina nor by similar assets of persons domiciled in Argentina; and (d) intercompany loans.

If, prior to the repayment of principal under existing facilities, the local debtor obtains new financing that provides for new funds to enter Argentina on or after December 26, 2002 through the foreign exchange market and this new financing (a) has an average life of not less than five years and (b) is for an amount at least equal to the amount of the debt that will be cancelled, the conditions of Communication “A” 3,843 will be deemed to have been met and therefore no prior authorization of the Central Bank will be necessary to pay principal under the existing facility.

(b) For payments of principal under past due financial debt, irrespective of whether the conditions described in (a) above have been met, the Central Bank’s prior authorization will not be required if the following conditions are met:

• The principal amount to be repaid must not exceed U.S.$150,000 per month.
• The debtor must give a sworn statement that the repayment complies with the conditions set forth herein.

In order to allow payments of interest needing the Central Bank’s prior approval, the Central Bank requires that the payment of interest be made not earlier than three days before the maturity date.

In recent days, the Central Bank has also issued communications providing additional flexibility (i) for corporations to remit profits and dividends abroad, (ii) for the payment of reinsurance premiums and (iii) for Argentine individuals and corporations to purchase up to U.S.$150,000 per month to make investments outside Argentina or to remit dividends and profits outside Argentina.

We cannot assure you that the Central Bank will not require prior authorization for us to make future payments on foreign indebtedness, including on the Existing Notes or the New Notes, and that such authorization will be granted. In addition, due to the general scarcity of dollars, we may find it difficult to convert large amounts of Pesos to U.S. Dollars to make principal and interest payments on our dollar-denominated debts. If the Central Bank restricts in the future our ability to transfer U.S. Dollars abroad, we will be unable to pay principal, interest and other amounts on our dollar-denominated liabilities, including on the Existing Notes and the New Notes, when they come due. The Central Bank’s willingness to permit us to make payments in U.S. Dollars may depend on a number of factors, which are not under our control.

Future governmental policies will likely significantly affect the economy as well as our operations

The federal government has historically exercised significant influence over the economy in general, and we, in particular, as a concessionaire of public services, have operated in a highly regulated environment. Due to the current Argentine crisis, we have been in discussions with the federal government regarding the terms of certain of our concessions, including our tariffs, for over a year. We cannot assure you that the terms and conditions of our various concessions will not change in the future, particularly in light of the continuing economic crisis, or that any changes will not adversely and materially affect our business, financial condition or results of operations, as well as our ability to honor our foreign currency-denominated debt obligations, including the Existing Notes and the New Notes.

As a result of the economic crisis, the federal government has taken several measures (as further described under “Recent Developments in Argentina”) and we cannot determine the impact of any of these or any future actions on the Argentine economy or our financial condition. Investors should be aware that, depending on reaction to the lifting of the corralito, the status of the discussions with the IMF, legislative or popular sentiment, the result of the presidential elections or other factors, the federal government could determine to adopt additional or amended policies to address the current economic situation in Argentina, the exchange rates or other circumstances.

Due to the current social and political crisis, investing in Argentina also entails the following risks:

• civil unrest, rioting, looting, nationwide protests, widespread social unrest and strikes;
• expropriation, nationalization and forced renegotiation or modification of existing contracts, including our concessions;
• taxation policies, including royalty and tax increases and retroactive tax claims; and
• changes in laws and policies affecting creditors’ rights and claims in bankruptcy.

We cannot provide any assurances as to the impact of any current or future action by the federal government on our financial condition and it is possible that uncertainties following any such action could themselves have an adverse impact on our financial condition.

Emerging markets volatility and certain recent developments

Financial and securities markets in Argentina are influenced, to varying degrees, by the economic and market conditions in other emerging market countries. Although the economic conditions vary from country to country, investors’ reactions to the events occurring in a certain country may substantially affect securities from issuers from other countries, including Argentina. We cannot assure you that even if Argentina’s economy stabilizes, it will not be affected by events affecting other emerging markets, such as the political and economic events that occurred in Mexico in 1994 that adversely impacted on emerging markets in general and Argentina in particular. A fall in several Asian economies, which continued during 1999 with the devaluation of the Russian currency and Russia’s defaulting on debt payments in 1998, and Brazil’s devaluation of its currency in 1999 have all affected the Argentine economy, and these and similar developments can be expected to affect the Argentine economy in the future.

It is impossible to assure you that the capital flight and decreasing liquidity levels in the Argentine financial system or any of the adverse developments that followed the situations described herein will not occur again. Moreover, it is impossible to assure or guarantee that Argentina’s or our ability to settle obligations in due time, including our obligations under the Existing Notes or the New Notes, will not result in unfavorable consequences as a result of such issues.

You may not be able to enforce your claims in Argentina

We are a corporation organized under the laws of Argentina. Most of our directors, members of the supervisory committee and officers and certain experts named herein reside in Argentina. All or a substantial portion of our assets and the assets of our directors are located in Argentina.

Under Argentine law, enforcement of foreign judgments would be recognized, provided that the requirements of Articles 517 through 519 of the Argentine Federal Code of Civil and Commercial Procedure are complied with, including the requirement that the judgment does not violate the principles of public policy of Argentine law, as determined by the Argentine court. We cannot assure you that an Argentine court would not deem the enforcement of foreign judgments condemning us to make a payment under the Existing Notes or the New Notes in foreign currency outside of Argentina to be contrary to Argentine public policy, if at that time there are legal restrictions prohibiting Argentine debtors from transferring foreign currency outside of Argentina to cancel indebtedness.

Risks Related to Us

Uncertainties resulting from the continued deterioration of the Argentine economy, the federal government’s adoption of various economic measures and the devaluation of the Peso give rise to a substantial doubt as to our ability to remain a going concern

Our Consolidated Financial Statements and our Interim Financial Statements have been prepared on the assumption that we will continue as a going concern. As a result of the continued deterioration of the Argentine economy, the devaluation of the Peso and the federal government’s adoption of various economic measures, as further described elsewhere in this Offering Memorandum, we cannot assure you that we will be able to obtain the necessary financial resources to repay or refinance our debt, that the restrictions imposed by the Central Bank on the transfer of funds abroad will not prevent us from paying principal and interest on our external debt as it comes due, including the Existing Notes and the New Notes, or that these conditions will not have a material adverse effect on our financial condition or results of operations.

On September 20, 2002, our independent auditors issued a report stating that we were negatively impacted by the continued deterioration of the Argentine economy, the federal government’s adoption of various economic measures and the devaluation of the Peso which raises substantial doubt as to our ability to continue as a going concern. You should review the report of PricewaterhouseCoopers included elsewhere in this Offering Memorandum carefully. We cannot assure you that we will be able to continue as a going concern. Our Consolidated Financial Statements and our Interim Financial Statements do not include the effects of eventual adjustments and restatements, if any, if we were required to sell our assets to pay off our liabilities, including contingent liabilities, under any circumstance other than in the ordinary course of our business.

We are highly leveraged and may be unable to pay principal and interest on our debt

We have, and expect to have, substantial liquidity and capital resource requirements to finance our business. As of September 30, 2002, we had approximately Ps.549.9 million of debt.

The amount of leverage that we have and may incur in the future could have important consequences, which include limiting our ability to refinance existing debt or to borrow money to finance working capital, acquisitions and capital expenditures, and requiring us to dedicate a substantial portion of our cash flow to repay principal and interest, thereby reducing the amount of money available to invest in operations, including acquisitions and capital expenditures.

We may not be able to generate sufficient funds from operating cash flows to satisfy our debt service requirements or to obtain future financing. If we cannot satisfy our debt service requirements or if we default on any of the various financial and other covenants in our debt arrangements, the holders of our debt will be able to accelerate the maturity of such debt or cause defaults under the other debt arrangements. Our ability to service debt obligations or to refinance them will depend upon future financial and operating performance, which will, in part, be subject to factors beyond our control such as macroeconomic conditions and regulatory changes in Argentina. If we cannot generate sufficient cash flows from our operations and cannot obtain future financing, we may have to delay or abandon some or all of our planned capital expenditures, which could further aggravate our inability to generate cash flows and repay our obligations. In addition, failure to comply with our planned capital expenditures could violate the terms of our concessions. See also “— We operate some of our businesses pursuant to concession contracts that are subject to termination.”

The impact of inflation in the restatement of our financial results may not accurately reflect our results of operations

On July 30, 2002, the Official Gazette published General Resolution No. 415 of the CNV dated July 25, 2002, pursuant to which financial statements of Argentine companies shall be issued in constant currency, upon application of the Restatement methodology set forth in Technical Resolution No. 6 of the Argentine Federation of Professional Council in Economic Sciences (Federación Argentina de Consejos Profesionales de Ciencias Económicas) as follows:

• accounting measures restated pursuant to the variations in the purchasing value of the currency until August 31, 1995, as well as those whose date of origin is included between such date and December 31, 2001, shall be considered stated in the currency as of such later date;
• the restatement method shall be applied as from January 1, 2002; and
• the index to be applied shall be the result of the calculation of the wholesale domestic price index by the National Institute of Statistics and Census (Instituto Nacional de Estadísticas y Censos).

The applicable financial statements filed as comparative information have been restated by applying the wholesale price index to historical financial statements. The application of different indexes for different periods makes comparison of the results from period to period particularly difficult and not necessarily meaningful.

The effects of inflation may impact our results of operations

Our results of operations prior to 2002 did not reflect the impact of inflation because the Peso was pegged to the U.S. Dollar on a one-to-one parity. At the end of 2001, Argentina experienced a financial and economic crisis, as more fully described elsewhere in this Offering Memorandum, and, as a result, the Peso has devaluated in relation to the U.S. Dollar. We cannot assure you that inflation itself and the federal government’s efforts to combat inflation will not affect our results of operations.

In addition, the Argentine economic crisis and inflationary environment significantly decrease the value of uncollected debts and unpaid accounts receivable.

We hold past due accounts from the federal government and nonpayment by the federal government of those debts may affect our financial condition

Due to the nature of our activities, our current assets include, and future assets may include, substantial overdue accounts receivable from the federal government. The federal government has, in the past, settled outstanding past due amounts by issuing certain federal government bonds, and may do so in the future. No assurances can be given as to the terms, principal amount, or maturity of such debt instruments. Moreover, any default by the federal government on any of its obligations will materially and adversely affect our financial condition and our ability to collect such overdue amounts, and may affect the value of those bonds, if issued, and, consequently, may hinder our ability to repay our obligations as they become due.

The tariffs that we charge customers are determined pursuant to concession contracts and controlled by the federal government

We, like all concessionaires in Argentina, are subject to extensive regulation of our tariffs. The tariffs that we charge for our services to customers are determined pursuant to certain concession contracts between the federal government and us. The federal government has substantial discretion to set our tariffs.

The Public Emergency Law established that in the case of contracts related to public services, such as our concessions, clauses setting forth the price of those public services in U.S. Dollars or other foreign currencies, and escalation clauses based on foreign price indexes or any other indexation mechanisms, are no longer valid. Prices and tariffs resulting from those clauses must be converted to Pesos at the one-to-one parity or the applicable foreign exchange rate. The Public Emergency Law also establishes that the federal government is authorized to renegotiate the terms of these contracts. The criteria for such renegotiation must take into account:

• the impact of tariffs on economic competitiveness and on income distribution;
• the quality of the service and capital expenditure programs, in cases where they were required in the contracts;
• the interest of the customers and accessibility to the services;
• the safety of the systems; and
• our profitability.

On February 12, 2002, the National Executive Branch issued Decree No. 293/02 putting the Ministry of Economy in charge of the renegotiation of contracts related to public projects and services and creating a Renegotiation Commission, the members of which (among them a representative of customers) were appointed through Decree No. 370 to assist the Ministry of Economy in order to reach a renegotiation agreement. The Ministry would have to submit a renegotiation proposal or a rescission recommendation to the National Executive Branch within 120 days of March 1, 2002. On September 16, 2002, Decree No. 1,839/02 extended the term to submit the renegotiations for an additional 120 business day period. Moreover, Decree No. 120/03, dated January 23, 2003, allows the National Executive Branch to adjust the tariffs of the public concession contracts until the renegotiations finish. If, as a result of the renegotiation procedure, an agreement is reached, it must be submitted to the Congress for analysis, and that agreement should include the adjustment made by the National Executive Branch.

We have negotiated various changes to the terms of our concessions with the federal government; however, the federal government has changed certain other terms unilaterally, and these changes have directly affected our tariffs. We cannot assure you that our tariffs will remain at the present level or that changes to our tariffs (or failure to obtain increases in our tariffs) will not materially adversely affect our results of operations. See “— Risk Related to Argentina — Future governmental policies will likely significantly affect the economy as well as our operations.”

The regulation of our tariffs by the federal government under our concessions limits our ability to operate our business

Our tariffs are limited by the federal government according to the terms of our various concessions. The tariffs charged by us, particularly in our toll roads and mass transportation segment, may be limited to unfavorably low levels, in order to combat inflation, and, therefore, our rates may not reflect the pace of inflation in Argentina. We have been experiencing real rate declines that may adversely affect our operating results. Our inability to increase our tariffs by an amount sufficient to compensate for inflation will likely have an adverse effect on our results of operations, cash flows and liquidity, which could in turn affect our ability to pay our debts, including our obligations under the Existing Notes and the New Notes, as they become due. We cannot assure you that the federal government will not use the tariff-setting policy as a means of combating inflation in the future.

We operate some of our businesses pursuant to concession contracts that are subject to termination

We are subject to a complex series of laws and regulations with respect to our activities. We provide our services pursuant to concessions, subject to regulation by various regulatory bodies. We operate some of our businesses under concessions and the terms of these concessions typically require the operator to meet specified requirements and to maintain minimum quality and service standards and certain required capital expenditures. Failure to comply with these criteria could result in the imposition of fines or other federal government actions, including termination of the concession. Historically, we have materially complied with the terms of our concessions, but due to the economic crisis in Argentina, we have not been able to fully comply with all of their terms, in particular, we are not in compliance with the minimum capital expenditures requirements in certain of our concessions. As a result, we cannot assure you that the federal government will not terminate or revoke any of our concessions even without cause. Any partial or total revocation of any or all of our concessions would likely have a material adverse effect on our financial condition and results of operations.

We are controlled by a major shareholder

All of our voting stock is owned directly or indirectly by the Roggio family, which has the ability to control the election of our board of directors, our direction and future operations, including decisions regarding acquisitions, other business opportunities and the issuance of other securities. See “Principal Shareholders.”

We are a holding company and depend on the results of our operating subsidiaries

We conduct our business through BRH and Caminos, both of which are Guarantors. The Guarantors have subsidiaries, joint ventures and affiliates in which they have minority investments. Our ability to meet our financial obligations, including our obligations under the Existing Notes and the New Notes, is dependent upon the cash flow and earnings of such subsidiaries, joint ventures and affiliates and the distribution or other payment of such earnings to us in the form of dividends, loans or other advances and payment of management fees and expenses, each of which may be subject to statutory, regulatory or contractual restrictions. Argentine law requires that dividends be paid only from available profits, as determined under applicable Argentine corporate law. Moreover, we do not have voting control over certain of the entities in which we have ownership interests and such entities may have no obligation, contingent or otherwise, to make any funds available to us, whether by dividends, advances, loans or other payments. Certain of our subsidiaries, joint ventures and affiliates are, or may in the future be, subject to loan agreements that prohibit or limit the transfer of funds to us in the form of dividends, loans, or advances and/or require that any indebtedness of such subsidiaries or affiliates to us be subordinate to the indebtedness under such loan agreements. Our subsidiaries, joint ventures and affiliates are separate and distinct legal entities and, other than the Guarantors, will have no obligation, contingent or otherwise, to pay any amounts due pursuant to the Existing Notes or the New Notes or to make any funds available therefor, whether in the form of loans, dividends or otherwise. Our subsidiaries (other than the Guarantors), joint ventures and affiliates will not guarantee the payment of principal of or interest on the Existing Notes or the New Notes. Any right we may have to receive assets of any of our subsidiaries, joint ventures or affiliates upon its liquidation or reorganization and the consequent right of the holders of the Existing Notes or the New Notes to participate in the distribution of proceeds from those assets will be effectively subordinated to the claims of such subsidiaries’, joint ventures’ or affiliates’ creditors (including tax authorities, trade creditors and lenders to such subsidiaries, joint ventures or affiliates), except to the extent that we are a creditor of such subsidiary, joint venture or affiliate, in which case our claims would still be subordinated to any security interest in the assets of such subsidiary or affiliate and indebtedness of such subsidiary or affiliate senior to that held by us.

The limitations imposed on creditors’ rights in Argentina and the ability to foreclose on certain guarantees may adversely impact you

The federal government had previously passed various laws and regulations limiting the ability of creditors to foreclose on collateral and to exercise their rights pursuant to guarantees and similar instruments upon the occurrence of a default by a debtor under a financing agreement, some of which are still in effect. Such limitations had restricted Argentine creditors from initiating collection actions and/or lawsuits to recover the repayment of defaulted loans. Pursuant to Argentine Law No. 25,563, as amended, all actions related to foreclosure proceedings (other than certain specified exceptions such as alimentary or labor credits), including pledges and all preliminary measures, such as attachments and preliminary injunctions to those facilities affected by the debtor to commercial and/or productive activities and that deprive the debtor from the use of such goods and/or facilities, are suspended until February 1, 2003. There can be no assurance that the federal government will not pass more restrictive rules and regulations restraining the ability of creditors to enforce their respective rights pursuant to debt agreements, guarantees and similar instruments and that may affect your ability to enforce the guarantees under the Existing Notes and/or the New Notes or to pursue any payment under the Existing Notes or the New Notes by the foreclosure of any of our assets.

The behavior of our customers will have a direct impact on our financial condition

As indicated earlier, the decreased level of ridership and traffic on the concessions operated by us as well as the possible non-performance by our customers (including governmental entities) of our existing contracts have had and will likely continue to have a material and adverse effect on us. Therefore, the behavior of our customers will have a significant impact on our financial condition and our ability to guarantee the repayment of the Existing Notes or the New Notes.

The deterioration of the Argentine economy has made it increasingly difficult for us to access the capital markets and obtain financing

Most Argentine companies, including us, have had limited access to the capital markets over the last few years. Our limited financing alternatives disappeared completely after December 2001, when the federal government defaulted on most of its financial obligations. In addition to Argentina’s debt crisis, our ability to access the capital and bank loan markets over the last few years has also been affected by the economic recession and political instability in Argentina and the scarcity of liquidity in the financial system. Furthermore, the federal government has imposed transfer restrictions on payments of foreign financial obligations. The prospects of Argentine companies accessing the financial markets in the near- or medium-term are very poor.

The guarantees may not be enforceable pursuant to Argentine law

BRH and Caminos will each guarantee payment in full of the New Notes. The guarantees of the New Notes to be issued by BRH and Caminos may be considered to be gratuitous and, pursuant to the Argentine insolvency law, remain subject to challenge and avoidance for a period of up to two years from the issuance of the New Notes if BRH and/or Caminos is declared bankrupt within such period. Therefore, in the event that BRH or Caminos is unable to meet its financial obligations (either as a result of the nonpayment of the New Notes or otherwise) and on or prior to the second anniversary of the issuance of the New Notes seeks judicial protection from its creditors or is declared bankrupt at the request of a third-party creditor, the guarantee granted by BRH or Caminos, as applicable, may be declared void and unenforceable by an Argentine bankruptcy court.

If an Argentine court in a suit by any creditor in respect of BRH’s or Caminos’ indebtedness which was outstanding prior to the date of issuance of their respective guarantees, which indebtedness had not been discharged at the time of the institution of such suit, were to find that (i) BRH or Caminos was insolvent at the time of institution of such suit, (ii) BRH or Caminos was insolvent at the time of issuing their respective guarantees or that insolvency resulted from the performance of BRH’s or Caminos’ obligation under their respective guarantees and (iii) BRH or Caminos did not receive adequate consideration for the issuance of their respective guarantees, the Argentine court may consider any payment made under the guarantees to be a fraud on creditors, declare any payments made to Noteholders of the Existing Notes and the New Notes under the guarantees to be ineffective as to such petitioning creditor and, accordingly, order that all amounts paid by BRH or Caminos under their respective guarantees to Noteholders of the New Notes be returned to BRH or Caminos, as the case may be, to the extent of the debt owed to such creditor.

Certain property dedicated to the provision of public services in Argentina may not be executed

Under Argentine law, attachment prior to execution and attachment in aid of execution will not be ordered by an Argentine court with respect to property which is located in Argentina and determined by such courts to be dedicated to the provision of essential public services. A portion of our assets may be considered by such court to be dedicated to the provision of an essential public service. If an Argentine court were to make such a determination with respect to certain of our assets, such assets would not be subject to attachment, execution or other legal process as long as such determination stands and the ability of one of our creditors to realize a judgment against such assets may be adversely affected.

We have not quantified the impact of the differences between Argentine GAAP and U.S. GAAP in our financial statements

A principal objective of the securities laws of the United States, Argentina and other countries is to promote full and fair disclosure of all material information of companies issuing securities. However, there may be less publicly available information about us than is regularly published by or about listed companies in certain countries with highly developed capital markets, such as the United States.

We maintain our financial books and records in Pesos and prepare our financial statements in conformity with Argentine GAAP. Significant differences exist between Argentine GAAP and U.S. GAAP, which might be material to the financial information presented in this Offering Memorandum. We have made no attempt to quantify the impact of those differences, and therefore the financial information presented in this Offering Memorandum may differ from what it would have been if prepared using U.S. GAAP.

Changes in the accounting rules relating to the preparation of our financial information may affect our financial results

The CNV adopted new accounting standards for the preparation of financial statements effective fiscal years beginning on January 1, 2003. The principal differences relevant to our financial information are (a) the mandatory application of the deferred tax method for recognizing income tax charges, (b) the utilization of a different method in the translation to Pesos of foreign subsidiaries financial information, and (c) the existence of additional disclosure requirements. Consequently, accounting standards to be utilized for the purposes of the preparation of our financial information in future periods will differ from the ones we utilized in the preparation of financial information included elsewhere in this Offering Memorandum.

Risks Related to the Exchange Offer

We may be unable to pay interest and other amounts due on the Existing Notes

Accrued interest is due on or with respect to the Existing Notes on December 1, 2002, subject to a grace period as provided for in the Existing Indenture under which the Existing Notes were issued. Given limited amounts of U.S. Dollars available to us and uncertainties in our ability to obtain the authorization of the Central Bank, as the case may be, to convert Pesos into dollars to pay accrued interest on the Existing Notes and other factors, there can be no assurances that we will in fact be able to, or determine to, pay accrued interest on the Existing Notes when due, including the interest payment due on December 1, 2002. We are making this Exchange Offer to help assist us in restructuring our financial condition and there can be no assurances what action we will determine to take to address the impact of the recent crisis in Argentina on us and our overall financial condition in the event that this Exchange Offer does not succeed.

If the Exchange Offer is not successful, we may not be able to achieve our refinancing strategy

If the Exchange Offer is not successful or if we cannot refinance our liabilities, and we cannot take other steps to ease our present lack of liquidity, we will not have sufficient resources to meet our payment obligations, and the payment default could create cross defaults on our other indebtedness. These defaults would give our creditors the right to accelerate our repayment obligations. As a result, all of our indebtedness would become due and payable.

In the event of such a default and acceleration, some or all of our creditors will have the option of taking legal action against us, which might cause us to institute bankruptcy or liquidation proceedings. Any such bankruptcy or liquidation proceeding is likely to result in significant changes to our existing obligations, including the Existing Notes, which could include the rescheduling of all or part of these obligations. Moreover, if any bankruptcy or liquidation proceedings were pending, our ability to operate or manage our business would likely be restricted and materially adversely affected.

We may make subsequent repurchases of the Existing Notes

We may, at any time, purchase Existing Notes in the open market, in privately negotiated transactions, through subsequent tender offers or otherwise. Any other purchases may be on the same terms or on terms which are more or less favorable to holders than the terms of this Exchange Offer. Any other purchases by us will depend on various factors existing at that time. Nothing contained in this Offering Memorandum will prevent us from exercising our rights under the Existing Indenture to decrease or otherwise discharge our obligations with respect to the Existing Notes in accordance with the terms thereof.

The exchange ratios for the Existing Notes may not be reflective of market values

Under the terms of the Exchange Offer, holders of Existing Notes will be offered the opportunity to exchange all or a portion of the principal amount of the Existing Notes held by them for the New Notes in an equivalent principal amount. Given uncertainties as to our financial condition, there can be no assurances as to the relative values, including market values, of the Existing Notes to the values, including market values, of the New Notes that ultimately may be assigned to holders of Existing Notes participating in the Exchange Offer.

The completion of the exchange of the Existing Notes will result in reduced liquidity for the remaining Existing Notes

To the extent the Exchange Offer is successful, the trading market for Existing Notes that are not tendered and exchanged may become very limited due to the reduction in the amount of Existing Notes outstanding after the Exchange Offer, which might adversely affect the liquidity and market price of such Existing Notes. As a result, such Existing Notes may trade at a significant discount depending on prevailing interest rates, the market for Existing Notes with similar credit features, our performance and other factors. Furthermore, the prices at which any such trading occurs in the Existing Notes could be extremely volatile. Holders of Existing Notes not tendered and exchanged may attempt to obtain quotations for their Existing Notes from their brokers; however, there can be no assurance that an active market in such Existing Notes will exist following successful consummation of the Exchange Offer and no assurance can be made as to the prices at which such Existing Notes may trade.

Risks Related to the Existing Notes and the New Notes

The terms of the New Notes differ from the terms of the Existing Notes

The terms and conditions of the New Notes differ from the terms and conditions of the Existing Notes, particularly with respect to cross-default, reporting requirements, limitations on liens and debt, among others. See “Summary — Principal Differences Between the New Notes and the Existing Notes” and “Description of the New Notes.”

We may be unable to make payments on the Existing Notes and the New Notes

Immediately following the consummation of the Exchange Offer, we will still have significant outstanding indebtedness and debt service obligations. We currently lack the resources or a plan for obtaining the resources to pay principal on the Existing Notes and the New Notes and our other debt remaining outstanding following the Exchange Offer. You should understand that an investment in the New Notes involves a high degree of risk, including the significant possibility of loss of your entire investment in the Existing Notes or the New Notes.

In addition, by participating in the Exchange Offer, you will tender your Existing Notes, which mature in 2004 in exchange for New Notes with a final maturity in 2012. We have substantial principal repayment obligations prior to the maturity of the New Notes as well as related interest payment obligations. If we are able to meet these prior obligations, we may do so by further impairing our liquidity and financial position which would in turn materially and adversely affect our ability to meet our obligations on the Existing Notes and the New Notes.

Our New Notes may not have an active trading market

The New Notes constitute a new issue that may not be widely distributed and for which there may be no established active trading market. We will make application to list the New Notes on the Buenos Aires Stock Exchange; however, if the New Notes are traded after their initial issuance, they may trade at a discount from their initial offering price, depending upon prevailing interest rates, the market for similar securities, general economic conditions and our financial condition. The Exclusive Dealer Manager is not under any obligation to make a market with respect to the New Notes and we cannot assure you that trading markets will develop or be maintained. Accordingly, we cannot assure you as to the development or liquidity of any trading market for the New Notes. If an active market for the New Notes does not develop or is interrupted, the market price and liquidity of the New Notes may be adversely affected.

RECENT DEVELOPMENTS IN ARGENTINA

The federal government has historically exercised a large influence in the Argentine economy. Due to the current economic crisis, particularly in the last four months, the federal government enacted a number of laws, decrees and regulations which sometimes conflict with each other, affecting the economy. No assurance can be given that the laws, decrees and regulations currently governing the Argentine economy will not be subject to further changes in the future, particularly in the light of the continued economic crisis, or that such changes will not adversely affect our financial condition or results of operations and our ability to make payments due under the Existing Notes and the New Notes.

Some of the actions taken by the federal government at the end of 2001 and in early 2002 might have an adverse effect on our ability to effect the payments required under the Existing Notes or the New Notes, and on the ability of holders of the Existing Notes or the New Notes to enforce their rights under the Existing Notes or the New Notes. Some of the provisions recently enacted are:

Decree No. 1570/01. On December 1, 2001, the National Executive Branch issued Decree No. 1,570/01, introducing significant changes in the Argentine financial system. This decree limited cash withdrawal from deposits in banks to a monthly maximum amount (corralito). Also, the transfer of funds outside Argentina was prohibited, except for payments related to foreign trade transactions and payments under standing financial obligations, in this latter case subject to authorization by the Central Bank.

Public Emergency and Foreign Exchange System Reform Law. On January 6, 2002, the Argentine Congress enacted the Public Emergency Law, which involved a significant change in the economic model in effect until such time. This law repealed the convertibility system that had prevailed in Argentina since 1991, and caused the devaluation of the Peso. This law enabled the Executive Branch, among other things, to enact additional regulations on monetary, financial and exchange matters. An “official” foreign exchange market was established, primarily for export and certain import transactions and financial obligations, at a rate of Ps.1.40 per U.S. Dollar, and a “free” foreign exchange market was established for all other transactions.

In addition, the Public Emergency Law granted the Executive Branch the ability to restructure U.S. Dollar- or other foreign currency-denominated debts to the domestic financial system and to provide for their conversion to Pesos at a rate of Ps.1.00=U.S.$1.00. Also, private contracts denominated in U.S. Dollars or other foreign currencies and not related to the financial system could be discharged in Pesos at a rate of Ps.1.00=U.S.$1.00 during a 180-day period. It was provided that during such period these agreements are to be renegotiated.

In the case of contracts with the federal government, including public services and works, the Public Emergency Law provided that any provisions setting the price for such works and services in U.S. Dollars or other foreign currency denomination, and also any adjustment provisions based on foreign price indexes or any other indexing mechanism, became null and of no effect. In such a way, the prices and rates resulting from such provisions must be converted to Pesos at a Ps.1.00 = U.S.$1.00 rate. It was provided that in the renegotiation of such contracts, the impact of the rates involved on economic competitiveness and on the distribution of income, the quality of service and investment plans, and the profitability of the relevant company, among other factors, were to be taken into account. Contract renegotiation proposals had to be submitted within 120 days from February 15, 2002; during such period, rates continued to be denominated in Pesos, with no variation from their pre-devaluation level. On September 16, 2002, Decree No. 1,839/02 extended the term to submit the renegotiations for an additional 120 business day period. The Public Emergency Law also provides that the Executive Branch may temporarily regulate the prices for essential supplies, goods and services. Moreover, Decree No. 120/03 dated January 23, 2003, allows the National Executive Branch to adjust the tariffs of the public concession contracts until the renegotiations finish. If, as a result of the renegotiation procedure, an agreement is reached, it must be submitted to the Congress for analysis and that agreement should include the adjustment made by the National Executive Branch.

The Public Emergency Law provided that U.S. Dollar- or Peso-denominated bank deposits should be released, subject to certain limitations to be determined by the Ministry of Economy and the Central Bank, including a payment rescheduling. Restrictions on cash withdrawals were relaxed, and the withdrawal of funds deposited in salary accounts were allowed. Cash withdrawals from other accounts could not exceed Ps.300.00 per week.

Amendment of the Central Bank Charter. On January 24, 2002, the federal government amended the Central Bank charter in order to enable it to print currency, removing the limitations imposed in 1991 under the Convertibility Law. This amendment also enables the Central Bank to make short-term advances to the federal government for amounts not exceeding 10% of the federal government’s cash revenues during the prior 12 months, act as a last-resort lender, and provide financial assistance to financial institutions in economic distress.

Decree No. 214/2002. At the beginning of February 2002, in an atmosphere of serious social turmoil, the federal government issued Decree No. 214/02 amending and supplementing the Public Emergency Law. The following items describe the most significant provisions included in this decree:

• Conversion of all U.S. Dollar-denominated debts to the Argentine financial system to Pesos, at a rate of Ps.1.00=U.S.$1.00.
• Conversion of all U.S. Dollar-denominated deposits in the financial system to Pesos at a rate of Ps.1.40 = U.S.$1.00.
• The deposits and debts converted to Pesos will be recalculated by application of an adjustment rate, the CER, to be published by the Central Bank, which will be applied as from the date of publication of Decree No. 214/2002, plus a minimum interest rate for deposits and a maximum interest rate for obligations to the financial system, to be set by the Central Bank.
• Establishment of a single free market that will determine the U.S. Dollar parity, ending with the temporary dual exchange rate provided under the Public Emergency Law.
• Conversion to Pesos of private contracts executed before January 6, 2002, at a Ps.1.00 = U.S.$1.00 rate, to be subsequently adjusted by the CER.
• Issue of a bond by the federal government to compensate financial institutions for the difference derived from the application of the exchange rates referred to above.
• Suspension for a 180-day period as from February 3, 2002, of all court actions, provisional remedies and execution proceedings on claims, debts, deposits or financial rescheduling affected by the new economic measures.

Subsequently, Decree No. 410/02 specified the scope of Decree No. 214/02, excluding certain transactions from the Peso conversion, such as, for instance, deposits with domestic financial institutions made by foreign banks or financial institutions under certain circumstances. On January 10, 2003 the Executive Branch enacted Decree No. 53/2002 excluding six more transactions from the Peso conversion. After four days, on January 14, 2003 Decree No. 70 was issued, setting forth that two of the six transactions excluded from the Peso conversion by Decree No. 53, were to be reincluded as operations that must be converted into Pesos.

In compliance with Decree No. 310/02, the Ministry of Economy provided, by Resolution No. 47/02, that the Coeficiente de Estabilización de Referencia, or CER, will be reported by the Central Bank on a monthly basis, and will be determined by the daily variation rate derived from the monthly evolution of the Consumer Price Index published by the Institute of Statistics and Census (INDEC).

Also, Decree No. 494/02 provided that the owners of foreign currency-denominated deposits with financial institutions that were converted to Pesos pursuant to Decree No. 214/02 would be able to elect to receive certain federal government bonds in exchange for such deposits. The period in which such option could be exercised was extended until April 30, 2003 by Resolution No. 46/02 of the Economy Ministry, and the maximum U.S.$30,000 amount originally established was suppressed by Decree No. 620/2002. Accordingly, the owners of such deposits may elect to receive bonds in substitution for their rescheduled deposits with no amount limitation.

Subsequently, the Executive Branch issued Decree No. 762/2002, excepting the following loans from application of the CER: (i) loans secured by a mortgage on the sole family dwelling under permanent occupation, originally contracted in U.S. Dollars and converted to Pesos by Decree No. 214, as amended; (ii) personal loans, whether secured by a mortgage or not, originally contracted up to the amount of Ps.12,000 or up to the amount of U.S.$12,000, and converted to Pesos by Decree No. 214, as amended, and (iii) pledge-secured loans originally contracted up to the amount of Ps.30,000 or U.S.$30,000, and converted to Pesos by Decree No. 214, as amended. Also, real property leases are excepted when the lessee is an individual and the property is used for purposes of a sole family dwelling under permanent occupation.

Decree No. 905/2002. On June 1, 2002, the Executive Branch issued Decree No. 905/2002, which repealed Decrees No. 494/2002 and No. 620/2002, in order to give the holders of rescheduled bank deposits (originally made in Pesos or U.S. Dollars and subsequently converted to Pesos by Decree No. 214/2002) an option to receive as a payment in kind, whether in whole or in part, of such deposits, Peso or U.S. Dollar bonds of the federal government under the conditions set forth in such decree. This option could be exercised for a period of up to thirty business days after the effective date of that decree. Rescheduled deposits would be publicly offered marketable securities and may be traded in self-regulating markets in Argentina. Accordingly, the holders of rescheduled deposits opting not to receive bonds could use such deposits to subscribe new issues of shares of stock and notes (negotiable obligations) authorized for their public offering and listed on a stock exchange. Such deposits could also be used to repay loans from the financial institutions with which the original deposits were made.

Resolution No. 11/02 of the Economy Ministry. On March 5, 2002, for purposes of restraining food price increases, the Ministry of Economy established a duty on exports of various consumption goods, at a rate of 10% in some cases and a rate of 5% in others. The federal government announced that it is studying the possibility of reducing the retention on crude oil exports to 10%, thus making the charges imposed on such exports equal to those imposed on other commodities.

Law No. 25,563 – Amendment to the Bankruptcy Law. On February 14, 2002, Law No. 25,563 was enacted. Under this law certain provisions of the Argentine Bankruptcy Law were amended, in an attempt to protect debtors, and a production and financial emergency was declared. For such purposes, this law provided a 90-day period for financial institutions and their debtors to reschedule debts outstanding as at November 30, 2001. Also, the law suspended all court and private execution proceedings, including mortgage foreclosures and enforcement proceedings in relation to pledge-secured loans, for 180 days. For the same period, all provisional remedies affecting assets required for the continuation of the debtor’s business are also suspended under this law.

On May 15, 2002, the Argentine Congress enacted Law No. 25,589, amending Law No. 25,563. This new law provided, among other things for: (i) the suspension of bankruptcy petitions for an additional 180-day term; (ii) the possibility for creditors and third parties to make, in the event of a failure to reach an arrangement with creditors, a bail-out offer or “cram-down” to prevent the debtor’s bankruptcy, and (iii) the suspension of all court and out-of-court execution proceedings provided for under Law No. 25,563 was repealed, such suspension being maintained only for some particular cases, such as real property auctions involving the debtor’s dwelling or property used by the debtor for purposes of production, trade or provision of services.

On August 15, 2002 the Argentine Congress enacted Law No. 25,640 amending Law No. 25,563 extending the suspension of court and out-of-court execution proceedings for an additional 90-day term. On November 11, 2002, the federal government issued a public announcement stating that the Argentine Banks Association (Asociación de Bancos de la Argentina) and the Argentine National and Private Banks Association (Asociación de Bancos Públicos y Privados de la República Argentina) agreed to extend the suspension of the execution proceedings until February 1, 2003.

Law No. 25,587. On April 25, 2002, Law No. 25,587 was enacted and established a delay of any judicial proceedings for relief against banks. These proceedings had forced banks to give depositors the money that had been retained by the banks as a result of withdrawal restrictions (corralito).

On November 22, 2002 the Ministry of Economy enacted Resolution No. 668. This Resolution provides the lifting of the banking restrictions (corralito). We cannot yet determine the impact of this action on the Argentine economy or on the financial system.

SELECTED CONSOLIDATED FINANCIAL DATA

The following tables present our selected consolidated financial data for the periods indicated. The information as of and for the years ended June 30, 2002, 2001 and 2000 and as of and for the three-month periods ended September 30, 2002 and 2001 has been derived from, should be read in conjunction with and is qualified in its entirety by reference to our Consolidated Financial Statements and related notes thereto audited by PricewaterhouseCoopers and our Interim Financial Statements and related notes thereto reviewed by PricewaterhouseCoopers, which are included elsewhere in this Offering Memorandum.

Our Consolidated Financial Statements and our Interim Financial Statements have been prepared on the assumption that we will continue as a going concern. Our independent auditors have issued a report stating that we were negatively impacted by the continued deterioration of the Argentine economy, the devaluation of the Peso and the federal government’s adoption of various economic measures. In view of these circumstances, we have not been able to comply with certain covenants contained in certain of our agreements, and, as a result, some of our creditors could demand the accelerated repayment of our debt. Management is in the process of implementing an action plan to mitigate the negative effects caused by the circumstances described above. However, we cannot assure you that we will be able to successfully implement the plan and obtain the necessary financial resources to repay or refinance our debt. These circumstances raise substantial doubt about our ability to continue as a going concern. Our Consolidated Financial Statements and Interim Financial Statements do not include any adjustments that might result from the outcome of this uncertainty. See “Risk Factors — Risks Related to Us.”

The Consolidated Financial Statements and the Interim Financial Statements included herein are prepared and presented in accordance with Argentine GAAP, which differ in certain significant respects from U.S. GAAP.

As a result of the current inflationary environment in Argentina, the accounting for inflationary effects was resumed effective January 1, 2002. Consequently, our Consolidated Financial Statements and our Interim Financial Statement have been prepared in constant Pesos in accordance with Technical Resolution No. 6, as modified by Technical Resolution No. 19. See “Presentation of Financial and Other Information” above for more information. Amounts as of and for the years ended June 30, 2002, 2001 and 2000 presented in the table below have been restated to constant Pesos as of September 30, 2002. The conversion factor used to restate this information for comparative purposes was 1.13 for the fiscal year 2002 and 2.21 for the fiscal years 2001 and 2000.

		Three-month period ended September 30,							Year ended June 30,
			2002				2001				2002		2001						2000
		(In millions of Pesos, except for financial ratios)
Income Statement Data
Net sales:
	Mass Transportation Management	39.7				128.0				363.1					526.4			445.5
	Toll Road Management	17.6				33.7				90.2					76.2			76.9
	Construction .	40.9				55.8				148.3					239.7			415.9
	Others	6.1				5.2				30.1					22.4			53.6
	Adjustments and eliminations	(3.3)				(3.0)				(13.7)					(12.3)			(60.3)
	Total net sales	Ps. 100.9				Ps. 219.7				Ps. 617.9					Ps. 852.4			Ps. 931.6
Operating (loss)/income:
	Mass Transportation Management	(1.2)				5.0				7.0					33.7			47.7
	Toll Road Management	(2.6)				12.3				5.0					(10.3)			(1.9)
	Construction	27.3				(5.9)				(18.8)					(37.2)			(30.7)
	Others	(0.1)				0.3				2.4					(15.2)			26.1
	Adjustments and eliminations	0.2				0.5				1.7					3.7			(30.0)
	Total operating income (loss)	Ps. 23.7				Ps. 12.2				Ps. (2.8)					Ps. (25.4)			Ps. 11.2
	Operating income (loss) per share	0.25				0.13				(0.03)					(0.26)			0.12
Other income and expenses, net		(1.4)				0.1				(26.5)					116.8			33.6
Net income in affiliated companies		15.0				8.6				23.5					3.5			16.8
Financing (expense) income:
	generated by assets	(40.2)				2.9				(252.0)					20.2			21.4
	generated by liabilities	54.8				(27.3)				(20.3)					(97.7)			(70.5)
Income (loss) before income taxes and Minority interest		Ps. 51.9				Ps. (3.5)				Ps. (278.0)					Ps. 17.5			Ps. 12.5
Income tax		(4.3)				(4.0)				(29.0)					(9.0)			(17.7)
Minority interest		3.3				(5.2)				33.6					0.7			(5.6)
Net income (loss)		Ps. 50.9				Ps. (12.7)				Ps. (273.4)					Ps. 9.1			Ps. (10.8)
Balance Sheet Data
Net working capital		Ps. 4.6				Ps. 87.9				Ps. (8.7)					Ps. 87.8			Ps. 131.4
Property, plant and equipment, net		179.6				245.0				198.6					250.8			247.8
Total assets		993.1				1.477.4				1.052.1					1.425.5			1.325.7
Total Debt (2)		549.9				456.1				623.8					463.6			475.9
Long-term Debt		449.9				264.3				516.5					294.6			285.5
Capital leases		*				*				*					*			*
Minority interest		1.6				45.9				(6.0)					41.2			59.4
Shareholders’ equity		Ps. 1.7				Ps. 211.9				Ps. (49.1)					Ps. 224.7			Ps. 216.0
Cash Flow Data
Net cash provided by (used in) operating activities		39.7				50.6				131.4					58.3			(17.2)
Net cash used in (provided by) investing activities		(5.8)				(15.4)				(45.1)					71.3			(31.6)
Net cash used in (provided by) financing activities		(31.3)				(36.1)				(158.3)					(88.5)			32.1
Other Financial Data
Adjusted EBITDA (1)		Ps. 52.0				Ps. 62.8				Ps. 123.1					Ps. 66.6			Ps. 95.1
Depreciation and amortization		25.8				25.7				101.1					97.3			85.9
Interest expense (2)		21.3				26.2				99.8					83.3			66.6
Ratio of Adjusted EBITDA to interest expense		2.4				2.4				1.2					0.8			1.4
Ratio of total debt to Adjusted EBITDA		*				*				5.1					7.0			5.0
Liquidity ratio (3)		1.0				1.1				1.0					1.1			1.2
Indebtedness ratio (4)		578.2				5.8				*					5.2			4.9
Solvency ratio (5)		0.0				0.2				*					0.2			0.2
Non-current asset to total asset ratio (6)		0.7				0.5				0.7					0.5			0.5
Profitability ratio (7)		*				*				(3.11)					0.04			(0.05)

__________________________

(1) Adjusted EBITDA means, with respect to any period, the Consolidated Net Income of the Issuer and the Restricted Subsidiaries for such period, (A) increased (to the extent deducted in calculating Consolidated Net Income) by the sum of: (i) all income taxes of the Issuer and the Restricted Subsidiaries paid or accrued in accordance with Argentine GAAP for such period (other than income taxes attributable to extraordinary, unusual or nonrecurring gains or losses); (ii) all financial results of the Issuer and the Restricted Subsidiaries paid or accrued for such period (including amortization of original issue discount and interest with respect to Capitalized Lease Obligations), if negative; (iii) all depreciation expense of the Issuer and the Restricted Subsidiaries; (iv) amortization expense of the Issuer and the Restricted Subsidiaries, including, without limitation, amortization of capitalized debt issuance costs; (v) deferred toll revenue of the Issuer and the Restricted Subsidiaries; (vi) adjustments to Consolidated Net Income for interests of minority shareholders in Restricted Subsidiaries; (vii) any other extraordinary noncash charges of the Issuer and the Restricted Subsidiaries, to the extent deducted in determining the Consolidated Net Income of the Issuer, and (viii) other income, net (if negative), and (B) reduced (without duplication) by the sum of (i) the aggregate amount of dividends or other distributions actually paid to minority shareholders of Restricted Subsidiaries, (ii) financial results of the Issuer and the Restricted Subsidiaries (if positive), (iii) charges for the reversal of the revaluation reserve of the Issuer and the Restricted Subsidiaries, (iv) amortization of negative goodwill and (v) other income, net (if positive), all determined on a consolidated basis in accordance with Argentine GAAP.

(2) Interest expense means the consolidated interest expense accrued on all of our debt (including capitalized interest) and that of our consolidated subsidiaries without giving effect to changes in the purchasing power of the currency (i.e., inflation accounting) and any other financial results generated by our liabilities and those of our consolidated subsidiaries in accordance with Argentine GAAP.

(3) Liquidity means current assets to current liabilities.

(4) Indebtedness means liabilities to shareholders’ equity.

(5) Solvency means shareholders’ equity to liabilities.

(6) Non-current asset to total asset ratio means non-current assets to total assets.

(7) Profitability means income for the relevant year to yearly average shareholders’ equity.

* Not provided.

THE EXCHANGE OFFER

You should carefully review the information included in this Offering Memorandum under “Risk Factors.” You should understand that the exchange of your Existing Notes for the New Notes involves a high degree of risk, including the significant possibility of loss of your entire investment in the New Notes.

Purpose of the Exchange Offer

The purpose of the Exchange Offer is to allow us to extend the maturity of our outstanding debt and to reduce our interest expense. The Exchange Offer is being conducted as part of our response to the recent events and the current economic crisis in Argentina.

Terms of the Exchange Offer

We are offering to exchange each U.S.$1,000 principal amount of our 11⅝% Guaranteed Senior Notes due June 1, 2004, or the Existing Notes, plus accrued and unpaid interest, for each U.S.$1,000 principal amount of our 6% Guaranteed Notes due 2012. If we accept your tender of Existing Notes we will pay you in lieu of accrued and unpaid interest on the Existing Notes to, but not including, the Settlement Date, at your option, either (A) a cash payment of U.S.$40 and an additional U.S.$40 principal amount of New Notes or (B) an additional U.S.$80 principal amount of New Notes. Our New Notes will be issued only in denominations of U.S.$1.00 principal amount and multiples thereof.

We will return any tendered Existing Notes that are not accepted for exchange, without expense, to the tendering holder as promptly as practicable following the Expiration Date or after we terminate the Exchange Offer for such Existing Notes.

We reserve our right to purchase or make offers for any Existing Notes that remain outstanding subsequent to the Expiration Date or to terminate the Exchange Offer as set forth under “— Conditions to the Exchange Offer.” We also reserve our right to purchase Existing Notes in the open market in privately negotiated transactions or otherwise, to the extent permitted by applicable law. Following consummation of the Exchange Offer, the terms of any purchases or offers could differ from the terms of the Exchange Offer.

Existing Notes may be exchanged only in minimum denominations of U.S.$1,000 and integral multiples of U.S.$1,000 in excess thereof; provided, however, that if any holder’s total holdings of Existing Notes total less than U.S.$1,000, such holder may tender such lesser amount of Existing Notes so long as all of such holder’s Existing Notes are tendered.

Tendering holders of Existing Notes will not be required to pay any brokerage commissions or fees or, subject to the instructions in the Letter of Transmittal, transfer taxes with respect to the exchange of Existing Notes pursuant to the Exchange Offer. We will pay all charges and expenses, other than applicable taxes, in connection with the Exchange Offer. See “— Other Fees and Expenses” below.

Concurrent Argentine Offer for New Notes

We are conducting, solely in Argentina, an offer of the New Notes, to be subscribed for cash, simultaneously with the Exchange Offer, pursuant to the rules and regulations of the CNV. This offer is being conducted outside the United States within the meaning of Regulation S under the Securities Act.

Expiration Date; Extensions; Amendments; Termination

For purposes of the Exchange Offer, the term “Expiration Date” means 5:00 p.m., New York City time, on February 25, 2003, subject to our right to extend such date and time for the Exchange Offer in respect of any of the Existing Notes in our absolute discretion, in which case the Expiration Date means the latest date and time to which the Exchange Offer is extended.

We reserve the right, in our absolute discretion, to (i) extend the Exchange Offer, (ii) terminate the Exchange Offer if a condition to our obligation to exchange the Existing Notes for the New Notes is not satisfied, or (iii) amend the Exchange Offer by giving oral or written notice of such delay, extension, termination or amendment to the Exchange Agent. If the Exchange Offer is amended in a manner that we determine constitutes a material change, we will extend the Exchange Offer for a period of at least five to ten business days, depending upon the significance of the amendment and the manner of disclosure to the holders, if the Exchange Offer would otherwise have expired during the five to ten business day period following such amendment. Any change in the consideration offered to holders of the Existing Notes pursuant to the Exchange Offer from the consideration described herein or in any supplement hereto will be granted to all holders whose Existing Notes have previously been tendered and not withdrawn pursuant to the Exchange Offer.

We will promptly announce any extension, amendment or termination of the Exchange Offer by publishing notices in compliance with the regulations of the CNV and the Buenos Aires Stock Exchange or through such other means of announcement as we deem appropriate. It will, in all cases, be sufficient means of announcement to provide such notice to or through the following parties: the trustee for the Existing Notes, DTC, the Buenos Aires Stock Exchange Bulletin and the newspaper La Nación based in Buenos Aires. We have no other obligation to publish, advertise or otherwise communicate any information about any extension, amendment or termination.

Conditions to the Exchange Offer

Notwithstanding any other provisions of the Exchange Offer, or any extension of the Exchange Offer, we will not be required to distribute cash or issue New Notes, and we may terminate the Exchange Offer or, at our option, modify, extend or otherwise amend the Exchange Offer at any time prior to or concurrently with the expiration of the Exchange Offer, as extended for any reason in our sole discretion, including, without limitation, if any of the following conditions have not been satisfied or waived:

we shall have received valid and unrevoked tenders representing at least 95% in the aggregate outstanding principal amount of the Existing Notes in the Exchange Offer;

the CNV shall have given all the relevant approvals for the issuance of the New Notes and the consummation of the Exchange Offer;

no action or event shall have occurred or been threatened, no action shall have been taken, and no statute, rule, regulation, judgment, order, stay, decree or injunction shall have been promulgated, enacted, entered, enforced or deemed applicable to the Exchange Offer, the exchange of cash and New Notes for Existing Notes under the Exchange Offer, by or before any court or governmental regulatory or administrative agency, authority or tribunal, that either:

challenges the making of the Exchange Offer, the exchange of cash and New Notes for Existing Notes under the Exchange Offer, or might, directly or indirectly, prohibit, prevent, restrict or delay consummation of, or might otherwise adversely affect in any material manner, the Exchange Offer, the exchange of cash and New Notes for Existing Notes under the Exchange Offer; or

in our judgment, could materially adversely affect our business, condition (financial or otherwise), income, operations, properties, assets, liabilities or prospects and that of our subsidiaries, individually or taken as a whole, or materially impair the contemplated benefits to us of the Exchange Offer or the exchange of cash and New Notes for Existing Notes under the Exchange Offer;

there shall not have occurred (a) any general suspension of or limitation on trading in securities in Argentina, the United States or other financial markets, including the over-the-counter market (whether or not mandatory), (b) any material adverse change in our business, financial conditions, results of operations or prospects or in the prices of the Existing Notes, (c) a material impairment in the general trading market for debt securities, (d) a declaration of a banking moratorium in Argentina, the United States or other major financial markets (whether or not mandatory), (e) a commencement of a war, armed hostilities or other national or international crisis directly or indirectly relating to Argentina or the United States, (f) any material adverse change in political or economic conditions in the United States or other international securities or financial markets generally, or (g) in the case of any of the foregoing existing at the time of the commencement of the Exchange Offer, a material acceleration or worsening thereof;

we shall not have received notice from any regulatory authority that the Exchange Offer is in violation of the laws of its jurisdiction; and

the trustee with respect to the Existing Notes shall not have either objected in any respect to, or taken any action that could, in our judgment, adversely affect the consummation of the Exchange Offer, the exchange of cash and New Notes for Existing Notes under the Exchange Offer, nor shall the trustee have taken any action that challenges the validity or effectiveness of the procedures used by us in making the Exchange Offer or the exchange of the Existing Notes under the Exchange Offer.

The foregoing conditions are for our sole benefit and may be waived by us in whole or in part and at our absolute discretion. Any determination made by us concerning an event, development or circumstance described or referred to above shall be conclusive and binding.

If any of the foregoing conditions are not satisfied, we may, at any time before or on the Expiration Date for the Exchange Offer:

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terminate the Exchange Offer and return all tendered Existing Notes to the holders thereof;

modify, extend or otherwise amend the Exchange Offer and retain all tendered Existing Notes until the Expiration Date, as extended; provided that holders will be entitled to any withdrawal rights they may have at that time (see “— Expiration Date; Extensions; Amendments; Termination” and “— Withdrawal of Tenders”); or

waive the unsatisfied conditions with respect to the Exchange Offer and accept all Existing Notes tendered and not previously withdrawn.

Effect of Tender

Any tender by a holder (and our subsequent acceptance of such tender) of any Existing Note will constitute a binding agreement between that holder and us upon the terms and subject to the conditions of the Exchange Offer described herein and in the Letter of Transmittal. The acceptance of the Exchange Offer by a tendering holder of an Existing Note will constitute the agreement by that holder to deliver good and marketable title to the Existing Note it has agreed to tender, free and clear of any liens, charges, claims, encumbrances, interests and restrictions of any kind. We reserve the right to waive, in our absolute discretion, any defects, irregularities or conditions of tender as to any particular Existing Note. In addition, if, due to additional cash subscriptions for New Notes in Argentina the Exchange Offer is over-subscribed, we also reserve the right to refuse to accept a number of Existing Notes validly tendered by Roggio in order to ensure that the Exchange Offer is fully subscribed. See “Commitment of Our Controlling Shareholder.”

Tax Treatment of the Exchange Offer

We believe that the exchange of Existing Notes for New Notes in the Exchange Offer will be treated as a recapitalization for U.S. federal income tax purposes, but such position is not certain. As a recapitalization, gain or loss generally will not be recognized on the exchange of Existing Notes for New Notes pursuant to the Exchange Offer. The New Notes will be issued with original issue discount for U.S. federal income tax purposes. Non-Argentine beneficiaries are exempted from Argentine income tax on capital gains derived from the exchange or disposition of the Existing Notes.

Letter of Transmittal; Representations, Warranties and Covenants of Holders of Existing Notes

Upon the submission of the Letter of Transmittal, or agreement to the terms of the Letter of Transmittal, a holder, or the beneficial owner of such Existing Notes on behalf of which the holder has tendered, will, subject to each holder’s ability to withdraw its tender and subject to the terms and conditions of the Exchange Offer generally, be deemed, among other things, to:

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irrevocably sell, assign and transfer to or upon our order or the order of our nominee, all right, title and interest in and to, and any and all claims in respect of or arising or having arisen as a result of such holder’s status as a holder of, all Existing Notes tendered thereby, such that thereafter it shall have no contractual or other rights or claims in law or equity against us or any fiduciary, trustee, fiscal agent or other person connected with the Existing Notes arising under, from or in connection with such Existing Notes;

waive any and all rights with respect to the Existing Notes tendered (including, without limitation, any existing, past or continuing defaults and their consequences in respect of such Existing Notes); and

release and discharge us, the Guarantors and the trustee from any and all claims such holder may have, now or in the future, arising out of or related to the Existing Notes tendered, including, without limitation, any claims that such holder is entitled to receive additional principal or interest payments with respect to the Existing Notes tendered (other than as expressly provided in this Offering Memorandum and the Letter of Transmittal) or to participate in any redemption or defeasance of the Existing Notes tendered.

In addition, such holder of Existing Notes, or the beneficial owner of such Existing Notes on behalf of which the holder has tendered, will be deemed to acknowledge, represent, warrant and agree that:

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it has received and reviewed this Offering Memorandum;

it is the beneficial owner (as defined below) of, or a duly authorized representative of one or more such beneficial owners of, the Existing Notes tendered thereby and it has full power and authority to execute the Letter of Transmittal, and has full power and authority to tender, sell, assign and transfer the Existing Notes tendered hereby;

the Existing Notes being tendered thereby were owned as of the date of tender, free and clear of any liens, charges, claims, encumbrances, interests and restrictions of any kind, and acknowledge that we will acquire good, indefeasible and unencumbered title to such Existing Notes, free and clear of all liens, charges, claims, encumbrances, interests and restrictions of any kind, when we accept the same;

it will not sell, pledge, hypothecate or otherwise encumber or transfer any Existing Notes tendered thereby from the date of the Letter of Transmittal or Agent’s Message and agrees that any purported sale, pledge, hypothecation or other encumbrance or transfer will be void and of no effect;

it is, or in the event that such holder is acting on behalf of a beneficial owner of the Existing Notes tendered thereby, such holder has received a written certification from such beneficial owner (dated as of a specific date on or since the close of such beneficial owner’s most recent fiscal year) to the effect that such beneficial owner is, either (a) a “qualified institutional buyer” as that term is defined in Rule 144A under the Securities Act, or a QIB, and is acquiring the New Notes for its own account or for a discretionary account or accounts on behalf of one or more QIBs (as to which it has been instructed and has the authority to make the statements contained herein), (b) is acquiring New Notes in an offshore transaction in accordance with Rule 903 of Regulation S under the Securities Act, or (c) an “accredited investor” as defined in Rule 501 under the Securities Act;

(a) if it is located or resident in Germany, it purchases or sells securities (as principal or agent) as part of its profession or business as defined in Section 2 No. 1 of the Securities Prospectus Act (Wertpapier-Verkaufsprospektgesetz), (b) it is aware that no sales prospectus for the New Notes within the meaning of the Securities Prospectus Act has been prepared, approved and published in German, (c) in case it is not a qualified investor as described in (a) above, it has contacted and requested this Offering Memorandum from the Exclusive Dealer Manager outside Germany and it has not been solicited in connection with the Exchange Offer by us, the Exclusive Dealer Manager, or any person acting for or on behalf of the foregoing and (d) any direct or indirect resale of the New Notes in Germany may only be made in accordance with the provision of the Securities Prospectus Act and applicable regulations thereunder;

it acknowledges that the New Notes have not been registered under the Securities Act and agrees that it will not resell New Notes in the United States, except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act;

it acknowledges that (i) we, the Exchange Agent, the Information Agent, the Principal Paying Agents and Transfer Agents or the Exclusive Dealer Manager or any person acting on behalf of any of the foregoing, have not made any statement, representation or warranty, express or implied, to it with respect to ourselves or the offer or sale of any New Notes, other than the information included in this Offering Memorandum, and (ii) any information it desires concerning us and the New Notes or any other matter relevant to its decision to acquire the New Notes (including a copy of this Offering Memorandum) is or has been made available to it;

if it is a person described in paragraph 5(a) above, (a) it is able to act on its own behalf for itself in the transactions contemplated by this Offering Memorandum, (b) it has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of its prospective investment in the New Notes, and (c) it (or the account for which it is acting) has the ability to bear the economic risks of its prospective investment in the New Notes and can afford the complete loss of such investment;

in evaluating the Exchange Offer and in making its decision as to whether to participate therein by submitting a Letter of Transmittal or transmitting an Agent’s Message to tender its Existing Notes, such holder has made its own independent appraisal of the matters referred to herein and in any related communications and is not relying on any statement, representation or warranty, express or implied, made to such holder by us, the Exchange Agent, the Information Agent or the Exclusive Dealer Manager other than those contained in this Offering Memorandum (as may be supplemented or amended prior to the Expiration Date);

the execution and delivery of the Letter of Transmittal or transmittal of an Agent’s Message shall constitute an undertaking to execute any further documents and give any further assurances that may be required in connection with any of the foregoing, in each case on and subject to the terms and conditions set out or referred to in this Offering Memorandum;

the submission of the Letter of Transmittal or transmittal of an Agent’s Message to the Exchange Agent shall, subject to the terms and conditions of the Exchange Offer generally, constitute the irrevocable appointment of the Exchange Agent as its attorney and agent, and an irrevocable instruction to such attorney and agent to complete and execute all or any form(s) of transfer and other document(s) deemed necessary in the opinion of such attorney and agent in relation to the Existing Notes tendered thereby in favor of us or such other person or persons as we may direct and to deliver such form(s) of transfer and other document(s) in the attorney’s and agent’s opinion and/or the certificate(s) and other document(s) of title relating to such Existing Notes’ registration and to execute all such other documents and to do all such other acts and things as may be in the opinion of such attorney or agent necessary or expedient for the purpose of, or in connection with, the acceptance of the Exchange Offer, and to vest in us or our nominees such Existing Notes;

the terms and conditions of the Exchange Offer shall be deemed to be incorporated in, and form a part of, the Letter of Transmittal which shall be read and construed accordingly; and

it acknowledges that we and others will rely upon the truth and accuracy of the foregoing acknowledgments, representations, warranties and agreements, and that if any of the acknowledgements, representations, warranties and agreements deemed to have been made by its acquisition of the New Notes are no longer accurate, it will promptly notify us.

Each holder of Existing Notes that submits a Letter of Transmittal, or agrees to the terms of a Letter of Transmittal pursuant to an Agent’s Message, will also be deemed to represent, warrant and agree as set forth under “Transfer Restrictions.”

The acknowledgments, representations and warranties and agreements of a holder tendering Existing Notes shall be deemed to be repeated and reconfirmed on and as of the Expiration Date and the Settlement Date. For purposes of this Offering Memorandum, the “beneficial owner” of any Existing Notes shall mean any holder that exercises sole investment discretion with respect to such Existing Notes.

Acceptance of Existing Notes for Exchange; Delivery of New Notes

Until the CNV’s authorization of the public offering of the New Notes in Argentina, any tender of the Existing Notes in Argentina will be deemed to constitute a nonbinding indication of interest to exchange Existing Notes for New Notes. The nonbinding indication of interest will be converted automatically into an effective tender of such Existing Notes upon receipt of the CNV’s authorization, unless the tender is validly withdrawn earlier. If the CNV’s authorization is not obtained prior to the Expiration Date, we will extend the Expiration Date.

We will be deemed to have accepted validly tendered Existing Notes that have not been validly withdrawn or revoked as provided in this Offering Memorandum when, and if, we have given oral or written notice thereof to the Exchange Agent. Subject to the terms and conditions of the Exchange Offer and subject to the CNV’s authorization as set forth in the preceding paragraph, delivery of New Notes and any payment (with respect to the Existing Notes accepted in the Exchange Offer) will be made by the Exchange Agent on the Settlement Date upon receipt of such notice. The Exchange Agent will act as agent for tendering holders of the Existing Notes for the purpose of receiving Existing Notes and transmitting New Notes and any cash payments as of the Settlement Date with respect to the Existing Notes. If any tendered Existing Notes are not accepted for any reason set forth in the terms and conditions of the Exchange Offer (including, in the case of Roggio, as a result of an over-subscription for the New Notes) or are validly withdrawn prior to the date on which we obtain CNV approval for the Exchange Offer, such unaccepted Existing Notes will be returned without expense to the tendering holder as promptly as practicable after the expiration or termination of the Exchange Offer.

On the Settlement Date, New Notes to be issued in exchange for Existing Notes as provided in the Exchange Offer, if consummated, will be delivered in book-entry form or, in the case of accredited investors, in certificated form.

Procedures for Tendering Existing Notes

The tender by a holder of record (and our subsequent acceptance of such tender) pursuant to one of the procedures set forth below will constitute a binding agreement between such holder and us in accordance with the terms and subject to the conditions set forth herein and in the Letter of Transmittal.

Tender of Notes Held Through a Custodian

To effectively tender Existing Notes that are held of record by a broker, dealer, commercial bank, trust company, custodian or other nominee, the beneficial owner thereof must instruct such holder to tender the Existing Notes on the beneficial owner’s behalf and deliver a Letter of Transmittal with respect thereto if tender instructions are on behalf of an accredited investor. Any beneficial owner of Existing Notes held of record by DTC or its nominee, through authority granted by DTC, may direct the DTC participant through which such beneficial owner’s Existing Notes are held in DTC to execute, on such beneficial owner’s behalf, a Letter of Transmittal with respect to Existing Notes beneficially owned by such beneficial owner on the day of execution.

Tender of Notes Held Through DTC

Pursuant to authority granted by DTC, if you are a DTC participant that has Existing Notes credited to your DTC account and thereby held of record by DTC’s nominee, you may directly tender your Existing Notes and deliver a consent as if you were the record holder. Accordingly, references herein to record holders include DTC participants with Existing Notes credited to their accounts. Within two business days after the date of this Offering Memorandum, the Exchange Agent will establish accounts with respect to the Existing Notes at DTC for purposes of the Exchange Offer.

To effectively tender Existing Notes that are held through DTC, DTC participants may transmit their acceptance through ATOP, for which the Exchange Offer will be eligible, and DTC will then edit and verify the acceptance and send an Agent’s Message to the Exchange Agent for its acceptance. Delivery of tendered Existing Notes must be made to the Exchange Agent pursuant to the book-entry delivery procedures set forth below. The term Agent’s Message means a message transmitted by DTC to, and received by, the Exchange Agent and forming a part of a book-entry confirmation, which states that DTC has received an express acknowledgment from the tendering DTC participant stating that such DTC participant has received and agrees to be bound by the Letter of Transmittal, and that we may enforce that Letter of Transmittal against that DTC participant. Delivery of Existing Notes on behalf of QIBs and Non-U.S. Holders may be effected through book entry at DTC. Delivery of Existing Notes on behalf of accredited investors may be effected through book entry at DTC, but also may be accompanied by a completed Letter of Transmittal. The Letter of Transmittal referencing the VOI identification of any related Agent’s Message and any other required documents must be transmitted to and received by the Exchange Agent.

Proper Execution and Delivery of Letter of Transmittal

Signatures on a Letter of Transmittal or notice of withdrawal described below (see “­Withdrawal of Tenders”), as the case may be, must be guaranteed by an eligible institution unless the Existing Notes tendered pursuant to the Letter of Transmittal are tendered (i) by a holder who has not completed the box entitled “Special Return Instructions” on the Letter of Transmittal or (ii) for the account of an eligible institution. If signatures on a Letter of Transmittal or notice of withdrawal are required to be guaranteed, such guarantee must be made by an eligible institution.

If the Letter of Transmittal is signed by the holder or holders of Existing Notes tendered thereby, the signature or signatures must correspond with the name or names as written on the face of the Existing Notes without alteration, enlargement or any change whatsoever. If any of the Existing Notes tendered thereby are held by two or more holders, all such holders must sign the Letter of Transmittal. If any of the Existing Notes tendered thereby are registered in different names on different Existing Notes, it will be necessary to complete, sign and submit as many separate Letters of Transmittal, and any accompanying documents, as there are different registrations of certificates.

If the Letter of Transmittal is signed by a person other than the holder of any Existing Notes listed therein, such Existing Notes must be properly endorsed or accompanied by a properly completed bond power, signed by such holder exactly as such holder’s name appears on such Existing Notes. If the Letter of Transmittal or any Existing Notes, bond powers or other instruments of transfer are signed by trustees, executors, administrators, guardians, attorneys-in-fact, officers of corporations or others acting in a fiduciary or representative capacity, such persons should so indicate when signing, and, unless waived by us, evidence satisfactory to us of their authority to so act must be submitted with the Letter of Transmittal.

No alternative, conditional, irregular or contingent tenders will be accepted. By executing the Letter of Transmittal (or facsimile thereof) or transmission of an Agent’s Message, the tendering holders of Existing Notes waive any right to receive any notice of the acceptance for exchange of their Existing Notes. Tendering holders should indicate in the applicable box in the Letter of Transmittal the name and address to which payments or substitute certificates evidencing Existing Notes for amounts not tendered or not exchanged are to be issued or sent, if different from the name and address of the person signing the Letter of Transmittal. If no such instructions are given, Existing Notes not tendered or exchanged will be returned to such tendering holder.

Withholding Tax

Under U.S. federal income tax laws relating to the “backup withholding tax,” the Exchange Agent may be required to withhold on payments made to certain holders who tender Existing Notes into the Exchange Offer. See “U.S. Federal Income Taxation ― Backup Withholding.”

General

The method of delivery of the Letter of Transmittal and all other required documents, including delivery through DTC and any acceptance of an Agent’s Message transmitted through ATOP, is at the election and risk of the tendering holder. Except as otherwise provided in the Letter of Transmittal, delivery will be deemed made only when actually received by the Exchange Agent. If a holder chooses to deliver by mail, the recommended method is by registered mail with return receipt requested and properly insured. In all cases, sufficient time should be allowed to ensure timely delivery.

We, in our sole discretion, will determine all questions as to the form of documents and validity, eligibility, including time of receipt, acceptance for payment and withdrawal of tendered Existing Notes, and our determination will be final and binding. We reserve the absolute right to reject any and all tenders of Existing Notes that we determine are not in proper form or the acceptance for payment of or payment for which may, in the opinion of our counsel, be unlawful. We also reserve the absolute right in our sole discretion to waive any of the conditions of the Exchange Offer or any defect or irregularity in the tender of Existing Notes of any particular holder, whether similar conditions, defects or irregularities are waived in the case of other holders. Our interpretation of the terms and conditions of the Exchange Offer (including the instructions in the Letter of Transmittal) will be final and binding. Neither we nor the Exchange Agent, the Exclusive Dealer Manager, the Information Agent, the Trustee nor any other person will be under any duty to give notification of any defects or irregularities in tenders or any notices of withdrawal or will incur any liability for failure to give any such notification.

No procedures for guaranteed delivery are provided in the Exchange Offer.

The Letter of Transmittal (or facsimile thereof), with any required signature guarantees, or (in the case of book-entry transfer) an Agent’s Message in lieu of the Letter of Transmittal, and any other required documents, must be transmitted to and received by the Exchange Agent on or prior to the Expiration Date at one of its addresses set forth on the back cover page of this Offering Memorandum. Existing Notes will not be deemed surrendered until the Letter of Transmittal when applicable and signature guarantees, if any, or Agent’s Message, are received by the Exchange Agent.

All New Notes will be delivered in book-entry form through DTC, except for New Notes in certificated form to be delivered to accredited investors pursuant to the delivery instructions so provided in the Letter of Transmittal.

Other Procedures

You will not be responsible for the payment of any fees or commissions to the Exchange Agent, the Information Agent, the trustee for the Existing Notes, the trustee for the New Notes or the Exclusive Dealer Manager. Participants of DTC, Euroclear or Clearstream, Luxembourg should contact the Exchange Agent for assistance. You may contact the Exclusive Dealer Manager for answers to questions concerning the terms of the Exchange Offer. The method of delivery of Existing Notes, the Letter of Transmittal, and all other required documents to the Exchange Agent is at the election and risk of the holder. Instead of delivery by mail, it is recommended that holders use an overnight or hand delivery service, properly insured. In all cases, sufficient time should be allowed to assure delivery to and receipt by the Exchange Agent on or before the Expiration Date.

Withdrawal of Tenders

You may withdraw tenders of Existing Notes pursuant to the Exchange Offer at any time on or before the date on which we obtain CNV approval for the Exchange Offer and the issuance of the New Notes. We may extend, at our discretion, the Expiration Date. If the Expiration Date is extended, it will be extended for a specific period of time. Tenders of Existing Notes may not be withdrawn subsequent to that time unless the Exchange Offer is extended and we explicitly grant you withdrawal rights.

If, for any reason whatsoever, acceptance for payment of, or payment for, any Existing Notes tendered pursuant to the Exchange Offer is delayed (whether before or after our acceptance for payment of Existing Notes) or we are unable to accept for payment or pay for the Existing Notes tendered pursuant to the Exchange Offer, we may (without prejudice to our rights set forth herein) instruct the Exchange Agent to retain tendered Existing Notes, and such Existing Notes may not be withdrawn.

Procedures. For a withdrawal of tenders of Existing Notes to be effective, a written or facsimile transmission notice of withdrawal must be received by the Exchange Agent at its address or fax number set forth on the back cover page of this Offering Memorandum. Any such notice of withdrawal must (1) specify the name of the DTC participant that tendered the Existing Notes to be withdrawn, (2) contain a description of the Existing Notes to be withdrawn and the aggregate principal amount represented by such Existing Notes and (3) be signed by the holder of such Existing Notes in the same manner as the original signature on the Letter of Transmittal by which such Existing Notes were tendered or be accompanied by evidence satisfactory to us that the person withdrawing the tender has succeeded to the beneficial ownership of the Existing Notes. In addition, the notice of withdrawal must specify, in the case of Existing Notes tendered by delivery of certificates for such Existing Notes, the name of the registered holder (if different from that of the tendering holder), or, in the case of Existing Notes tendered by book-entry transfer, the name and number of the account at DTC, Euroclear or Clearstream, Luxembourg, to be credited with the withdrawn Existing Notes. The signature on the notice of withdrawal must be guaranteed by an eligible institution unless the Existing Notes have been tendered for the account of an eligible institution. If the Existing Notes to be withdrawn have been delivered or otherwise identified to the Exchange Agent, a signed notice of withdrawal is effective immediately upon written or facsimile notice of such withdrawal even if physical release is not effected.

Any permitted withdrawal of tenders of Existing Notes may not be rescinded, and any tenders of Existing Notes properly withdrawn will thereafter be deemed not validly tendered; provided, however, that properly withdrawn tenders of Existing Notes may be re-tendered, by again following one of the appropriate procedures described above under “— Procedures for Tendering Existing Notes,” at any time on or prior to the Expiration Date.

Any Existing Notes that have been tendered pursuant to the Exchange Offer but that are not purchased will be returned to the holder thereof without cost to such holder as soon as practicable following the earlier to occur of the Expiration Date or the date on which the Exchange Offer is terminated without any such Existing Notes being purchased thereunder.

All questions as to the validity, form and eligibility (including time of receipt) of notices of withdrawal will be determined by us, in our sole discretion (which determination shall be final and binding). None of us, the Exchange Agent, the Exclusive Dealer Manager or any other person will be under any duty to give notification of any defects or irregularities in any notice of withdrawal, or incur any liability for failure to give any such notification.

Exchange Agent

The Bank of New York has been appointed as the Exchange Agent for the Exchange Offer and Banco Río de la Plata S.A. has been appointed by the Exchange Agent as its representative in Argentina. The address and telephone number of the Exchange Agent and its representative can be found on the back cover page of this Offering Memorandum.

Letters of Transmittal and all correspondence in connection with the Exchange Offer should be sent or delivered by each holder of Existing Notes, or a beneficial owner’s commercial bank, broker, dealer, trust company or other nominee, to the Exchange Agent at the address and facsimile number set forth on the back cover page of this Offering Memorandum. We will pay the Exchange Agent’s customary fees for its services and will reimburse it for its out-of-pocket expenses in connection therewith.

Information Agent

D.F. King & Co., Inc. has been appointed as the Information Agent for the Exchange Offer and will receive customary compensation for its services. Questions concerning tender procedures and requests for additional copies of this Offering Memorandum or the Letter of Transmittal should be directed to the Information Agent at the address and telephone numbers set forth on the back cover page of this Offering Memorandum. Holders of Existing Notes may also contact their commercial bank, broker, dealer, trust company or other nominee for assistance concerning the Offer. In certain circumstances, the Information Agent will make available electronic copies of this Offering Memorandum and the Letter of Transmittal.

Obtaining Information in Argentina

In Argentina, copies of this Offering Memorandum are available in Spanish. The Spanish translation of this Offering Memorandum, Letters of Transmittal and all correspondence in connection with the Exchange Offer may be requested by holders of the Existing Notes directly or through their brokers, dealers, commercial banks, trust companies, custodians or other nominees that hold such Existing Notes for their account, from the representative of the Exchange Agent in Argentina at the address and telephone number set forth on the back cover page of this Offering Memorandum.

Exclusive Dealer Manager

Banc of America Securities LLC will act as Exclusive Dealer Manager in connection with the Exchange Offer (conducting solicitation in Argentina through Bank of America, N.A., Buenos Aires Branch) and will receive customary compensation for its services. We will also reimburse the Exclusive Dealer Manager for its reasonable out-of-pocket expenses. The obligations of the Exclusive Dealer Manager Agent to perform such function are subject to certain conditions. We have agreed to indemnify the Exclusive Dealer Manager against certain liabilities, including certain liabilities under United States and Argentine securities laws. Questions regarding the term of the Exchange Offer may be directed to the Exclusive Dealer Manager at the address and telephone number set forth on the back cover page of this Offering Memorandum.

Other Fees and Expenses

We will bear the expenses of soliciting tenders of the Existing Notes. The principal solicitation is being made by mail; additional solicitations may, however, be made by facsimile transmission, telephone, e-mail or in person by the Exclusive Dealer Manager and the Information Agent, as well as by our officers and other employees and those of our affiliates, in compliance with all applicable laws and regulations.

Tendering holders of Existing Notes will not be required to pay any fee or commission to the Exclusive Dealer Manager or the Information Agent. If, however, a tendering holder handles the transaction through its broker, dealer, commercial bank, trust company or other institution, such holder may be required to pay brokerage fees or commissions to said institutions.

Payments

If the Exchange Offer is consummated, the New Notes will be issued and delivered in exchange for the Existing Notes accepted in the Exchange Offer and cash payments will be made (including cash payments in lieu of accrued and unpaid interest on the Existing Notes) on the Settlement Date. The Exchange Agent will act as agent for the tendering holders of Existing Notes for the purposes of receiving any New Notes.

All payments required to be made in connection with the Exchange Offer shall be made free of any withholding taxes or deductions.

Existing Notes may be tendered and will be accepted for exchange only in denominations of U.S.$1,000 principal amount and integral multiples of U.S.$1,000 in excess thereof.

Listing of the New Notes

Application will be made to list the New Notes on the Buenos Aires Stock Exchange.

EXCHANGE RATES

From April 1, 1991 until the beginning of 2002, the Convertibility Law was applicable in Argentina. The Convertibility Law established a fixed exchange rate under which the Central Bank was obliged to sell U.S Dollars at a fixed rate of one Peso per U.S. Dollar. The Peso devaluation triggered greater uncertainty with respect to the economic future in Argentina.

On January 6, 2002, the Congress enacted the Public Emergency Law putting an end to the regime of the Convertibility Law and, thus, abandoning over ten years of the U.S. Dollar-Peso parity and eliminating the requirement that the Central Bank’s reserves in gold and foreign currency be at all times equivalent to not less than 100% of the monetary base. The Public Emergency Law grants the Executive Branch the power to set the exchange rate between the Peso and foreign currencies and to issue regulations related to the foreign exchange market. On the same day, the Executive Branch established a temporary dual exchange rate system. One exchange rate, applicable to exports and essential imports, was set at a rate of Ps.1.40 per U.S. Dollar. The other, which was applicable to all other transactions, was a floating rate to be freely determined by the market.

The Peso has fluctuated significantly since it began floating on January 11, 2002. On January 11, 2002, the Central Bank ended the banking holiday that it had imposed on December 21, 2001. The exchange rate for the Peso was allowed to float freely for the first time in eleven years, beginning at the rate of Ps.1.40 per U.S.$1.00. Heightened demand for scarce U.S. Dollars, caused by uncertainty and by the lack of any other investment alternatives within the corralito, led the Peso to trade well below the Ps.1.40 per U.S. Dollar exchange rate used by the federal government in the official market. On February 3, 2002 the Executive Branch repealed the dual exchange system, and another banking holiday was imposed. Exchange operations were not resumed until February 11, 2002. Since that date there has been only one freely floating exchange rate for all transactions. See “Risk Factors — Risks Related to Argentina.” During June 2002, the Peso lost significant ground, trading as low as Ps.3.90 per U.S.$1.00. The Central Bank intervened on several occasions by selling U.S. Dollars in order to support the Peso and during the third quarter the Peso recovered part of the value lost. However, the Central Bank’s ability to support the Peso by selling U.S. Dollars is restricted by its limited U.S. Dollar reserves. On January 24, 2003, the U.S. Dollar-Peso exchange rate was approximately Ps.3.16 per U.S. Dollar.

Our financial results and results of operations are impacted by the fluctuation of the Peso against the U.S. Dollar. See “Risk Factors — Risks Related to Argentina — The devaluation of the Peso creates greater uncertainty as to Argentina’s economic future.”

The following table sets forth the annual high, low, average and period-end exchange rates for U.S. Dollars for the periods indicated, expressed in nominal Pesos per U.S. Dollar and not adjusted for inflation.

	Exchange Rate of Pesos per U.S.$1.00
Year Ended December 31	Low	High	Average (1)	Period-end
1997 to 2001(2)	1.00	1.00	1.00	1.00
2002	1.60	3.90	3.22	3.37
Month Ended
June 30, 2002	3.50	3.90	3.65	3.80
July 31, 2002	3.55	3.79	3.63	3.70
August 31, 2002	3.59	3.65	3.63	3.63
September 30, 2002	3.62	3.75	3.65	3.75
October 31, 2002	3.52	3.75	3.66	3.52
November 30, 2002	3.48	3.64	3.54	3.64
December 31, 2002	3.37	3.58	3.49	3.37
January 2003 (through January 24, 2003)	3.10	3.35	3.25	3.16

Source: Banco de la Nación Argentina.

(1) Represents the daily average exchange rate during each of the relevant periods.

(2) Our assets and liabilities denominated in foreign currency as of December 31, 2001 were valued at the exchange rate of Ps.1.00 to each U.S. Dollar, as required by Resolution MD No. 01/02 of the Consejo Profesional de Ciencias Económicas de la Ciudad Autónoma de Buenos Aires (CPCECABA, Professional Council in Economic Sciences of the Autonomous City of Buenos Aires), by Central Bank Communications “A” 3439 and “A” 3574, by the Comisión Nacional de Valores, Resolution No. 392 and Inspección General de Justicia (IGJ, Governmental Regulatory Agency of Corporations) Resolution No. 2/02.

COMMITMENT OF OUR CONTROLLING SHAREHOLDER

Our controlling shareholder, Roggio, has entered into a series of agreements to acquire U.S.$71,810,000 of Existing Notes. Roggio has agreed to participate in the Exchange Offer and, except as described below, to tender the total amount of its Existing Notes and, in connection with its tender, to receive additional New Notes in payment of all of the accrued and unpaid interest due on its Existing Notes. Notwithstanding the foregoing, Roggio has agreed that if, due to additional cash subscriptions for New Notes in Argentina, the offer for New Notes is over-subscribed, we may adjust the number of Existing Notes that we accept to exchange for New Notes to ensure that the Exchange Offer is fully subscribed. Any Existing Notes which are validly tendered by Roggio but not accepted for the Exchange Offer will be returned to Roggio.

Roggio has also agreed that, immediately after the issuance of the New Notes in exchange for its Existing Notes, Roggio will deliver such New Notes (and, if applicable, any Existing Notes that are not accepted and returned as a result of an over-subscription) to us in repayment of Ps.96,000,000 of the amounts owed to us by Roggio under an outstanding inter-company loan. Upon receipt of these New Notes (and if applicable, any Existing Notes returned to Roggio), we will cancel such notes, thereby reducing our indebtedness. The delivery of the New Notes (and, if applicable, any Existing Notes) to us by Roggio in satisfaction of the inter-company balance and the cancellation of any New Notes or Existing Notes, if any, that we received are hereinafter referred to as the “Recapitalization.”

CAPITALIZATION

The following table sets forth our consolidated debt and total capitalization, which comprises total long-term and short-term debt and shareholders’ equity as of September 30, 2002 and our consolidated debt and total capitalization after giving effect to the Exchange Offer and the Recapitalization. Except as disclosed herein, there has been no material change in our capitalization since September 30, 2002.

	At September 30, 2002	After giving effect to Offer and Recapitalization(1)
	(in millions of Pesos)
Short-term debt
Loans	59.6	59.6
Financial debt	40.3	27.6
Total short-term debt	99.9	87.3
Long-term debt
Loans	52.0	52.0
Financial debt	397.9	131.4
Total long-term debt	449.9	183.4
Shareholders’ equity
Capital stock, par value Ps.1.00 per share	96.6	96.6
Inflation adjustment of capital stock	117.1	117.1
Reserves	3.2	3.2
Accumulated deficit	(215.2)	(32.0)
Total shareholders’ equity	1.7	184.9
Total capitalization	551.6	455.6

(1)We assumed (i) exchange of 100% of Existing Notes and (ii) that all holders of Existing Notes, other than Roggio, elect to receive cash in partial settlement of accrued and unpaid interest.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following management’s discussion and analysis of financial condition and results of operations should be read together with “Selected Consolidated Financial Data” and our financial statements appearing elsewhere in this Offering Memorandum. This management’s discussion and analysis of financial condition and results of operations contains forward-looking statements that involve risks, uncertainties and assumptions. These forward-looking statements include, among others, the words “expects,” “anticipates,” “intends,” “believes” and similar language. The actual results may differ materially from those anticipated in these forward-looking statements as a result of many risk factors, including those set forth elsewhere in this Offering Memorandum.

Substantial Doubt as to Our Ability to Continue as a Going Concern

Our Consolidated Financial Statements and our Interim Financial Statements have been prepared on the assumption that we will continue as a going concern. Our independent auditors have issued a report stating that we were negatively impacted by the continued deterioration of the Argentine economy, the devaluation of the Peso and the federal government’s adoption of various economic measures. In view of these circumstances, we have not been able to comply with certain covenants contained in certain of our agreements, and, as a result, some of our creditors could demand the accelerated repayment of our debt. Management is in the process of implementing an action plan to mitigate the negative effects caused by the circumstances described above. However, we cannot assure you that we will be able to successfully implement the plan and obtain the necessary financial resources to repay or refinance our debt. These circumstances raise substantial doubt as to our ability to continue as a going concern. Our financial statements do not include any adjustments that might result from the outcome of this uncertainty. See “Risk Factors  Risks Related to Us.”

Critical Accounting Policies and Estimates; Certain Adjustments Required by Argentine GAAP

In connection with the preparation of the financial statements included in this Offering Memorandum, we have relied on variables and assumptions derived from our historical experience and various other factors that we deemed reasonable and relevant. Although we review these estimates and assumptions in the ordinary course of business, the portrayal of our financial condition and results of operations often requires our management to make judgments regarding the effects of matters that are inherently uncertain on the carrying value of our assets and liabilities. Actual results may differ from those estimated under different variables, assumptions or conditions. In order to provide an understanding about how management forms its judgments about future events, including the variables and assumptions underlying the estimates, and the sensitivity of those judgments to different variables and conditions, we have included comments related to each critical accounting policy described as follows:

• revenue recognition; and
• provision for allowances and contingencies.

In addition, because of the effect that certain adjustments required by Argentine GAAP have on our financial results, we have included additional comments on two of those adjustments relating to:

• inflation accounting; and
• foreign currency assets and liabilities.

The financial information included in this section is presented in constant Pesos of September 30, 2002 and has been prepared in accordance with Argentine GAAP, which differs in certain significant respects from U.S. GAAP. Such differences involve methods of measuring the amounts shown in the financial statements, as well as additional disclosures required by U.S. GAAP. Neither our Consolidated Financial Statements nor our Interim Financial Statements include a reconciliation to U.S. GAAP of net income (loss) and total shareholders’ equity (deficit). See “Risk Factors  Risks Related to Us.”

Certain amounts contained herein may not total due to rounding.

Revenue Recognition

Construction Segment. We use the percentage-of-completion method of accounting with respect to revenues from construction contracts. Under this method, revenue is recognized based on the ratio of costs incurred to total estimated costs applied to total estimated revenues. We do not commence revenue and cost recognition until such time as the decision to proceed with the project is made and construction activities have begun. We evaluate individually all existing contracts at the end of each financial quarter and if a future loss is expected in connection with any of them, we set up a provision in the period in which the loss became known. We recognize claims on construction projects as income on our financial statements the moment they are recognized by their respective debtors.

Due to the economic crisis and uncertainty in Argentina, it is not possible to reasonably determine the new costs associated with future income. Therefore, BRH decided to determine its present costs and income for most of its projects based on the definition of its engineers at September 30, 2001. Although we believe that this evaluation avoids any distortions in the present value of our projects, we cannot assure you that the margins for these projects will not increase or decrease in the future, and a loss or a gain may be recognized in connection therewith at that time.

Toll Road Management Segment. We account for the operations of each of the projects comprising our consolidated toll road management segment using the expected margin on the project. Pursuant to this accounting method, we, at the inception of a toll road project, estimate the capital expenditures and other improvements required by such project as well as the anticipated revenues, including any subsidy or other amounts to be received from the federal government as compensation for reduced tariffs or otherwise. Based on these estimates, we calculate a projected gross margin over our cost for each toll road concession. The estimates are revised at least once a year. At the end of each period, the subsidies accrued and toll fees collected in excess of those that are earned are classified as deferred revenue.

Mass Transportation Segment. We recognize revenues for the passenger transportation service based on the number of passengers transported (i.e., actual passenger trips taken). At the end of each period, passenger fees collected in excess of those recognized on the basis of actual passenger usage are classified as deferred revenues. Revenues derived from contracts for the lease of shops at stations, use of spaces and rights of way are recognized on a straight-line basis over the term of the lease.

Under the Metrovías Concession Contract, the federal government committed to complete certain improvements and capital expenditures to the existing infrastructure (such as the modernization of Line A) to increase passenger traffic. Under a separate agreement entered into between Metrovías and the federal government, the parties agreed to liquidated damages to be calculated on the basis of a specified formula in the event that the works relating to the modernization of Line A were not completed. This compensation is recorded as income when it is accrued under the contract. We recognize any claims for construction projects or other damages or grants arising from our operations in the mass transportation segment as income on our financial statements the moment they are recognized by their respective debtors.

Any cash amounts received by Metrovías from the Gasoil Fund are recorded as a liability, and not as revenues at this time. Such funds were intended to provide emergency financing, but the federal government has not yet decided against which of the various obligations it will apply the amounts advanced from the Gasoil Fund. Once such a determination is made, Metrovías will make the appropriate allocations and, if necessary, make the reorganization of revenue.

Provision for Allowances and Contingencies

We provide for losses relating to accounts receivable. The allowance for bad debts is based on our management’s evaluation of various factors, including the credit risk of customers, historical trends and other information. While our management uses the information available to make evaluations, future adjustments to the allowance may be necessary if future conditions, whether economic or otherwise, differ substantially from the assumptions used in making the evaluations. Our management has considered all events and/or transactions that are subject to reasonable and normal methods of estimation, and our financial statements reflect that consideration. This allowance is shown as a reduction of the related receivable balance. Absent any agreement to compromise or settle our claims, all balances owed to us by (or claims recognized by) any federal, provincial or municipal government are carried at their full, face amount.

We have certain contingent liabilities with respect to existing or potential claims, lawsuits and other proceedings, including those involving labor and other matters. We accrue liabilities when it is probable that future costs will be incurred and such costs can be reasonably estimated. Such accruals are based on developments to date, our estimates of the outcomes of these matters and our lawyers’ experience in contesting, litigating and settling other matters. As the scope of the liabilities becomes better defined, there will be changes in the estimates of future costs, which could have a material effect on our future results of operations and financial condition or liquidity.

Inflation Accounting

As described below, as from January 1, 2002, our financial statements have been prepared on the basis of general price-level accounting which reflects changes in the purchasing power of the Peso in the historical financial statements using changes in the Argentine wholesale price index, or WPI, as published by the Instituto Nacional de Estadísticas y Censos, as follows:

• nonmonetary items and consolidated statements of operations were adjusted to reflect the then-current general purchasing power.
• monetary items were not adjusted since such items are by nature stated in terms of current general purchasing power.
• monetary gains or losses were recognized in our consolidated statements of operations, reflecting the effect of holding monetary items. We have included the monetary gain or loss (i.e., gain or loss on exposure to inflation) within financing results, net.

The Consolidated Financial Statements as of and for the years ended June 30, 2002, 2001 and 2000 and the Interim Financial Statements as of and for the three-month periods ended September 30, 2002 and 2001 are expressed in constant Pesos as of September 30, 2002 for comparative purposes.

We have been reflecting the effects of inflation on our financial statements in accordance with generally accepted accounting standards and regulations of the control authorities, as follows:

• Prior to September 1, 1995 the financial statements were prepared on the basis of general price level accounting, which reflected changes in the purchasing power of the Peso in the historical financial statements.
• During the period from September 1, 1995 through December 31, 2001, we discontinued the restatement methodology, maintaining the effects of inflation accounted for in prior periods, as provided by rules issued by the CNV in Argentina. The discontinuance of inflation accounting was in compliance with Argentine GAAP since the annual variation in the WPI did not exceed 8%.
• As from January 1, 2002 and as result of the current inflationary context which started at the beginning of 2002 subsequent to the end of the convertibility regime, we resumed the recognition of the effects of inflation in our financial statements in accordance with Resolution No. 3/2002 of the Consejo Profesional de Ciencias Econónimas de la Ciudad Autónoma de Buenos Aires (CPCECABA, the Professional Council in Economic Sciences of the Autonomous City of Buenos Aires) and Resolution No. 415 of the CNV. We have followed the restatement methodology established by Technical Resolution No. 6, as modified by Technical Resolution No.19, considering that the accounting measurements restated due to the change in the purchasing power of the currency up to August 31, 1995, as well as those which originated between that date and December 31, 2001, are stated in the currency value as of the latter date.

Valuation of Foreign Currency Receivables and Liabilities; Capitalization of Exchange Differences

As determined by Resolution No. 1/2002 of the CPECABA and Resolution No. 392 of the CNV, we have recognized the effects of the devaluation on our financial statements beginning January 1, 2002.

As determined by Resolution No. 3/2002 issued by the CPECABA and Resolution No. 398 of the CNV, exchange rate differences arising out of the devaluation of the Peso as from January 6, 2002, as well as other effects derived from that devaluation on liabilities denominated in foreign currency that existed at that date, can be capitalized as part of the cost of the assets acquired or constructed through such financing if a direct relationship exists. As an alternative criterion, it is possible to opt to give similar treatment to the exchange differences generated by indirect financing. In accordance with these rules, at September 30, 2002, we have capitalized Ps.55,302,723 in exchange differences related to direct financing as part of the cost of noncurrent investments in subsidiary companies and property, plant and equipment.

Other exchange rate differences arising in 2002 were charged to income and are disclosed within financial results, net in the consolidated statement of operations.

Consolidated Results of Operations

	Three-month period ended
	September 30,				Fiscal year ended June 30,
	2002		2001		2002		2001		2000
	(in millions of constant Pesos as of September 30, 2002)
Net sales	Ps. 100.9		Ps. 219.7		Ps. 617.9		Ps. 852.4		Ps. 931.6
Cost of sales	(56.8)		(164.9)		(480.1)		(653.0)		(735.9)
Administrative expenses	(11.3)		(23.0)		(79.0)		(123.5)		(108.7)
Other operating expenses	(9.1)		(19.6)		(61.5)		(101.3)		(75.8)
Operating income (loss)	23.7		12.2		(2.8)		(25.4)		11.2
Operating margin	23.5%		5.6%		(0.4)%		(3.0)%		1.2%
Other income and expenses, net	(1.4)		0.1		(26.5)		116.8		33.6
Net income in affiliated companies	15.0		8.6		23.5		3.5		16.8
Financial results, net
generated by assets	(40.2)		2.9		(252.0)		20.2		21.4
generated by liabilities	54.8		(27.3)		(20.3)		(97.7)		(70.5)
Income tax	(4.3)		(4.0)		(29.0)		(9.0)		(17.7)
Minority interest	3.3		(5.2)		33.6		0.7		(5.6)
Net income (loss)	Ps. 50.9		Ps. (12.7)		Ps. (273.4)		Ps. 9.1		Ps. (10.8)
Depreciation and amortization	25.8		25.7		101.1		97.3		85.9
Deferred results gain (loss)	9.0		(26.6)		(0.3)		(22.9)		2.2

This table includes our three principal segments (mass transportation management, construction and toll road management) and secondary operations.

Results of Operations by Segment

The tables below include selected information on the results of operations of our three major operating segments. Information about our other activities has not been included in these tables.

Mass transportation

	Three-month period				Fiscal year ended
	ended September 30,				June 30,
	2002		2001			2002		2001		2000
	(in millions of constant Pesos as of September 30, 2002)
Net sales	Ps. 39.7		Ps. 128.0			Ps. 363.1		Ps. 526.4		Ps. 445.5
Cost of sales	(28.3)		(97.1)			(281.4)		(383.9)		(316.9)
Administrative expenses	(6.3)		(12.5)			(40.0)		(58.0)		(46.9)
Other operating expenses	(6.2)		(13.4)			(34.7)		(50.7)		(34.0)
Operating (loss) income	Ps. (1.2)		Ps. 5.0			Ps. 7.0		Ps. 33.7		Ps. 47.7
Operating margin	(3.1)%		3.9%			1.9%		6.4%		10.7%
Depreciation (Property, plant and equipment only)	3.5		4.5			15.2		14.1		12.1

Toll road management

	Three-month period				Fiscal year ended
	ended September 30,				June 30,
	2002		2001		2002				2001				2000
	(in millions of constant Pesos as of September 30, 2002)
Net sales	Ps. 17.6		Ps. 33.7			Ps. 90.2				Ps. 76.2				Ps. 76.9
Cost of sales	(16.3)		(14.4)			(59.9)				(56.4)				(49.9)
Administrative expenses	(2.2)		(4.6)			(15.4)				(20.1)				(16.7)
Other operating expenses	(1.6)		(2.3)			(9.9)				(10.0)				(12.2)
Operating (loss) income	Ps. (2.6)		Ps. 12.3			Ps. 5.0				Ps. (10.3)				Ps. (1.9)
Operating margin	(14.6)%		36.6%			5.6%				(13.5)%				(2.4)%
Depreciation (Property, plant and equipment only)	16.6		14.6			60.7				57.3				50.7

Construction

	Three-month period				Fiscal year ended
	ended September 30,				June 30,
	2002		2001		2002		2001		2000
	(in millions of constant Pesos as of September 30, 2002)
Net sales	Ps. 40.9		Ps. 55.8		Ps. 148.3		Ps. 239.7		Ps. 415.9
Cost of sales	(11.4)		(53.3)		(133.9)		(211.8)		(383.2)
Administrative expenses	(1.6)		(4.8)		(17.1)		(31.0)		(35.4)
Other operating expenses	(0.5)		(3.6)		(16.1)		(34.1)		(28.0)
Operating income (loss)	Ps. 27.3		Ps. (5.9)		Ps. (18.8)		Ps. (37.2)		Ps. (30.7)
Operating margin	66.7%		(10.6)%		(12.7)%		(15.5)%		(7.4)%
Depreciation (Property, plant and equipment only)	1.8		2.3		8.9		11.0		13.5

Three-month period ended September 30, 2002 compared to the three-month period ended September 30, 2001

Overview

Net sales decreased by Ps.118.8 million, or 54.1%, from Ps.219.7 million during the three-month period ended September 30, 2001 to Ps.100.9 million during the three-month period ended September 30, 2002, primarily as a result of a decrease in sales of the mass transportation segment of Ps.88.3 million, a decrease in sales of the construction segment of Ps.15.0 million and a decrease in sales of the toll road segment of Ps.16.2 million.

Cost of sales decreased by Ps.108.1 million, or 65.5%, to Ps.56.8 million for the three-month period ended September 30, 2002 from Ps.164.9 million for the three-month period ended September 30, 2001, primarily due to decreases of Ps.68.8 million in the mass transportation segment and Ps.41.8 million in the construction segment, partially offset by an increase of Ps.1.9 million in the toll road segment.

Administrative and other operating expenses decreased by Ps.22.2 million, or 52.1%, to Ps.20.4 million for the three-month period ended September 30, 2002 from Ps.42.6 million for the three-month period ended September 30, 2001, primarily as a result of decreases in administrative and other operating expenses in the mass transportation segment, construction segment and toll road segment of Ps.13.3 million, Ps.6.3 million, and Ps.3.2 million, respectively.

Depreciation and amortization expenses totaled Ps.25.8 million for the three-month period ended September 30, 2002 and Ps.25.7 million for the three-month period ended September 30, 2001.

Deferred results amounted to a Ps.9.0 million gain for the three-month period ended September 30, 2002, as compared to a Ps.26.6 million loss in the three-month period ended September 30, 2001.

As a result of the above, operating results for the three-month period ended September 30, 2002 increased by Ps.11.4 million to a profit of Ps.23.7 million for the three-month period ended September 30, 2002, from a profit of Ps.12.2 million for the three-month period ended September 30, 2001.

Please refer to the tables above and the discussion below of segment data for a full description of the operating results for each of our three principal segments: mass transportation management, construction and toll road management.

Results of mass transportation management segment

Net sales. Net sales of our mass transportation business decreased by Ps.88.3 million, or 69.0%, to Ps.39.7 million for the three-month period ended September 30, 2002, from Ps.128.0 million for the three-month period ended September 30, 2001.

This decrease in sales is principally attributable to:

a decrease in revenues from transportation services of Ps.44.2 million, or 56.0%, to Ps.34.8 million during the three-month period ended September 30, 2002, from Ps.79.0 million during the three-month period ended September 30, 2001. Approximately Ps.2.1 million of the decrease was caused by lower ridership resulting from the general recession in the Argentine economy. The remainder of the decrease in sales of transportation services (amounting to Ps.42.1 million) was due to the changes in the purchasing power of the currency (i.e., the effects of inflation accounting) (see “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Inflation Accounting”);

a decrease in revenues from works performed pursuant to the New Investment Plan of Ps.35.7 million, or 94.8%, to Ps.2.0 million for the three-month period ended September 30, 2002, from Ps.37.6 million for the three-month period ended September 30, 2001. Sales from these works fell by Ps.14.5 million, due primarily to lower sales to the federal government of new rail cars, partially offset by (a) an increase in the amount of subsidies owed by the federal government designed to compensate for the decrease in ridership in Line A due to the works that were not performed on such line, and (b) an increase in sales of ventilation works. The remainder of the decrease in sales from works performed pursuant to the Investment Plan (described in the Metrovías Concession Contract) (amounting to Ps.21.2 million) is attributable to the changes in the purchasing power of the currency (i.e., the effects of inflation accounting) (see “— Inflation Accounting”); and

the non-consolidation, during the three-month period ended September 30, 2002, of Transportes Automotores de Luján S.A.C.I., or Talsa,which was sold in March 2002; sales of this project recorded during the three-month period ended September 30, 2001 amounted to Ps.5.2 million.

Cost of sales. Cost of sales of our mass transportation business decreased by Ps.68.8 million, or 70.8%, to Ps.28.3 million during the three-month period ended September 30, 2002, from Ps.97.1 million during the three-month period ended September 30, 2001.

This decrease is principally attributable to:

This hidden Level is here to restart lower levels

a decrease in costs associated with transportation services of Ps.32.5 million, or 56.1%, to Ps.25.4 million for the three-month period ended September 30, 2002 from Ps.57.9 million for the three-month period ended September 30, 2001. Costs associated with transportation services decreased by Ps.3.1 million, mainly due to the recovery of costs previously recorded by Metrovías in its accounts during prior periods pursuant to a provision in the concession contract which provided that, if costs increase by more than 6%, Metrovías will be granted a subsidy to compensate for this increase. The remainder of the decrease in costs associated with transportation services (amounting to Ps.29.4 million) is attributable to the changes in the purchasing power of the currency (i.e., the effects of inflation accounting) (see “— Inflation Accounting”);

a decrease in costs associated with works performed pursuant to the Investment Plan of Ps.26.2 million, or 93.2%, to Ps.1.9 million for the three-month period ended September 30, 2002, from Ps.28.2 million for the three-month period ended September 30, 2001. Costs associated with the works performed pursuant to the Investment Plan decreased Ps.9.4 million, due mainly to a decrease in the cost of new rail cars under the acquisition program. The remainder of the decrease in costs associated with works performed pursuant to the Investment Plan (amounting to Ps.16.7 million) is attributable to the changes in the purchasing power of the currency (i.e., the effects of inflation accounting) (see “—Inflation Accounting”); and

the non-consolidation, during the three-month period ended September 30, 2002, of Talsa, which was sold in March 2002; the cost of sales of this project recorded during the three-month period ended September 30, 2001 totaled Ps.8.7 million.

Administrative expenses. Administrative expenses consist principally of certain types of salaries, legal fees, and payments made to Banco Suquía S.A. under the cash-in-transit agreement. Administrative expenses decreased by Ps.6.2 million, or 49.4%, to Ps.6.3 million for the three-month period ended September 30, 2002, from Ps.12.5 million for the three-month period ended September 30, 2001. This decrease was primarily due to the changes in the purchasing power of the currency (see “— Inflation Accounting”).

Other operating expenses. Other operating expenses consist primarily of expenses associated with the sale of tickets (primarily the salaries of ticket booth clerks), security costs, advertising, costs of cleaning rail cars and stations, as well as expenses for related professional services. Other operating expenses decreased by Ps.7.1 million, or 53.5%, to Ps.6.2 million for the three-month period ended September 30, 2002, from Ps.13.4 million for the three-month period ended September 30, 2001. Ps.1.1 million of this decrease is mainly due to (a) a reduction in advertising costs, and (b) the non‑consolidation, during the three-month period ended September 30, 2002, of Talsa, which was sold in March 2002. The remainder of the decrease in other operating expenses (amounting to Ps.6.0 million) was attributable to the changes in the purchasing power of the currency (i.e., the effect of inflation accounting) (see “ Inflation Accounting”).

Results of toll road management segment

We recognize toll collections as revenues based on the expected margin of the project. Toll revenues collected in excess of those that are earned are classified as deferred revenue. Management fees earned and other sales are included in the computation of total net sales.

Net sales. Our net sales recorded decreased by Ps.16.2 million or 47.9%, to Ps.17.6 million during the three-month period ended September 30, 2002, from Ps.33.7 million for the three-month period ended September 30, 2001 due primarily to (a) a Ps.1.8 million reduction in toll fees collected as a result of a decrease in ridership and the reduction in toll fees approved by the federal government in August 2001 for users of categories 4, 5 and 6 (the remainder of the decrease in toll fees collected (amounting to Ps.5.0 million) is attributable to the changes in the purchasing power of the currency (i.e., the effects of inflation accounting)); and (b) a Ps.42.8 million decrease in subsidies earned amounting to (Ps.3.5 million for the three-month period ended September 30, 2002, as compared to Ps.46.3 million for the three-month period ended September 30, 2001), as a result of the large debt acknowledgment made by the federal government as of September 30, 2001 in connection with the amounts owed to the concessionaires in respect of toll fees increases not timely approved, interest related to subsidies settled after corresponding due dates, and special discounts borne by the federal government which were not repeated in 2002.

The aforementioned decrease was partially offset by an increase of Ps.33.6 million in sales related to deferred revenues (a Ps.8.0 million gain recorded for the three-month period ended September 30, 2002 as compared to a Ps.25.6 million loss recorded as a decrease of sales during the three-month period ended September 30, 2001).

The actual toll fees collected, subsidies earned, taxes, deferred revenues and management fees and other sales recorded by us during the three-month period ended September 30, 2002 and 2001 are set forth in the table below:

	Three-month period ended September 30,
	2002		2001
	(in millions of constant Pesos as of September 30, 2002)
Actual tolls fees collected	Ps. 6.1		Ps. 12.9
Subsidies earned	3.5		46.3
Taxes	(0.1)		(0.1)
Subtotal	9.6		59.2
Deferred revenue	8.0		(25.6)
Management fees and other sales	0.0		0.1
Total revenues	Ps. 17.6		Ps. 33.7

Cost of sales. Cost of sales of our toll road management business increased by Ps.1.9 million, or 13.2%, to Ps.16.3 million for the three-month period ended September 30, 2002, from Ps.14.4 million for the three-month period ended September 30, 2001, due principally to an increase in depreciation expense from improvement works completed on highway projects.

Administrative and other operating expenses. Administrative and other operating expenses consist of all expenses related to the operation of a toll road concession that are not allocable to improvements to the highway. Administrative and other operating expenses decreased by Ps.3.2 million, to Ps.3.8 million for the three-month period ended September 30, 2002, from Ps.7.0 million for the three-month period ended September 30, 2001. This decrease was primarily due to the changes in the purchasing power of the currency (i.e., the effects of inflation accounting) (see “— Inflation Accounting”).

Results of construction segment

Net sales. Net sales of our construction segment decreased by Ps.15.0 million, or 26.8%, to Ps.40.9 million for the three-month period ended September 30, 2002, from Ps.55.8 million for the three-month period ended September 30, 2001, mainly due to the net effect of: (i) an increase in net sales of our construction segment of Ps.15.3 million, to Ps.40.5 million for the three-month period ended September 30, 2002, from Ps.25.2 million for the three-month period ended September 30, 2001, primarily due to the receipt of an amount due to us in connection with a prior claim for past due costs from the construction of the Tower of Telecommunications in the City of Montevideo (Uruguay), partially offset by the end of some works and a decrease in sales of some existing contracts such as: the construction of Pilar – Villa María Road in the province of Córdoba, works performed on Route 9 in the province of Jujuy, works performed on Line D of the Buenos Aires Subway, the construction of a drainage channel for the sewer drain system and the construction of a plant for the treatment of waste liquids in the city of Mar del Plata (province of Buenos Aires), the construction of Paso de Jama (a route that connects the province of Jujuy and Chile), works performed on the Buenos Aires-La Plata highway in the province of Buenos Aires, and the construction of a women’s prison complex in the city of Córdoba (province of Córdoba); (ii) a decrease in net sales (amounting to Ps.30.2 million) attributable to the changes in the purchasing power of the currency (i.e., the effect of inflation accounting) (see “― Inflation Accounting”).

Cost of sales. Cost of sales of our construction business decreased by Ps.41.8 million, or 78.5%, to Ps.11.4 million during the three-month period ended September 30, 2002, from Ps.53.3 million during the three-month period ended September 30, 2001. This decrease is principally attributable to the completion of some works and a decrease in sales of some existing contracts as described above, partially offset by an increase in costs of the construction of the Tower of Telecommunications in the City of Montevideo (Uruguay), and the effect of the changes in the purchasing power of the currency (amounting to Ps.28.8) (i.e., the effect of inflation accounting) (see “— Inflation Accounting”).

Administrative expenses and other operating expenses. Administrative expenses and other operating expenses reflect head office expenses of the construction segment as well as those arising from the consolidation of the accounts of certain Uniones Transitoria de Empresas, or UTEs, in which we have equity interests. Administrative expenses and other operating expenses consist primarily of consulting fees, salaries and fringe benefits, provision for contingencies and various other costs associated with evaluating requests for proposals and submitting bids.

Administrative expenses and other operating expenses decreased by Ps.6.3 million, to Ps.2.1 million for the three-month period ended September 30, 2002, from Ps.8.4 million for the three-month period ended September 30, 2001. The decrease in administrative and other operating expenses of Ps.1.6 million is principally due to a reduction in labor costs. The remainder of the decrease in administrative and other operating expenses (amounting to Ps.4.7 million) is attributable to the changes in the purchasing power of the currency (i.e., the effect of inflation accounting) (see “— Inflation Accounting”).

Consolidated Results

Depreciation and amortization. On a consolidated basis, depreciation and amortization charges for property, plant and equipment and intangible assets amounted to Ps.25.8 million for the three-month period ended September 30, 2002 and Ps.25.7 million for the three-month period ended September 30, 2001.

The depreciation of property, plant and equipment increased by Ps.1.0 million, to Ps.22.9 million for the three-month period ended September 2002, from Ps.21.9 million corresponding to the three-month period ended September 30, 2001, is due mainly to an increase in depreciation expense at Covicentro S.A. or Covicentro, and Red Vial Centro S.A, or Red Vial, from the completion of works and other capital expenditures in the toll road segment, partially offset by the non-consolidation, during the three-month period ended September 30, 2002, of Talsa, which was sold in March 2002, and a decrease in depreciation on Metrovías’ and BRH’s assets.

The amortization of intangible assets decreased by Ps.1.0 million, to Ps.2.8 million for the three-month period ended September 30, 2002, from Ps.3.8 million for the three-month period ended September 30, 2001, essentially due to the write-off of some goodwill as a result of the sale of Talsa in March 2002.

Other income and expenses, net. Other income and expenses, net, decreased by Ps.1.6 million, to a Ps.1.4 million loss for the three-month period ended September 30, 2002, from a Ps.0.1 million gain for the three-month period ended September 30, 2001. This variation was primarily due to sales of property, plant and equipment which resulted in an aggregate loss of Ps.0.9 million during the three-month period ended September 30, 2002, as compared to a Ps.0.1 million gain during the three-month period ended September 30, 2001.

Net income in affiliated companies and minority interest. Net income in affiliated companies increased by Ps.6.4 million, to Ps.15.0 million for the three-month period ended September 30, 2002, from Ps.8.6 million for the three-month period ended September 30, 2001. This increase was mainly due to a Ps.17.1 million increase in the gain arising from our equity interest in Polledo, partially offset by a Ps.10.5 million decrease in results obtained from equity investees in the toll road segment.

Our charges for minority interests held by others in consolidated companies amounted to a Ps.3.3 million gain for the three-month period ended September 30, 2002, as compared to a Ps.5.2 million loss for the three-month period ended September 30, 2001. The gain recorded during the three-month period ended September 30, 2002 was primarily due to the loss recorded by the controlled toll road segment projects, and partially offset by a gain recorded from investments in the UTEs controlled by us.

Financial results. Interest and other financial income generated by assets decreased by Ps.43.1 million, to a Ps.40.2 million loss for the three-month period ended September 30, 2002, from a Ps.2.9 million gain for the three-month period ended September 30, 2001, as a result of the following:

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the results from exposure to inflation amounted to a Ps.38.7 million loss in the three-month period ended September 30, 2002; in the three-month period ended September 30, 2001, Argentine GAAP did not require companies to give accounting recognition to the effects of inflation, consequently no inflation adjustments have been recorded in the three-month period ended September 30, 2001;

interest income decreased by Ps.45.0 million, to a Ps.4.9 million gain in the three-month period ended September 30, 2002, from a Ps.49.9 million gain in the three-month period ended September 30, 2001. The gain recorded during the three-month period ended September 30, 2002 represents the net effect of computing interest charges based on an “actual” interest rate (defined as the nominal interest rate less the inflation rate for the period). The Ps.49.9 million gain recorded during the three-month period ended September 30, 2001 includes: (a) interest income calculated on a historical basis for the three-month period ended September 30, 2001 amounting to Ps.22.6 million, and (b) the adjustment to reflect interest income in constant Pesos as of September 30, 2002, totaling Ps.27.3 million. Therefore, without considering the changes in the purchasing power of the currency (i.e., the effect of inflation accounting), interest income generated by assets decreased by Ps.11.6 million to a Ps.10.9 million gain in the three-month period ended September 30, 2002, from a Ps.22.6 million gain in the three-month period ended September 30, 2001, due mainly to the gain recorded by the toll road segment during the three‑month period ended September 30, 2001, as a result of the recognition by the federal government of interest due to Covicentro and Red Vial on unpaid and overdue receivables, partially offset by the gain related to the adjusting index (CER) in the three-month period ended September 30, 2002, applied to assets denominated in foreign currencies that were converted to Pesos as a result of the pesification; and

exchange loss decreased by Ps.42.9 million to Ps.4.1 million in the three-month period ended September 30, 2002, from Ps.47.0 million in the three-month period ended September 30, 2001, due to a Ps.21.3 million loss recorded in connection with bonds received in payment of subsidies and other receivables in the three-month period ended September 30, 2001. The remainder of the decrease (Ps.21.7 million) is attributable to the changes in the purchasing power of the currency (i.e., the effects of inflation accounting) (see “— Inflation Accounting”).

Interest and other financing expense generated by liabilities decreased by Ps.82.1 million, to a Ps.54.8 million gain for the three-month period ended September 30, 2002, from a Ps.27.3 million loss for the three-month period ended September 30, 2001, due to the following:

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the results from exposure to inflation amounted to a Ps.18.2 million gain in the three-month period ended September 30, 2002; in the three-month period ended September 30, 2001, Argentine GAAP did not require companies to give accounting recognition to the effects of inflation, consequently no inflation adjustments have been recorded during this period;

exchange gain increased by Ps.42.8 million to a Ps.42.4 million gain in the three-month period ended September 30, 2002, from a Ps.0.4 million loss in the three-month period ended September 30, 2001, mainly due to the gain recorded during the three-month period ended September 30, 2002 represented by the net effect of computing exchange changes based on the “actual” exchange rate (defined as the nominal exchange rate less the inflation rate); and

interest expense decreased by Ps.21.1 million, to Ps.5.1 million during the three-month period ended September 30, 2002, from Ps.26.2 million during the three-month period ended September 30, 2001. The loss recorded during the three-month period ended September 30, 2002 represents the effect of computing interest charges based on an “actual” interest rate (defined as the nominal interest rate less the inflation rate for the period). The Ps.26.2 million loss recorded during the three-month period ended September 30, 2001 includes: (a) the interest expense calculated on a historical basis amounting to Ps.11.8 million, and (b) the adjustment to reflect interest expense in constant Pesos of September 30, 2002, totaling Ps.14.3 million. Therefore, without considering the effect of the inflation adjustment, interest expense increased by Ps.9.5 million to Ps.21.3 million in the three-month period ended September 30, 2002, from Ps.11.8 million in the three-month period ended September 30, 2001, mainly due to (a) the loss related to the adjusting index (CER) applied to liabilities denominated in foreign currencies that were converted to Pesos as a result of the pesification in the three-month period ended September 30, 2002, and (b) an increase in interest expense due to the effect on liabilities denominated in foreign currencies because of the devaluation of the Peso.

The financial results recorded by us during the three-month periods ended September 30, 2002 and 2001 are set forth in the table below:

		Three-month period ended September 30,
		2002		2001
		(in millions of constant Pesos as of September 30, 2002)
Generated by assets:
Interest		Ps. 4.9		Ps. 49.9
Translation adjustments		(2.3)		—
Exchange loss		(4.1)		(47.0)
Loss on exposure to inflation		(38.7)		—
Financial results generated by assets		(40.2)		2.9
Generated by liabilities:
Interest		(5.1)		(26.2)
Exchange gain (loss)		42.4		(0.4)
Gain on exposure to inflation		18.2		—
Negotiable obligations fee and expenses amortization		(0.7)		(0.7)
Financial results generated by liabilities		54.8		(27.3)
Total financial results		Ps. 14.7		Ps. (24.4)

Income tax and asset tax. These charges during the three-month period ended September 30, 2002 increased by Ps.0.2 million to Ps.4.3 million for the three-month period ended September 30, 2002, from Ps.4.0 million for the three-month period ended September 30, 2001, due principally to an increase in taxes payable by the construction segment, partially offset by a decrease in those accruing in the toll road segment.

Net income (loss). As a result of the factors discussed above, we recorded net income of Ps.50.9 million for the three-month period ended September 30, 2002, as compared to a net loss of Ps.12.7 million for the three-month period ended September 30, 2001.

Year ended June 30, 2002 compared to year ended June 30, 2001

Overview

For the year ended June 30, 2002, net sales decreased by Ps.234.5 million, or 27.5%, as compared with the year ended June 30, 2001, to Ps.617.9 million from Ps.852.4 million as a result of a decrease in sales of Ps.163.3 million in the mass transportation segment and a decrease of Ps.91.4 million in the construction segment, partially offset by increases in sales of Ps.14.1 million in the toll road segment.

Cost of sales decreased by Ps.172.9 million, or 26.5%, to Ps.480.1 million for the year ended June 30, 2002 from Ps.653.0 million for the year ended June 30, 2001, primarily due to decreases of Ps.102.5 million in the mass transportation segment and Ps.77.8 million in the construction segment, partially offset by increases of Ps.3.5 million in the toll road segment.

Administrative and other operating expenses decreased by Ps.84.2 million, or 37.6%, to Ps.140.5 million for the year ended June 30, 2002 from Ps.224.7 million for the year ended June 30, 2001. This decrease was due principally to a decrease in administrative and other operating expenses in the mass transportation segment of Ps.34.2 million, a decrease of Ps.31.9 million in the construction segment, and a decrease of Ps.4.8 million in the toll road segment.

Depreciation and amortization expenses totaled Ps.101.1 million for the year ended June 30, 2002 and Ps.97.3 million for the year ended June 30, 2001.

Deferred results amounted to a Ps.0.3 million loss for the year ended June 30, 2002, as compared to a Ps.22.9 million loss for the year ended June 30, 2001.

As a result of the above, operating results for the year ended June 30, 2002 increased by Ps.22.6 million to a Ps.2.8 million loss for the year ended June 30, 2002 from a Ps.25.4 million loss for the year ended June 30, 2001.

Please refer to the tables above and the discussion below of segment data for a full description of the operating results for each of our three principal segments: mass transportation management, construction and toll road management.

Results of Mass Transportation Management Segment

Net sales. Net sales of our mass transportation business decreased by Ps.163.3 million, or 31.0%, to Ps.363.1 million for the year ended June 30, 2002, as compared to Ps.526.4 million for the year ended June 30, 2001.

This decrease in sales is attributable to:

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a decrease in revenues from transportation services of Ps.107.9 million, or 30.8%, to Ps.242.1 million for the year ended June 30, 2002, from Ps.350.0 million for the year ended June 30, 2001. Sales from transportation services decreased by Ps.34.5 million due to (i) a reduction in ridership arising from: (a) the 24-hour nationwide strike organized by the Confederación General del Trabajo in July 2001; (b) the 7-hour strike organized by the Unión Tranviarios Automotor (U.T.A.) in August 2001; (c) the strikes that occurred during December 2001; and (d) the general recession in the Argentine economy that contributed to an overall decrease in ridership; and (ii) a reduction in the price of transportation services earned since July 2001 as a result of the extension of the value-added tax, or VAT, to such services that were absorbed by us. The remainder of the decrease in sales of transportation services (amounting to Ps.73.4 million) is attributable to the changes in the purchasing power of the currency (i.e., the effects of inflation accounting) (see “— Inflation Accounting”);

a decrease in revenues from works performed pursuant to the Investment Plan of Ps.37.2 million, or 26.6%, to Ps.102.7 million for the year ended June 30, 2002, from Ps.139.9 million for the year ended June 30, 2001. Sales fell by Ps.13.4 million, due principally to a decrease in sales to the government of new rail cars, partially offset by an increase in (a) the amount of government subsidies designed to compensate for the decrease in ridership in Line A due to works that were not performed on it, (b) an increase in sales of ventilation works, and (c) an increase in sales of signal works. The remaining decrease in sales from works performed pursuant to the Investments Plan (totaling Ps.23.8 million) is attributable to the changes in the purchasing power of the currency (i.e., the effects of inflation accounting) (see “— Inflation Accounting”); and

the non-consolidation in the fiscal year ended 2002, of Talsa, which was sold in March 2002; the sales of this project recorded during the year ended June 30, 2001 amounted to Ps.12.1 million.

Cost of sales. Cost of sales of our mass transportation business decreased by Ps.102.5 million, or 26.7%, to Ps.281.4 million during the year ended June 30, 2002, from Ps.383.9 million during the year ended June 30, 2001.

This decrease is attributable to:

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a decrease in costs associated with transportation services of Ps.36.1 million, or 16.5%, to Ps.182.5 million during the year ended June 30, 2002, from Ps.218.6 million for the year ended June 30, 2001. The costs associated with transportation services decreased by Ps.4.8 million, due primarily to a reduction in labor costs, and the establishment of the VAT on transportation services that reduced our costs since we began accounting for the related VAT amounts paid as a tax credit on our consolidated balance sheet as from July 2001. The remainder of the decrease in cost associated with transportation services (amounting to Ps.31.3 million) is attributable to the changes in the purchasing power of the currency (i.e., the effects of inflation accounting) (see “— Inflation Accounting”);

a decrease in costs associated with works performed pursuant to the Investment Plan of Ps.43.4 million, or 31.8%, to Ps.93.3 million for the year ended June 30, 2002, from Ps.136.7 million for the year ended June 30, 2001. The costs associated with the works performed pursuant to the Investment Plan decreased by Ps.17.5 million, primarily as a result of a decrease in the cost of new rail cars under the acquisition program, partially offset by an increase in costs of ventilation and signal works. The remainder of the decrease in costs associated with works performed pursuant to the Investment Plan (amounting to Ps.25.9 million) is attributable to the changes in the purchasing power of the currency (i.e., the effects of inflation accounting) (see “— Inflation Accounting”); and

the non-consolidation, in the fiscal year ended 2002, of Talsa, which was sold in March 2002. The cost of sales of this project recorded during the year ended June 30, 2001 amounted to Ps.16.7 million.

Administrative expenses. Administrative expenses consist principally of certain types of salaries, legal fees, and payments to Banco Suquía S.A. under the cash-in-transit service agreement. Administrative expenses decreased by Ps.18.1 million, or 31.1%, to Ps.40.0 million for the year ended June 30, 2002, from Ps.58.0 million for the year ended June 30, 2001. Administrative expenses decreased by Ps.5.9 million, mainly due to the extension of the VAT on our services that reduced our administrative expenses since we began accounting for the related VAT amounts paid as a tax credit on our consolidated balance sheet as from July 2001, and the reduction in payments made to Banco Suquía S.A. under the aforementioned contract. The remainder of the decrease in administrative expenses (amounting to Ps.12.2 million) is attributable to the changes in the purchasing power of the currency (i.e., the effects of inflation accounting) (see “— Inflation Accounting”).

Other operating expenses. Other operating expenses consist primarily of expenses associated with the sale of tickets (primarily the salaries of ticket booth clerks), security costs, advertising, costs of cleaning cars and stations, as well as expenses for related professional services. Other operating expenses decreased by Ps.16.1 million, or 31.7%, to Ps.34.7 million for the year ended June 30, 2002, as compared to Ps.50.7 million for the year ended June 30, 2001. Other operating expenses decreased by Ps.6.0 million primarily as a result of the establishment of the VAT on transportation services that reduced our other operating expenses since we began accounting for the related VAT amounts paid as a tax credit on our consolidated balance sheets as from July 2001, a reduction in advertising costs, a reduction in security costs, and a reduction in the costs of cleaning railcars and stations. The remainder of the decrease in other operating expenses (amounting to Ps.10.0 million) is attributable to the changes in the purchasing power of the currency (i.e., the effects of inflation accounting) (see “— Inflation Accounting”).

Results of toll road management segment

We recognize toll collections as revenues based on the expected margin of the project. Toll revenues collected in excess of those earned are classified as deferred revenue. Management fees earned and other sales are included in the computation of total net sales.

Net sales. Net sales recorded by us increased by Ps.14.1 million, or 18.5%, to Ps.90.2 million during the year ended June 30, 2002, from Ps.76.2 million for the year ended June 30, 2001, principally due to an increase of Ps.45.1 million in subsidies earned (Ps.63.9 million for the year ended June 30, 2002, as compared to Ps.18.9 million for the year ended June 30, 2001) as a result of: (a) the formal acknowledgment made by the federal government of the amounts owed to the concessionaires in respect of: (1) principal and corresponding interest related to toll fee increases that had not been timely approved, (2) interest related to subsidies paid after corresponding due dates, and (3) principal and corresponding interest on special discounts borne by the federal government; and (b) subsidies earned to compensate for the reduction in toll fees approved by the federal government in August 2001 for users of categories 4, 5 and 6.

The aforementioned increase was partially offset by: (a) a reduction in toll fees collected, due to a decrease in ridership, and the reduction in toll fees approved by the federal government in August 2001 for users of categories 4, 5 and 6, which amounted to Ps.7.1 million (the remainder of the decrease in toll fees collected (amounting to Ps.11.7 million) was due to the changes in the purchasing power of the currency (i.e., effects of inflation accounting) (see “— Inflation Accounting”)) and (b) the recording of deferred revenues of Ps.1.2 million as a decrease of sales in the year ended June 30, 2002, as compared to the recording of Ps.7.9 million as an increase of sales in the year ended June 30, 2001.

The actual toll fees collected, subsidies earned, taxes, deferred revenues and management fees and other sales recorded by us during the years ended June 30, 2002 and 2001 are set forth in the table below:

		Year ended June 30,
		2002		2001
		(in millions of constant Pesos as of September 30, 2002)
Actual tolls fees collected		Ps. 29.7		Ps. 48.4
Subsidies earned		63.9		18.9
Taxes		(2.2)		(0.8)
Subtotal		Ps. 91.4		Ps. 66.5
Deferred revenue		(1.2)		7.9
Management fees and other sales		0.1		1.7
Total revenues		Ps. 90.2		Ps. 76.2

Cost of sales. Cost of sales of our toll road management business increased by Ps.3.5 million, or 6.2%, to Ps.59.9 million for the year ended June 30, 2002, from Ps.56.4 million for the year ended June 30, 2001, due principally to an increase in depreciation expense from improvement works completed on highway projects.

Administrative and other operating expenses. Administrative and other operating expenses consist of all expenses related to the operation of a toll road concession, which are not allocable to improvements to the highway. Administrative and other operating expenses decreased by Ps.4.8 million, to Ps.25.3 million for the year ended June 30, 2002 from Ps.30.1 million for the year ended June 30, 2001, Ps.2.6 million of which was mainly due to a decrease in professional fees and labor costs, partially offset by an increase in the provision for severance, indemnities, which have been estimated on the basis of the remaining contractual term of the concession. The remainder of the decrease in administrative and other operating expenses (amounting to Ps.2.2 million) is attributable to the changes in the purchasing power of the currency (i.e., the effects of inflation accounting) (see “  Inflation Accounting”).

Results of construction segment

Net Sales. Net sales for our construction segment decreased by Ps.91.4 million, or 38.1%, to Ps.148.3 million for the year ended June 30, 2002, from Ps.239.7 million for the year ended June 30, 2001. Net sales of our construction segment decreased by Ps.23.3 million to Ps.99.2 million for the year ended June 30, 2002, from Ps.122.5 million for the year ended June 30, 2001, due principally to the completion of some works and a decrease in sales of some existing contracts, such as the construction of a main gas line for the Partido de Punta del Indio and Partido de Magdalena in the province of Buenos Aires, improvements and other works performed on Line A of the Buenos Aires Subway, the construction of a 125-kilometer long channel in the province of Santa Fe, the construction of a men’s prison complex in the city of Córdoba (province of Córdoba); partially offset by the increase in sales of some existing contracts, such as the construction of the Pilar – Villa María Road in the province of Córdoba, works performed on Route 9 in the province of Jujuy, and works performed on Line D of the Buenos Aires Subway. The remainder of the decrease in sales for the construction segment (amounting to Ps.68.1 million) is attributable to the changes in the purchasing power of the currency (i.e., the effects of inflation accounting) (see “— Inflation Accounting”).

Cost of Sales. Cost of sales for our construction business decreased by Ps.77.8 million, or 36.8%, to Ps.133.9 million during the year ended June 30, 2002, from Ps.211.8 million during the year ended June 30, 2001. Without considering changes in the purchasing power of the currency (i.e., the effects of inflation accounting), cost of sales of our construction segment decreased Ps.19.8 million to Ps.88.4 million for the year ended June 30, 2002, from Ps.108.3 million for the year ended June 30, 2001, due principally to the completion of some works and a decrease in sales for some existing contracts such as those described above. The remainder of the decrease in cost of sales (amounting to Ps.58.0 million) is attributable to the application of inflation accounting (see “— Inflation Accounting”).

Administrative and other operating expenses. Administrative expenses and other operating expenses reflect head office expenses of the construction segment as well as those arising from the consolidation of the accounts of certain UTEs in which we have equity interests. Administrative expenses and other operating expenses consist primarily of consulting fees, salaries and fringe benefits, provision for contingencies and various other costs associated with evaluating requests for proposals and submitting bids.

Administrative and other operating expenses decreased by Ps.31.9 million, to Ps.33.2 million for the year ended June 30, 2002, from Ps.65.1 million for the year ended June 30, 2001. Administrative and other operating expenses decreased by Ps.9.3 million, due principally to a reduction in labor costs, rents, professional fees and maintenance expenses, partially offset by an increase in provisions and allowances. The remainder of the decrease in administrative and other operating expenses (amounting to Ps.22.7 million) is attributable to the changes in the purchasing power of the currency (i.e., the effects of inflation accounting) (see “— Inflation Accounting”).

Consolidated Results

Depreciation and amortization. On a consolidated basis, depreciation and amortization charges for property, plant and equipment, and intangible assets, amounted to Ps.101.1 million for the year ended June 30, 2002, and Ps.97.3 million for the year ended June 30, 2001.

The depreciation of property, plant and equipment increased by Ps.4.0 million, to Ps.88.3 million for the year ended June 30, 2002, from Ps.84.3 million for the year ended June 30, 2001, due mainly to an increase in the depreciation expense at Covicentro and Red Vial. from the completion of works and other capital expenditures in the toll road segment, the effect of the exchange rate on assets of Clima S.R.L. (Bolivia), or Clima, and an increase in depreciation expense for Metrovías’ assets, partially offset by a decrease in the depreciation expense for BRH and the sale of our interest in Talsa in March 2002, thus excluding its depreciation expense from our consolidated results of operations for the fiscal year 2002.

The amortization of intangible assets decreased by Ps.0.3 million, to Ps.12.7 million during the year ended June 30, 2002, from Ps.13.0 million for the year ended June 30, 2001.

Other income and expenses, net. Other income and expenses, net decreased by Ps.143.3 million, to a loss of Ps.26.5 million for the year ended June 30, 2002, from a gain of Ps.116.8 million for the year ended June 30, 2001. This variation was due principally to: (i) the sales of our interests in Talsa and Cliba Ltda. (São Paulo, Brazil), which generated a loss of approximately Ps.15.7 million during the year ended June 30, 2002; (ii) the sales of waste management businesses, GCO’s shares, and Metrovías’ shares in the initial public offering, which amounted to a approximately Ps.56.2 million gain for the year ended June 30, 2001; and (iii) the remainder of the decrease in other income and expenses, net (Ps.71.4 million) is mainly attributable to the changes in the purchasing power of the currency (i.e., the effects of inflation accounting) (see “—Inflation Accounting”).

Net income in affiliated companies and minority interest. Net income in affiliated companies increased by Ps.20.0 million, to Ps.23.5 million for the year ended June 30, 2002, from Ps.3.5 million for the year ended June 30, 2001. This increase was primarily due to a Ps.37.5 million increase in the gain arising from our equity interest in Polledo, partially offset by: (i) a Ps.10.6 million loss recorded in connection with our equity interest in Talsa, before its sale in March 2002, and (ii) a decrease in the results recorded by equity investees in the toll road segment totaling Ps.5.1 million.

Our charges for minority interests held by others in consolidated companies amounted to a Ps.33.6 million gain for the year ended June 30, 2002, as compared to a Ps.0.7 million gain for the year ended June 30, 2001. The gain in the year ended June 30, 2002 was due principally to the loss recorded by our subsidiaries engaged in the construction segment and the mass transportation segment.

Financial results. Interest and other financial income generated by assets decreased by Ps.272.2 million, to a Ps.252.0 million loss for the year ended June 30, 2002, from a Ps.20.2 million gain for the year ended June 30, 2001, mainly due to the following:

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the results from exposure to inflation amounted to a Ps.220.1 million loss in the year ended June 30, 2002; in the year ended June 30, 2001, Argentine GAAP did not require companies to give accounting recognition to the effects of inflation, and consequently no inflation adjustments have been recorded in the year ended June 30, 2001;

interest generated by assets amounted to a Ps.63.8 million loss in the year ended June 30, 2002, as compared to a Ps.14.7 million gain in the year ended June 30, 2001. The loss recorded during the year ended June 30, 2002 represents the effect of computing interest charges based on an “actual” interest rate (defined as the nominal interest rate less the inflation rate for the period which, during the fiscal year 2002, largely exceeded interest rates applied on receivables). The Ps.14.7 million gain recorded in the year ended June 30, 2001 includes: (a) interest income calculated on a historical basis for the year ended June 30, 2001 amounting to Ps.7.5 million, and (b) the adjustment to disclose interest income in constant Pesos of June 30, 2002, amounting to Ps.7.2 million. Therefore, without considering changes in the purchasing power of the currency (i.e., the effects of inflation accounting), interest income generated by assets increased by Ps.50.2 million to a Ps.57.7 million gain in the year ended June 30, 2002, from a Ps.7.5 million gain in the year ended June 30, 2001, mainly due to: (a) the gain from the toll road segment generated by the federal government’s Acknowledgement of Debt involving unpaid and overdue receivables, (b) the gain related to the adjusting index (CER) applied to assets denominated in foreign currencies that were converted to Pesos as a result of the pesification, (c) interest income on short-term investments, and (d) interest income on Metrovías’ overdue receivables related to the works performed under the Investment Plan, and

during the year ended June 30, 2002, we recorded a Ps.27.3 million gain in connection with the impact of exchange rate changes on the foreign projects located in Uruguay, Brazil, Paraguay and Bolivia.

Interest and other financing expense generated by liabilities decreased by Ps.77.3 million, to a Ps.20.3 million loss for the year ended June 30, 2002, from a Ps.97.7 million loss for the year ended June 30, 2001, mainly due to the following:

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the results from exposure to inflation amounted to a Ps.165.8 million gain in the year ended June 30, 2002; in the year ended June 30, 2001, Argentine GAAP did not require companies to give accounting recognition to the effects of inflation, consequently no inflation adjustments have been recorded in the year ended June 30, 2001;

the exchange loss increased by Ps.184.5 million to reach a Ps.196.3 million loss in the year ended June 30, 2002, from a Ps.11.8 million loss in the year ended June 30, 2001, mainly due to the effects of the devaluation of the Peso on foreign currency liabilities that amounted to Ps.327.8 million on a historical basis (nominal exchange rate), partially offset by Ps.131.5 million gain recorded during the year ended June 30, 2002 represented by computing the difference between the nominal exchange rate and the “actual” exchange rate (defined as the nominal exchange rate less the inflation rate). The exchange loss recognized as expense during the year ended June 30, 2002 does not include Ps.68.1 million of exchange losses that were capitalized as part of investments and property plant and equipment in accordance with Resolution 3/2002 issued by the CPCECABA and Resolution No. 398 of the CNV (see “— Valuation of Foreign Currency Receivables and Liabilities; Capitalization of Exchange Differences”); and

the interest expense generated by liabilities amounted to a Ps.12.9 million gain in the year ended June 30, 2002, as compared to a Ps.83.3 million loss in the year ended June 30, 2001. The gain recorded during the year ended June 30, 2002 represents the effect of computing interest charges based on an “actual” interest rate (defined as the nominal interest rate less the inflation rate for the period which, during fiscal 2002, largely exceeded interest rates applied on liabilities). The Ps.83.3 million loss recorded in the year ended June 30, 2001 includes: (a) the interest expense calculated on a historical basis amounting to Ps.42.6 million, and (b) the adjustment to reflect interest expense in constant Pesos as of June 30, 2002, amounting to Ps.40.7 million. Therefore, without considering the changes in the purchasing power of the currency (i.e., the effects of inflation accounting), interest expense generated by liabilities increased by Ps.57.2 million to a Ps.99.8 million loss in the year ended June 30, 2002, from a Ps.42.6 million loss in the year ended June 30, 2001, mainly due to (a) the loss related to the adjusting index (CER) applied to liabilities denominated in foreign currencies that were converted to Pesos as a result of the pesification in the year ended June 30, 2002, (b) the impact of the devaluation of the Peso on the principal of financial debts denominated in foreign currencies held with foreign entities, and (c) tax interests recorded in order to conform tax and accounting methods used to account for Metrovías’ concession license fee (canon).

The actual financial results recorded by us during the years ended June 30, 2002 and 2001 are set forth in the table below:

		Year ended June 30,
		2002		2001
		(in millions of constant Pesos as of September 30, 2002)
Generated by assets:
Interest		Ps. 63.8)		Ps. 14.7
Translation adjustments		27.3		___
Exchange gain		4.6		5.5
Loss on exposure to inflation		(220.1)		___
Financial results generated by assets		(252.0)		20.2
Generated by liabilities:
Interest		12.9		(83.3)
Exchange loss		(196.3)		(11.8)
Gain on exposure to inflation		165.8		___
Negotiable obligations fee and expenses amortization		(2.7)		(2.7)
Financial results generated by liabilities		(20.3)		(97.7)
Total financial results		Ps. (272.3)		Ps. (77.5)

Income tax and asset tax. These charges during the year ended June 30, 2002 increased by Ps.20.0 million to Ps.29.0 million for the year ended June 30, 2002, from Ps.9.0 million for the year ended June 30, 2001, principally due to the change in tax calculation method related to the operating concession license fee (canon) that Metrovías must pay to the federal government, in order to conform the tax method with the accounting method.

Net (loss) income. As a result of the factors discussed above, we recorded a net loss of Ps.273.4 million for the year ended June 30, 2002, as compared to a net income of Ps.9.1 million for the year ended June 30, 2001.

Year ended June 30, 2001 compared to year ended June 30, 2000

Overview

Net sales decreased by Ps.79.2 million, or 8.5 %, from Ps.931.6 million for the year ended June 30, 2000, to Ps.852.4 million for the year ended June 30, 2001, primarily as a result of a decrease in sales for the construction segment of Ps.176.3 million, partially offset by an increase in sales in the mass transportation segment of Ps.80.9 million.

Cost of sales decreased by Ps.82.9 million, or 11.3%, to Ps.653.0 million for the year ended June 30, 2001 from Ps.735.9 million for the year ended June 30, 2000, mainly due to a Ps.171.4 million decrease in the construction segment, partially offset by a Ps.67.1 million increase in the mass transportation segment.

Administrative and other operating expenses increased by Ps.40.3 million, or 21.8%, to Ps.224.7 million for the year ended June 30, 2001, from Ps.184.5 million for the year ended June 30, 2000. This increase was mainly originated in the mass transportation segment.

Depreciation and amortization expenses totaled Ps.97.3 million for the year ended June 30, 2001 and Ps.85.9 million for the year ended June 30, 2000.

Deferred revenues amounted to a Ps.22.9 million loss for the year ended June 30, 2001, as compared to a Ps.2.2 million gain recognized for the year ended June 30, 2000.

As a result of the above, operating income for the year ended June 30, 2001 decreased by Ps.36.5 million, or 326.6%, to a Ps.25.4 million loss for the year ended June 30, 2001, from a Ps.11.2 million gain for the year ended June 30, 2000.

Please refer to the tables above and the discussion below of segment data for a full description of the operating results for each of our three principal segments: mass transportation management, construction, and toll road management.

Results of Mass Transportation Management Segment

Net sales. Net sales of our mass transportation business increased by Ps.80.9 million, or 18.2%, to Ps.526.4 million for the year ended June 30, 2001, from Ps.445.5 million for the year ended June 30, 2000.

This increase in sales is principally attributable to: (i) an increase in revenues from works performed pursuant to the Investment Plan of Ps.76.8 million, or 121.6% (Ps.139.9 million for the year ended June 30, 2001, as compared to Ps.63.1 million for the year ended June 30, 2000), and (ii) the acquisition in November 2000 of Talsa, which contributed sales for the year ended June 30, 2001, amounting to Ps.12.1 million.

The increase in revenues from works performed pursuant to the Investment Plan was due to: (i) the assembly of the first two trains using the 80 rail cars purchased from Alstom Transporte Ltda., (ii) an equity interest in the incorporation of 24 rail cars from the Japanese city of Nagoya that were placed in service on Line D, and (iii) the amount received from the federal government to compensate for the decrease in ridership in Line A due to the works that were performed on it. This increase was partially offset by the finalization of some works such as: (i) works performed on the sign system of Lines B, C, D and E; (ii) work to fix up the Ruben Darío repair shop and the Plaza Italia substation; and (iii) works performed on the Technologic Complex Access Tunnel.

The aforementioned increase in sales was partially offset by a decrease in revenues from transportation services of Ps.14.4 million, or 4.0% (Ps.350.0 million for the year ended June 30, 2001, as compared to Ps.364.4 million for the year ended June 30, 2000), due to the influence of: (i) the 36-hour nationwide strike organized by the Confederación General del Trabajo in November 2000; (ii) the one-day strike organized by the Unión Tranviarios Automotor (U.T.A.) in March 2001; (iii) the one-day nationwide strike organized by the Confederación General del Trabajo in June 2001; and (iv) the general recession in the Argentine economy that has contributed to the decrease in ridership. This decrease in revenues from transportation services was partially offset by an increase of the ridership in some months of the year caused by improvements in the services rendered, such as: (i) the incorporation of 24 rail cars from the Japanese city of Nagoya in February and April 2000 that has provided greater comfort to passengers and has increased system reliability, (ii) the installation of escalators to replace stairs and (iii) the opening of the Congreso de Tucumán station in April 2000, which amounted to a 10.5 km extension of Line D up to Núñez’s neighborhood.

Cost of sales. Cost of sales of our mass transportation business increased by Ps.67.1 million, or 21.2%, to Ps.383.9 million during the year ended June 30, 2001, from Ps.316.9 million during the year ended June 30, 2000. This increase is principally attributable to: (i) an increase in cost of sales from works performed pursuant to the Investment Plan of Ps.55.1 million, or 70.6% (Ps.133.1 million for the year ended June 30, 2001, as compared to Ps.78.0 million for the year ended June 30, 2000), and (ii) the acquisition in November 2000 of Talsa, which contributed costs for the year ended June 30, 2001 amounting to Ps.16.7 million.

The increase in cost of sales to undertake capital improvements under the New Investment Plan was due principally to an increase in professional fees and subcontracting costs associated with the assembly of the first two trains using the 80 rail cars purchased from Alstom Transporte Ltda. and the incorporation of 24 rail cars from the Japanese city of Nagoya in February and April 2000. This increase was partially offset by the completion of some works, such as: (i) works performed on the sign system of the B,C,D and E Lines, (ii) works performed to fix up the Ruben Dario repair shop and equipment of the Central Operation Site and (iii) works performed in the Technologic Complex Access Tunnel and in the Plaza Italia substation.

Administrative expenses. Administrative expenses consist principally of certain types of salaries, legal fees and payments made to Banco Suquía S.A. under the cash-in-transit service agreement. Administrative expenses increased by Ps.11.1 million, or 23.7%, to Ps.58.0 million for the year ended June 30, 2001, from Ps.46.9 million for the year ended June 30, 2000, primarily due to an increase in taxes and contributions, an increase in professional fees paid, an increase in salaries and benefits and the November 2000 acquisition of Talsa.

Other operating expenses. Other operating expenses consist primarily of expenses associated with the sale of tickets (primarily the salaries of ticket booth clerks), security costs, advertising, costs of cleaning rail cars and stations, as well as expenses for related professional services. Other operating expenses increased by Ps.16.7 million, or 49.2%, to Ps.50.7 million for the year ended June 30, 2001, from Ps.34.0 million for the year ended June 30, 2000, essentially due to an increase of: (i) professional fees, (ii) costs related to advertising campaigns, (iii) salaries and benefits, and (iv) the amortization of goodwill related to the purchase of shares of Metronec and Metrovías.

Results of toll road management segment

We recognize toll collections as revenues based on the expected margin of the project. Toll revenues collected in excess of those that are earned are classified as deferred revenue. Management fees earned and other sales are included in the computation of total net sales.

Net sales. Net sales recorded by us decreased by Ps.0.7 million, or 0.9%, to Ps.76.2 million during the year ended June 30, 2001, from Ps.76.9 million for year ended June 30, 2000, primarily due to a decrease in tolls collected and management fees and other sales recorded by us during the year ended June 30, 2001. The decrease in tolls collected was due principally to a reduction of 8% in the toll fees applied by the concessionaires since March 15, 2000, and the effects of the general recession in the Argentine economy.

The aforementioned decrease was offset by a Ps.5.8 million increase in sales related to deferred revenues (Ps.7.9 million during the year ended June 30, 2001, as compared to Ps.2.2 million during the year ended June 30, 2000).

The actual toll fees collected, subsidies earned, taxes, deferred revenues and management fees and other sales recorded by us during the years ended June 30, 2001 and 2000 are set forth in the table below:

		Year ended June 30,
			2001		2000
	(in millions of constant Pesos as of September 30, 2002)
Actual tolls collected			Ps. 48.4		Ps. 51.8
Subsidies earned			18.9		18.9
Taxes			(0.8)		(0.0)
Subtotal			66.5		70.7
Deferred revenue			7.9		2.2
Management fees and other sales			1.7		4.0
Total revenues			Ps. 76.2		Ps. 76.9

Cost of sales. Cost of sales of our toll road management business increased by Ps.6.5 million, or 13.0%, to Ps.56.4 million for the year ended June 30, 2001, from Ps.49.9 million for the year ended June 30, 2000, primarily due to an increase in depreciation expense from works completed on such projects.

Administrative and other operating expenses. Administrative and other operatingexpenses consist of all expenses related to the operation of a toll road concession that are not allocable to improvements to the highway. Administrative and other operating expenses increased by Ps.1.2 million to Ps.30.1 million for the year ended June 30, 2001, from Ps.28.9 million for the year ended June 30, 2000. This increase was due principally to an increase in professional fees, partially offset by a decrease in doubtful account expenses and salaries and benefits.

Results of construction segment

Net Sales. Net sales of our construction segment decreased by Ps.176.3 million, or 42.4%, to Ps.239.7 million for the year ended June 30, 2001, from Ps.415.9 million for the year ended June 30, 2000. This decrease is principally attributable to: (i) the end of some works and a decrease in sales of some contracts, such as: works performed on Route 14 in the province of Corrientes for Ps.8.1 million; the construction of a men’s prison complex in the city of Córdoba (province of Córdoba) for Ps.19.2 million; the construction of a 3,120 meter long tunnel for the Corporación de Obras Sanitarias of Paraguay for Ps.26.3 million; the construction of the Tower of Telecommunications in the City of Montevideo (Uruguay) for Ps.6.7 million; the construction of a hospital (province of Mendoza) for Ps.5.4 million; the construction of a hospital in the province of Entre Ríos for Ps.33.3 million; works performed in Line D of the Buenos Aires Subway for Ps.24.5 million; works performed on Line E of the Buenos Aires Subway for Ps.7.3 million; the construction of a hotel in Puerto Madero in the city of Buenos Aires for Ps.28.5 million; works for the supply of irrigating water in the Microregión-Añelo area in the province of Neuquén for Ps.9.5 million; works performed on Route 76 in the province of La Riojafor Ps.17.3 million; works performed on Route 11 in the province of Catamarcafor Ps.6.0 million; works performed on Route 34 in the province of Santa Fefor Ps.6.4 million; works performed on Route 9, which connects the cities of Córdoba and Rosario, for Ps.6.6 million; the construction of a main gas line for the Partido de Punta del Indio and Partido de Magdalena in the province of Buenos Aires for Ps.11.5 million; the construction of alternative routes to the Western Access Road to the City of Buenos Aires for Ps.9.1 million; works performed on Line A of the Buenos Aires Subway for Ps.8.4 million; works performed in International Airport in Córdoba for Ps.7.5 million; works performed on Route 95 in the province of Formosa for Ps.4.1 million; and works performed for the Empresa Provincial de Energía Eléctrica in the city of Córdoba (province of Córdoba) for Ps.4.7 million; and (ii) the general recession of the Argentine economy, which has affected the construction industry.

The aforementioned decrease was partially offset by the commencement of new contracts during the year ended June 30, 2001 and the increase in sales of some existing contracts, such as: the construction of a route that connects the provinces of Jujuy and Chile for Ps.47.8 million; the construction of a women’s prison complex in the city of Córdoba (province of Córdoba) for Ps.6.3 million; the construction of the Pilar – Villa María Road in the province of Córdoba for Ps.5.1 million; and the construction of a drainage channel for the sewer drain system and the construction of a plant for the treatment of waste liquids in the city of Mar del Plata (province of Buenos Aires) for Ps.8.6 million.

Cost of Sales. Cost of sales of our construction business decreased by Ps.171.4 million, or 44.7%, to Ps.211.8 million during the year ended June 30, 2001, from Ps.383.2 million during the year ended June 30, 2000. This decrease is principally attributable to a reduction in cost of sales related to the end of some works and the decrease in cost of sales for some existing contracts, as described above.

The aforementioned decrease was partially offset by the commencement of works under contracts during the year ended June 30, 2001, as described above.

Administrative and other operating expenses. Administrative and other operating expenses reflect head office expenses of the construction segment and also those arising from the consolidation of the accounts of certain UTEs in which we have equity interest. Administrative and other operating expenses consist primarily of consulting fees, salaries and fringe benefits, provision for contingencies and various other costs associated with evaluating requests for proposals and submitting bids.

Administrative and other operating expenses increased by Ps.1.7 million to Ps.65.1 million for the year ended June 30, 2001, from Ps.63.4 million for the year ended June 30, 2000, due principally to an increase in consulting fees and provisions for contingencies, partially offset by a decrease in salaries and benefits and allowance for doubtful receivables.

Consolidated Results

Depreciation and amortization. On a consolidated basis, depreciation and amortization charges for property, plant and equipment, and intangible assets increased by Ps.11.4 million, to Ps.97.3 million for the year ended June 30, 2001, and Ps.85.9 million for the year ended June 30, 2000.

The depreciation of property, plant and equipment increased by Ps.6.2 million, to Ps.84.3 million for the year ended June 30, 2001 from Ps.78.1 million for the year ended June 30, 2000, principally due to an increase of the depreciation expense in Covicentro and Red Vial. This increase was partially offset by a decrease of the depreciation expense in BRH.

The amortization of intangible assets increased by Ps.5.2 million to Ps.13.0 million during the year ended June 30, 2001, from Ps.7.8 million for the year ended June 30, 2000. This increase was due principally to the amortization of the goodwill recorded by BRH, related to the acquisition of Metronec’s and Metrovías’ shares.

Other income and expenses, net. Other income and expenses, net increased by Ps.83.2 million, to Ps.116.8 million for the year ended June 30, 2001, from Ps.33.6 million for the year ended June 30, 2000. This increase was primarily due to: (i) the gain recorded by BRH on the sale of its equity interest in companies and UTEs whose principal line of business is waste management, as well as the sale of its participation in GCO and (ii) the gain recorded by Rail S.A. de Inversion, or Rail, on the sale of an equity interest in Metrovías.

Net income in affiliated companies and minority interest. Net income in affiliated companies decreased by Ps.13.3 million, to Ps.3.5 million for the year ended June 30, 2001, from Ps.16.8 million for the year ended June 30, 2000. This decrease was due principally to: (i) a decrease in the results of Concanor S.A., or Concanor, the UTE BRH/CBPO/N. Odebretch S.A. (Pichi Picún Leufú); (ii) as of June 30, 2000, as a consequence of the sale of a portion of our waste management business, its results were included in net income in affiliated companies; and (iii) as a result of the sale of GCO’s shares during the year ended June 30, 2001, BRH recorded the results corresponding only to three months of this investment. That decrease was partially offset by: (i) an improvement in Polledo’s results, generated by its equity interest in the geographic services business for the city of Buenos Aires and in some toll road projects, and (ii) an improvement in the results of La Morada S.A.

Our charges for minority interests held by others in consolidated companies amounted to a Ps.0.7 million gain for the year ended June 30, 2001, as compared to a Ps.5.6 million loss for the year ended June 30, 2000. This increase was due to the decrease in the results for BRH, and to an increase in the net loss of Covicentro, partially offset by an improvement in the results for Red Vial.

Financial results. Interest and other financing income generated by assets decreased by Ps.1.2 million to Ps.20.2 million for the year ended June 30, 2001, from Ps.21.4 million for the year ended June 30, 2000. This decrease was principally due to the reduction of the interest recognized from the federal government to Metrovías. This decrease was partially offset by the gain recorded by Covicentro and Red Vial to recognize the net realizable value of bonds received from the federal government.

Interest and other financing expenses generated by liabilities increased by Ps.27.2 million, to Ps.97.7 million for the year ended June 30, 2001, from Ps.70.5 million for the year ended June 30, 2000, mainly due to new loans granted to BRH in May 2000, to Caminos in August 2000 and to new loans granted to Metrovías, which were associated with new investment projects for the years ended June 30, 2000 and 2001.

Income tax and asset tax. During the year ended June 30, 2001, these charges decreased by Ps.8.7 million, to Ps.9.0 million, from Ps.17.7 million for the year ended June 30, 2000. This decrease was principally due to a decrease in the taxable income recorded by Metrovías for the year ended June 30, 2001.

Net income (loss).As a result of the factors discussed above, we recorded a net income of Ps.9.1 million for the year ended June 30, 2001 as compared to a net loss of Ps.10.8 million for the year ended June 30, 2000.

Liquidity and Capital Resources

We are a holding company and have no substantial operations of our own and, consequently, must fund our capital requirements through other sources, including cash dividends, management fees and intercompany loans from our subsidiaries and the UTEs in which we participate, as well as from borrowings. As a result, the following discussion of our consolidated cash flows may not reflect our actual cash levels or our cash equivalent position.

The following discussion of our consolidated liquidity and capital resources is presented in constant Pesos of September 30, 2002.

For the three-month periods ended September 30, 2002 and 2001

Our consolidated operating activities resulted in net cash inflows of Ps.39.7 million and Ps.50.6 million for the three-month periods ended September 30, 2002 and 2001, respectively. The net operating cash inflow for the three-month period ended September 30, 2002 was mainly due to: (i) a net income of Ps.50.9 million; (ii) noncash charges to reconcile net income amounting to Ps.19.8 million (cash decrease), represented mainly by Ps.19.3 million of financial results; a Ps.15.0 million gain in affiliated companies and Ps.9.0 million of deferred results recorded as an increase in sales, partially offset by Ps.25.7 million of depreciation and amortization; (iii) changes in certain assets and liabilities representing a net increase of cash of Ps.8.6 million, mainly due to a Ps.30.2 million decrease in receivables, a Ps.2.7 million decrease in inventories and a Ps.3.2 million increase in provisions and allowances, partially offset by a Ps.27.4 million decrease in accounts payable. The net operating cash inflow for the three-month period ended September 30, 2001 was mainly due to (i) a net loss of Ps.12.7 million, (ii) noncash charges to reconcile net loss amounting to Ps.74.5 million (cash increase), represented mainly by Ps.25.7 million of depreciation and amortization, Ps.26.6 million of deferred results recorded as a decrease in sales, Ps.15.7 million of devaluation of receivables, and Ps.10.0 million of financial results, partially offset by Ps.8.6 million of net income in affiliated companies, and (iii) changes in certain assets and liabilities representing a net decrease of cash of Ps.11.2 million mainly due to a Ps.47.0 million increase in receivables and a Ps.10.0 million decrease in provisions and allowances, partially offset by a Ps.41.3 million increase in accounts payable.

Our consolidated investing activities resulted in a net cash outflow of Ps.5.8 million for the three-month period ended September 30, 2002, primarily due to purchases of property, plant and equipment for Ps.8.0 million, partially offset by proceeds from sales of property, plant and equipment for Ps.2.6 million. Our consolidated investing activities resulted in a net cash outflow of Ps.15.4 million for the three-month period ended September 30, 2001, primarily due to purchases of property, plant and equipment for Ps.18.2 million, partially offset by proceeds from sales of investments for Ps.2.1 million.

Our consolidated financing activities resulted in a net cash outflow of Ps.31.3 million for the three-month period ended September 30, 2002, primarily due to a Ps.22.2 million decrease in loans and other debt, a Ps.6.6 million increase in other receivables and a Ps.2.5 million decrease in other liabilities. Our consolidated financing activities resulted in a net cash outflow of Ps.36.1 million for the three-month period ended September 30, 2001, primarily due to a Ps.28.3 million increase in other receivables and a Ps.22.1 million decrease in loans and other debt, partially offset by a Ps.14.3 million increase in other liabilities.

As a result of the factors discussed above, our net cash and cash equivalents on a consolidated basis increased by Ps.2.7 million during the three-month period ended September 30, 2002, and decreased by Ps.0.9 million during the three-month period ended September 30, 2001.

As of September 30, 2002, our consolidated indebtedness was approximately Ps.549.9 million, comprised of Ps.59.6 million of short-term loans and overdrafts, Ps.40.3 million of current portion of long-term debt, and Ps.449.9 million of long-term debt.

For the years ended June 30, 2002, 2001 and 2000

Our consolidated cash flows provided by (used in) operating activities for the years ended June 30, 2002, 2001 and 2000 amounted to Ps.131.4 million, Ps.58.3 million and (Ps.17.2) million, respectively. The net operating cash inflow for the year ended June 30, 2002 was comprised of: (i) a net loss of Ps.273.4 million, (ii) noncash charges reconciling net loss amounting to Ps.272.0 million (cash increase), represented mainly by Ps.99.2 million of depreciation and amortization expenses, Ps.174.0 million of financial results, a Ps.26.7 million loss from the sale of equity investments, and by Ps.26.5 million of devaluation of receivables, partially offset by Ps.23.5 million of net income in affiliated companies and Ps.33.6 million of minority interest, (iii) changes in certain assets and liabilities representing a net cash increase of Ps.132.8 million, mainly due to a Ps.31.0 million decrease in inventories, a Ps.54.2 million decrease in receivables, a Ps.11.6 million increase in provisions and allowances and a Ps.36.6 million increase in accounts payable. The net operating cash inflow for the year ended June 30, 2001 was mainly comprised of: (i) a net income of Ps.9.1 million, (ii) noncash charges to reconcile net income amounting to Ps.2.1 million (cash increase), represented mainly by Ps.97.2 million of depreciation and amortization expenses, Ps.22.9 million of deferred results and Ps.5.6 million of financial results, partially offset by a Ps.124.5 million gain from the sale of equity investments, and (iii) changes in certain assets and liabilities representing a net cash increase of Ps.47.1 million, mainly due to a Ps.114.1 million increase in accounts payable and a Ps.42.7 million decrease in inventories, partially offset by a Ps.91.4 million increase in receivables and an increase of Ps.11.1 million in intangible assets. The net operating cash outflow for the year ended June 30, 2000 was mainly comprised of: (i) a net loss of Ps.10.8 million, (ii) noncash charges to reconcile net loss amounting to Ps.50.2 million (cash increase) represented mainly by Ps.85.8 million in depreciation and amortization expenses, a Ps.9.0 million loss of financial results and a Ps.5.6 million in minority interest, partially offset by a Ps.30.1 million gain from the sale of equity investments and a Ps.16.8 million gain from net income in affiliated companies, and (iii) changes in certain assets and liabilities representing a net cash decrease of Ps.56.6 million, mainly due to a Ps.79.0 million increase in receivables and a Ps.18.4 million decrease in accounts payable, partially offset by a Ps.25.9 million increase in provisions and allowances and a decrease of Ps.14.9 million of inventories.

Our consolidated investing activities resulted in a net cash outflow of Ps.45.1 million for the year ended June 30, 2002, primarily due to purchases of property, plant and equipment for Ps.49.2 million, partially offset by proceeds from sales of property, plant and equipment for Ps.2.8 million. Our consolidated investing activities resulted in a net cash inflow of Ps.71.3 million for the year ended June 30, 2001, primarily due to the sales of investments (net of acquisition) for Ps.140.0 million, partially offset by purchases of property, plant and equipment amounting to Ps.76.3 million. Our consolidated investing activities resulted in a net cash outflow of Ps.31.6 million for the year ended June 30, 2000, primarily due to purchases of property, plant and equipment for Ps.70.8 million, partially offset by the proceeds from the sale of investments in the amount of Ps.26.7 million and the proceeds from the sale of property, plant and equipment in the amount of Ps.8.8 million.

Our consolidated financing activities resulted in a net cash outflow of Ps.158.3 million for the year ended June 30, 2002, primarily due to a Ps.75.7 million decrease in loans and other debts and a Ps.90.7 million increase in other receivables, partially offset by a Ps.8.1 million increase in other liabilities. Our consolidated financing activities resulted in a net cash outflow of Ps.88.5 million for the year ended June 30, 2001, primarily due to a Ps.37.4 million increase in other receivables, a Ps.34.9 million decrease in other liabilities and a Ps.13.9 million decrease in loans and other debts. Our consolidated financing activities resulted in a net cash inflow of Ps.32.1 million for the year ended June 30, 2000, primarily due to a Ps.142.3 million increase in loans and other debts and a Ps.5.3 increase in other liabilities, partially offset by a Ps.114.7 million increase in other receivables.

As a result of the factors discussed above, our consolidated cash and cash equivalents (decreased) increased by Ps.(72.0) million, Ps.41.0 million and Ps.(16.7) million during the years ended June 30, 2002, 2001 and 2000, respectively.

BUSINESS

History

BRH was created by Mr. Benito Roggio in 1908 and incorporated as a sociedad anónima (corporation) in Argentina in 1955. BRH operated principally as a construction company until 1985. In 1985, BRH adopted a strategy of diversification and between 1985 and 1994 developed or acquired interests in waste management, toll road management, subway management, energy, communications and real estate services companies to complement its construction business and the banking and mining businesses that BRH had acquired prior to 1985. Due to management and legal considerations, BRH underwent a restructuring in 1994, known as the 1994 Restructuring, whereby a holding company, Roggio, was created.

As part of the 1994 Restructuring, members of the Roggio family and a related company, together holding approximately 89.9% of the capital stock of BRH, contributed their shares in BRH to Roggio in exchange for 100% of the shares of Roggio. At that time, Angel Sargiotto, a long‑standing employee of BRH, formed Inversar S.A., or Inversar, to hold his 2.3% stake in BRH. Immediately after the transfer of shares and the creation of Roggio and Inversar, the toll road management of BRH was transferred to Caminos, and BRH’s miscellaneous business interests were transferred to newly organized subsidiaries of Roggio. BRH continued to own and operate the remaining construction and waste management businesses.

In 1996, the management of Roggio decided to consolidate all infrastructure development and service businesses under one corporate structure in order to more effectively manage the businesses and to take advantage of economies of scale in administration and finance. On October 21, 1996, Roggio and Inversar, the owners of 94.2% and 99.4% of BRH and Caminos, respectively, organized Clisa as a subsidiary of Roggio, and shortly thereafter, Roggio and Inversar transferred all of their equity interests in BRH and Caminos, which had at that time a book value of Ps.158.4 million, to Clisa.

On September 24, 1997, Clisa and the then-shareholders of Polledo, executed a spin-off and merger, based on a merger agreement dated June 26, 1997, approved by the shareholders of Caminos and Polledo. The merger was effective as of March 31, 1997. Under the terms of this merger agreement, Caminos spun off the shareholdings that it possessed in certain companies, and they were merged with and into Polledo. In exchange, Clisa received shares of Polledo representing 57.15% of its capital, and, as a result, has obtained control of Polledo. On September 30, 1998, the board of directors of Polledo approved a capital increase; as a result of the subscription of the shares on March 1999, Clisa reduced its participation in Polledo, and Roggio acquired indirect control of Polledo. As of September 20, 2002, Clisa had 46.07% of the common shares of Polledo, which is accounted for under the equity method, and was Polledo’s largest shareholder.

Prior to 2001, we were comprised of four major segments: mass transportation management, construction, toll road management and waste management. During 2001 we sold the majority of our assets relating to the waste management segment, in a series of transactions for approximately Ps.51.0 million. Presently, we are comprised of three major operating segments: mass transportation management, toll road management and construction.

The chart below sets forth our structure, including our main subsidiaries:

Overview

We are one of the leading Argentine infrastructure development and management companies. We are comprised of three major operating segments: mass transportation management, toll road management and construction. In addition, we are engaged only in two waste management projects. In June 2000 and July 2000, in a series of transactions, we sold the majority of our assets relating to the waste management segment. For the year ended June 30, 2002, we generated, on a consolidated basis, revenues of Ps.617.9 million and adjusted EBITDA of Ps.123.1 million.

Mass Transportation Management. We conduct our mass transportation management business through Metrovías, our subsidiary, in which we own approximately 73% of the capital stock. Metrovías has a concession contract through 2017 to operate and manage a commuter railroad, which carries approximately 21 million paying passengers per year, and the entire Buenos Aires subway system, which carries approximately 230 million paying passengers per year. The Buenos Aires subway system is a 40‑kilometer network comprised of five separate lines, which run within downtown Buenos Aires and between the downtown area and outlying commuter railway stations, serving densely populated areas. Metronec, a company under our control, is responsible for the commercial activities of the areas within the domain of the Metrovías Concession Contract. These commercial activities include, among others, the leasing of shops and advertising space offered in the stations, cars and properties covered by the Metrovías Concession Contract, the rental of fiber optical cables throughout the tunnels (a business which is developed through CPS Comunicaciones S.A., a subsidiary of Metronec), the rental of spaces for the installation of antennas for cellular telephone communications, the commercial exploitation of shops in the stations for the sale of various items, such as photography machines, rolls of film, telephone cards, lottery games, and the development of a refillable money card, called “subtecard.”

Toll Road Management. We have ownership interests in nine companies that have been granted concession contracts to operate toll roads. Seven of these companies operate toll roads in Argentina consisting of 2,275 kilometers of highways averaging approximately 197,000 toll transactions per day, without including the concession contract awarded to Puentes del Litoral to build and operate a bridge over the Paraná river connecting the cities of Rosario (province of Santa Fe) and Victoria (province of Entre Ríos). Of these nine companies, two are commuter roads that lead to the city of Buenos Aires, through Coviares and Covimet. We are the operating manager of four of the toll road concessions and our construction segment has acted as a contractor on the construction projects for many of the toll road concessions. In addition to our operations in Argentina, we have interests in a concessionaire that manages a toll road in Brazil, which averages approximately 15,200 toll transactions per day.

Our interests in toll road concessions are held, directly or indirectly, by Caminos, BRH and Polledo.

Construction. We are one of the largest construction companies in Argentina. Our numerous completed construction projects include the IBM Building in Buenos Aires, the Sheraton Hotel in Buenos Aires, the International Airport in Santiago, Chile, the Piedras Moras Water Dam in the province of Córdoba, the Chateau Carrera Córdoba Soccer Stadium in the province of Córdoba, the Telecom building in Buenos Aires, the West Access Road, in Buenos Aires, the Conrad Hilton Hotel and Casino in Punta del Este, Uruguay, the port facility in the province of Santa Cruz, a city beltway in the city of Córdoba, the Pichi Picún Leufú hydroelectric dam in the province of Neuquén and the installation of antennas for cellular telephone communications throughout Argentina for Compañía de Teléfonos del Interior (CTI), among others.

Mass Transportation Management

We are a leading provider of mass transportation services in Argentina. We operate the Buenos Aires subway, a five-line subway that carries approximately 230 million paying passengers per year, through our subsidiary Metrovías.

Strategy

We are seeking to consolidate our operations and become one of the main operators of mass transportation in Argentina and to use suitable available technology to render a service that, considering the limitations imposed by the economic conditions of our country, are comparable with those offered by the best subways in the world. We are also analyzing prospects for new commercial opportunities, in order to benefit from the passage of approximately 850,000 people through our stations every day, as well as the possibilities of expanding our services into other countries.

Metrovías

Overview. We provide subway and commuter rail transportation services to the residents of Buenos Aires and the surrounding suburbs through our subsidiary, Metrovías. Metrovías was granted a concession contract in 1993 to manage and operate the Buenos Aires Subway, or the BAS, and the Urquiza Line, a commuter rail line.

At the request of Metrovías, the concession contract under which it renders its services, known as the Metrovías Concession Contract, may be extended for consecutive periods of ten years, if the relevant authority considers Metrovías to have satisfactorily complied with its obligations and improved its performance.

The BAS is comprised of five underground lines and the Premetro, a light surface railway. The five underground lines total 40 kilometers of double tracks, and have 67 stations and a fleet of 567 cars, 499 of which are in service. Four of the five underground lines have radial layouts connecting the center of Buenos Aires with the outlying residential areas. The fifth underground line is a cross-route line that links the other four lines. The Premetro has 7 kilometers of extension and 16 stations. The BAS carries approximately 230 million paying passengers per year.

The Urquiza Line is an electric railway line connecting the terminal of one of the BAS lines with the suburbs of low urban density in greater Buenos Aires, with 23 stations totaling 26 kilometers. It is the newest of the railway lines serving Buenos Aires. It has a total fleet of 128 cars, 108 of which are in service, and carries approximately 21 million paying passengers per year.

Background and History. Prior to 1994, the BAS was operated by Subterráneos de Buenos Aires Sociedad del Estado, or the Buenos Aires Subway Company, SBASE, a company owned by the municipal government of Buenos Aires, and the commuter rail lines serving Buenos Aires were operated by Ferrocarriles Metropolitanos S.A., or FEMESA, a company owned by the federal government. During the 1980s, the operation of the BAS and the commuter rail lines operated by FEMESA required large operating subsidies. In 1990, the subsidy to FEMESA, which operated five lines in addition to the Urquiza Line, totaled U.S.$250 million and consumed 0.3% of Argentina’s GNP, while SBASE required U.S.$30 million per year to support its operations, or 3.0% of Buenos Aires’ annual budget. Because of the large operating subsidy, both the Buenos Aires municipal and the Argentine federal governments were unable to invest in capital improvements for the system, and, as a result of deteriorating service, the commuting population progressively increased its reliance on private automobiles and commuter buses to meet its intraurban transportation needs. In 1991, the federal government decided to grant a concession allowing the concessionaire to assume responsibility over the assets of the BAS and the Urquiza Line and requiring the concessionaire to maintain and improve these assets (including the services rendered and the security of the facilities), as well as operate these systems. Pursuant to the Metrovías Concession Contract, Metrovías is required to secure its assets with insurance policies.

In 1993, Metrovías was awarded its concession contract to operate the BAS and the Urquiza Line by the MEYOSP.

At the time the federal government was in the process of receiving bids for services to grant the concession contract, its goal was to reduce the operational deficit and improve the quality of the transportation services. As a result, the concession contract contains provisions for an investment plan with those objectives.

After the concession contract was granted and services were initiated, the concession contract needed to be adapted and modified to reflect the significant increase in demand for transportation services and corresponding increase in the quality and quantity of services being rendered. By 1997, the demand for transportation services had reached levels that, in accordance with the concession contract, were scheduled to be reached in 2013.

The federal government, in agreement with us, reconsidered the goals set forth in the concession contract originally granted in order to respond to that increase in demand and to improve the quality and the regularity of our services. Decree No. 543/97 established that the Secretary of Public Works and Transportation, an agency of MEYOSP, would renegotiate and adapt the technical contents of the contractual obligations of the parties under the concession contract. As a result of this process, on April 16, 1999, the concession contract was amended. This amendment was approved by the federal government through Decree No. 393 dated April 21, 1999, known as the Addendum. The Addendum, among other things: (a) improves the services offered in terms of capacity, safety and quality; (b) maximizes and increases the level of execution of the committed investments under the Metrovías Concession Contract, through the incorporation of new projects that will improve the railway system for the benefit of the passengers; (c) improves the safety measures in the railway areas, in order to benefit the community by reducing the current rate of accidents; and (d) improves the integration of the subway and the railway systems in the urban transport system and in the Buenos Aires metropolitan area, promoting their competitiveness with the various means of transportation that operate in that region.

The Addendum reformulated the initial investment plan, approving a more ambitious plan of projects, in order to achieve the maximum capacity of the subway system in the shortest possible time.

The Addendum approved a schedule of fare increases for the BAS and for the Urquiza Line, determining that the amount collected due to the increase in fares was to be used to fund the Investment Plan, and more specifically, to fund specific amounts to be used solely to pay for works on the BAS and the Urquiza Line, respectively, known as the Capital Investment Fund, (only the first increase included a portion for Metrovías, in consideration of the level of quality of the service). The Addendum established that the concession license fee (canon) (which, under the original concession contract was for the federal government) was to be applied to the financing of new improvement projects. Resolution No. 153/99 of the Secretary of Transportation authorized the first scheduled fare increase for the subway systems in accordance with the Addendum, in consideration of the fact that we had complied with our obligations due in 1999.

On December 3, 2000, the second increase was authorized, which, in the case of the subway system, raised the tariff for the public to Ps.0.70. On December 14, 2000, a lawsuit was filed challenging the tariff increase for the mass transportation system. On March 17, 2001, a final decision confirmed the tariff increase.

On May 11, 2000, the Buenos Aires legislature enacted a law confirming its adherence to Decree No. 393/99, which approved the Addendum.

Shareholders. At the time Metrovías submitted its bid to MEYOSP, Metrovías was owned by a consortium including BRH, Burlington Northern Railroad Co., or Burlington Northern, Morrison Knudsen Corporation, or Morrison Knudsen, Cometrans S.A., or Cometrans, and S.K.S. S.A.C.C.I.F.A. y M., or SKS.

In February 1995, BRH increased its stake in Metrovías by acquiring all of the shares of Metrovías held by Morrison Knudsen. In March 1995, BRH further increased its participation in Metrovías by acquiring 5.3% of the shares held by Cometrans. In November 1997, BRH agreed to acquire 6.7% of the shares of Metrovías held by Burlington Northern as part of a settlement of certain arbitration proceedings between BRH and Burlington Northern.

Continuing with our policy of growth in the area of passenger mass transportation services, in June 2000, BRH acquired all the shares that Burlington Northern owned in Metrovías, equal to 10% of its share capital, and in September 2000, we acquired the shares that Cometrans owned in Metrovías, equal to 14.30% of its share capital.

In October 2000, the CNV authorized the public offer of 48.96% of the share capital of Metrovías, represented by Class B shares, although only 25% were in fact sold to the public. Since then, the shares of Metrovías have been registered on the Buenos Aires Stock Exchange. The Class B Shares sold in the public offering represented 25% of Metrovías’s total share capital. We still own the remaining 75% of the total share capital of Metrovías through our controlled companies BRH and Rail. BRH owns 52.52% and Rail owns 22.48%.

Strategy. Upon assuming control of the BAS in 1994, our management implemented a strategy to quickly improve service performance in order to bolster the reputation of the subway system and increase the number of customers using the system. The initiatives implemented included: (i) increasing the number of trains in operation, (ii) upgrading the reliability of the service through better maintenance, (iii) substantially improving the cleanliness of both stations and cars by hiring outside cleaning services, and (iv) providing increased security by hiring outside security services. These improvements have attracted passengers back to the BAS, resulting in a 57.2% increase in ridership from the six-month period ended June 30, 1993 to the six-month period ended June 30, 2002. Due to the economic crisis in Argentina, ridership decreased 9.9% in the 12-month period ended June 30, 2002, compared with the 12-month period ended June 30, 2001.

Metrovías’ profitability is largely driven by three factors:

• increased ridership revenue,
• lower operating costs, and
• revenues from management construction required under the Investment Program.

In order to improve operating efficiency, management has outsourced many services, including station and car cleaning, rolling stock and station maintenance, security, and cash collection. Our management is currently evaluating these outsourcing policies in light of the new economic scenario in Argentina.

Under the Metrovías Concession Contract, as modified by the Addendum, we are required to perform a series of investments, known as the New Investment Plan. The completion of the New Investment Plan and the projects on certain lines of the BAS would allow Metrovías to operate more trains, with more cars during peak demand hours, at higher speeds and with longer subway lines, resulting in increased ridership volume. With the Argentine economic crisis, the concession contract has been under renegotiation and the New Investment Plan has not been performed in accordance with the manner in which it was established by the Addendum.

Our management is presently in the process of renegotiating the present concession contract in order to: (i) assure the continuation of the services under the concession contract to reflect the present and future economic situation in Argentina, (ii) define the appropriate plan of investment in the current economy in Argentina, and (iii) receive compensation from the federal government for certain claims. Our management is also continuing its development of an internal restructuring of our activities to reduce our costs.

The Concession Contract. The Metrovías Concession Contract contains the following terms and provisions:

Works to be completed by the licensor: the licensor is responsible for improvements on Line A, including the signaling system, the changing of all the tracks, the reconditioning of stations and changes in electrical substations. These projects are being partially financed by a U.S.$200 million loan from the World Bank to the federal government, dated November 1997, and are now suspended. The licensor has also built, at its own expense, a 3.7-kilometer extension of the subway tunnel for Line D of the BAS, as well as four subway stations, and is currently carrying out works on them.

Works under the New Investment Plan: the New Investment Plan sets forth the technical specifications and the schedule of the improvements to be made to the BAS and the Urquiza Line by us. The New Investment Plan includes (i) projects under the reformulated Basic Plan (as described in the Metrovías Concession Contract), supplementary projects and sanitation and security projects, (ii) projects funded with the difference between the fare paid by passengers (see “Fare revenues”) and the portion of it received by Metrovías, known as the Capital Investment Fund; (iii) projects completed in payment of the concession license fee.

Works under the reformulated Basic Plan, supplementary projects and sanitation and security projects: the procedure for the execution of projects under the reformulated Basic Plan, supplementary projects and sanitation and security projects is as follows: the concessionaire executes the work according to the concession contract, the progress of the projects is overseen by the controlling authority that issues certificate of measurement and work certificates, which the Tesorería General de la Nación, the Federal Treasury, is required to pay to Metrovías within 30 days from the issuance of such certificate.

Works funded with amounts in the Capital Investment Fund: the concessionaire is responsible for executing the projects in the New Investment Plan depending on the availability of funds in the Capital Investment Fund.

Works to be completed in payment of concession license fee: the concession contract provides for Metrovías to pay the concessionaire a fee (canon), of approximately Ps.319 million from 1999 through 2017. The Addendum provides that Metrovías will pay the concession license fee, partially by completing projects under the New Investment Plan.

“Works funded with amounts in the Capital Investment Fund” and “Works to be completed in payment of concession license fee” are executed on the basis of projects granted by way of a public tender, and Metrovías receives a fee in exchange for managing them. The following table sets forth approximately the amounts to be invested by Metrovías in each of these categories under the New Investment Plan according to the projections contained in the Addendum:

Financing of the Proposed Subway Network Investment Program

	Basic Reformulated Plan, Complementary Works, Safety and Sanitation	Reinvestment of the Concession License Fee	Works Funded with the Fare Increase	Total
	(In thousands of Pesos as of December 1997)
Modernization and enlargement of the fleet	235,168	126,065	300,000	661,232
Improvement of installations	125,479	179	56,643	182,302
Improvement of accessibility and circulation	20,594	22,771	97,402	140,765
Improvements in the maintenance installations	58,947	1,522	30,000	90,469
Improvements in safety conditions	5,413	-	841	6,254
Extension of the lines	-	-	150,283	150,283
Works of extension and modernization of the lines	-	-	236,517	236,517
Total	445,597	150,537	871,687	1,467,821

Financing of the Proposed Urquiza Line Investment Program

	Basic Reformulated Plan, Complementary Works, Safety and Sanitation	Reinvestment of the Concession License Fee	Works Funded with the Fare Increase	Total
	(In thousands of Pesos as of December 1997)
Modernization and enlargement of the fleet	-	-	46,251	46,251
Improvement of installations	35,655	45,705	58,053	139,413
Improvement of accessibility and circulation	-	16,803	-	16,803
Improvements in the maintenance installations	4,226	-	-	4,226
Improvements in safety conditions	9,518	-	-	9,518
Other extension works and modernization of the lines	-	-	11,058	11,058
Total	49,399	62,508	115,362	227,268

The improvements to the BAS required by the New Investment Plan consist, among other things, of a 2,300 meter expansion of the E Line from Bolívar station, which will add three new stations (Central Post Office, Catalinas and Retiro) to the line. In addition, the New Investment Plan provides for the increase of 150 cars and the refurbishing of 154 cars for Lines C and E, the addition of 75 cars for Line C and 65 cars for Line E, as well as the installation of a drive automatic system for Lines C and D to decrease the frequency intervals. With respect to infrastructure projects under the New Investment Plan, the projects are principally the implementation of a ventilation system for the tunnels and stations, a 13.2 kv ring to feed the electrical substations and the improvements in the access to the station, with the incorporation of new elevators and escalators.

Investments to the Urquiza Line required by the New Investment Plan include a massive renovation of tracks, standardization of railway and pedestrian overpasses, and automatic signaling, focusing on improving safety, comfort and accessibility, which will significantly increase the safety of the service. The 108 cars that constitute the line’s fleet will be remodeled and air conditioning will be installed, improving comfort. Also, the facilities of the Rubén Darío workshop will be modernized to assure proper maintenance of the line’s cars and infrastructure. A high voltage electrical power supply system will be installed and cables and substations will be renovated, thereby improving the reliability of the service by eliminating one of the most frequent causes of delays or problems.

Since Metrovías began discussing the changes to the concession contract with the federal government, it has not complied with the projects required under the concession contract.

Decree No. 2,075/02, dated October 16, 2002, declared a state of emergency in the public railway transportation system of passengers (above and below-ground) in the Buenos Aires metropolitan area, which, among other things, suspended the execution of the investment plans as they have been discussed above, and determined that the concessionaires formulate, in accordance with the particulars of each service, an emergency program that includes those projects that are essential to guarantee sufficient services being rendered. In addition, this decree determined that the funds deposited in the fiduciary accounts can be used to liquidate certain outstanding debts that the federal government had with the concessionaires, and that the concessionaires had to maintain the same salaries and number of employees.

Resolution No. 115/2002 of the Ministry of Production, dated December 23, 2002, among other things, approved the emergency investment programs for each of the concessionaires of the public transportation railway service. The following sets forth the main projects contained in Metrovías’ approved emergency investment program for the years 2003 through 2005 and the means of funding:

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Works to be Funded by the Tesoro Nacional, or the National Treasury:

• Signal works on Lines B, C and D.
• Cable system on Line C.
• Engineering works on cars of Line C and D.
• Emergency lights in stations.
• Renovation of tracks on Line D.
• Installation of additional ATP (“Automatic Train Protection”) security teams on Lines C and D.
• Ventilation works in stations on Lines B, C and D.
• Reduction of noise in the subway.
• Replacement of escalators.
• New cars.
• Renovation of tracks on the Urquiza Line.

Works to be Funded by the amounts in the Capital Investment Fund:

• Access tunnel to the new central garage.
• Signal works on Line B.
• Remodeling of the Premetro car.
• Engineering works in the Line D station garage.
• Installation of escalators.
• Emergency lighting in stations.
• Reduction of noise in the subway.
• New cars.
• Renovation of tracks on the Urquiza Line.

In addition, Resolution No. 115 confirmed the suspension, during the year 2003, of the works to be done as payment for the concession license fee. These works will be defined by the Secretary of Transportation of the Ministry of Production. Resolution No. 115 also recognizes as debt any penalties assessed until October 17, 2002, and that they should be cancelled in 24 monthly payments. Therefore, Metrovías will pay a total of Ps.4.0 million from January 2003 through December 2004.

Voluntary projects. At its own risk and expense, Metrovías may make additional investments that, in its judgment, may increase safety and productivity, reduce costs or increase income. The federal government must approve such investments prior to their implementation, in the case of facilities being modified, or when they affect the security of operations and/or passengers and/or the general public. At the end of the concession, these investments (other than rolling stock) revert to SBASE, in the case of the BAS, and to FEMESA, in the case of the Urquiza Line.

Operating Revenues. According to the concession contract, Metrovías derives revenues from (i) fares; (ii)  investments; and (iii) ancillary activities.

Fare revenues. The BAS has a single or basic fare of Ps.0.70, of which Ps.0.579 is received by Metrovías. The fare for the use of the Premetro is only Ps.0.45. Nevertheless, if passengers use the Premetro and the BAS, they have to pay a single fare in the amount of Ps.0.70. The fare includes all trips, regardless of their length or duration. The Addendum provided for the gradual increase in the fare for the public up to a maximum amount of Ps.0.75, of which Ps.0.579 would be received by Metrovías. The difference between Ps.0.579 and the base fare paid by passengers is directed to the Capital Investment Fund. This fund may only be used to fund capital improvements to the subway system. These improvements began in the year 2001. In the case of the Urquiza Line, the fare charged for each service is based on a chart of distance-based prices, for one-way trips, ranging from Ps.0.40 to Ps.0.85, as the case may be. The Addendum established the gradual increase in these fares up to maximum values ranging from Ps.0.55 to Ps.1.25. Metrovías receives a fixed portion of these fares, depending upon the zone traveled, ranging from Ps.0.393 to Ps.0.768, independent of actual fare paid. As with the BAS fares, the difference between the fare collected and the amount for the account of Metrovías goes to the Capital Investment Fund to finance improvements to the Urquiza Line. Since Metrovías begun to discuss the changes to the concession contract with the federal government, no increase in tariffs has been granted to Metrovías.

The chart below describes the fares contained in the Addendum as they have been executed:

	1998	1999	2000	Pending Approval
BAS:
Fare to public	Ps.0.500	Ps.0.600	Ps.0.700	Ps.0.750
Fare receivable by Metrovías	Ps.0.495	Ps.0.579	Ps.0.579	Ps.0.579
Urquiza Line:
Zone 1:
Fare to public	Ps.0.400	Ps.0.400	Ps.0.500	Ps.0.550
Fare receivable by Metrovías	Ps.0.375	Ps.0.393	Ps.0.393	Ps.0.393
Zone 2:
Fare to public	Ps.0.600	Ps.0.600	Ps.0.700	Ps.0.900
Fare receivable by Metrovías	Ps.0.551	Ps.0.569	Ps.0.569	Ps.0.569
Zone 3:
Fare to public	Ps.0.850	Ps.0.850	Ps.0.950	Ps.1.250
Fare receivable by Metrovías	Ps.0.750	Ps.0.768	Ps.0.768	Ps.0.768

The rates that are being charged on the Urquiza Line are slightly different from the ones established in the Addendum, but their averages are similar. This difference is due to the decision by the federal government to increase the rates by 10 cents.

Decree No. 2,075/02, dated October 16, 2002, suspends the application of the tariff increases established by the Addendum, and instructs the Secretary of Transportation of the Ministry of Production to carry out the necessary studies in order to determine the need of a reconfiguration of the tariff structure of the services included, based on the prevailing tariffs for all of the forms of public transportation for passengers in the Buenos Aires metropolitan area.

Investment revenues. Investment revenues derive from (i) projects under the reformulated Basic Plan, supplementary projects and sanitation and security projects, and (ii) management fees from projects funded with amounts in the Capital Investment Fund and projects completed in payment of the concession license fee.

The work certificates under the reformulated Basic Plan, supplementary projects and sanitation and security projects are paid to Metrovías by the Tesorería General de la Nación, and in the event Metrovías completes the work under budget, Metrovías keeps the difference; on the other hand, if the work is completed for more than the amount budgeted, Metrovías loses any amount spent in excess of the budgeted amount.

With respect to the projects funded with amounts in the Capital Investment Fund and projects completed in payment of the concession license fee, Metrovías receives a management fee of 16.15% for civil projects or equipment and 8% for new cars and in each case, construction and equipment purchase contracts are to be awarded by public bidding.

Resolution No. 115/2002 of the Ministry of Production determined that the amounts paid in connection with management, supervision and inspection of the work, in the emergency period, were reduced by 50% with respect to that which had been established by the concession contract.

Ancillary revenues. Metrovías may use, lease and license certain places in the subway stations, including areas reserved for subway services, corridors or passenger waiting areas. Therefore, Metrovías recognizes revenues from, among other things, commercial leases, advertising and rental of the fiber optical cables in the tunnels. Also, according to the concession contract, Metrovías may charge a toll from third-party concessionaires and any other operators for the use of the train tracks. While such tolls are determined by kilometers used at the present time, Metrovías does not currently charge any fees in connection with that use.

Compensation for Cost Increases. The concession contract includes a mechanism to increase the revenues that Metrovías receives, or to decrease the payments that Metrovías is required to make, on the basis of increases in costs incurred during the term of the concession contract. This mechanism operates by applying certain price indices to the assumed cost structure included in a business plan prepared by Metrovías at the beginning of the concession. In the event that the projected cost of operating the BAS and the Urquiza Line in any month, adjusted by actual inflation, exceeds the projected cost included in the business plan by more than 6.0%, MEYOSP will incur indebtedness to Metrovías in an amount sufficient to reflect a 6.0% increase in such costs. MEYOSP has the option to authorize Metrovías to collect this money through a fare increase or to amortize it through the receipt of an increased subsidy (or the payment of a reduced fee) over the term of the concession. After any such cost adjustment, the cost adjustment mechanism will be reset to measure cost increases based on the restated assumed cost structure.

Joint Resolution No. 11 of the Ministry of Production and Resolution No. 61 of the Ministry of Economy implemented an allocation of funds for the concessionaire on a monthly basis, with advance payments made in the form of a subsidy compensation that will be considered at the time of the contract renegotiation. The funds being allocated are derived from the taxes on diesel, known as the Gasoil Fund.

Gasoil Fund. The Gasoil Fund has been created as a funding mechanism for certain companies in Argentina. Our mass transportation, toll road and construction segments are eligible to receive amounts from this fund. The Gasoil Fund was created by Decree No. 802, dated June 15, 2001, and was initially intended to be a part of the development for infrastructure of the roads and compensation to the road concessionaires of reduced tariffs by the federal government. Decree No. 976, dated July 31, 2001, (i) determines that Ps.0.05 for each liter of diesel will go to the Gasoil Fund; (ii) creates a trust to administer these funds; and (iii) determines who, among the road and railway concessionaires, will be the beneficiaries of the Gasoil Fund. Decree No. 1,377, dated November 1, 2001, (i) creates “SIT,” or the Sistema Integrado de Transporte (the Integrated Transportation System), which includes the “SISVIAL,” or the Sistema Vial Integrado (the Integrated Road System), and the “SIFER,” or the Sistema Ferroviario Integrado (the Integrated Railway System), which are responsible for the allocation of the resources in the Gasoil Fund; (ii) determines other parties to be beneficiaries of the funds in the Gasoil Fund, including, among others, contractors for projects connected to SIT; and (iii) establishes the order of the priority for the allocation of funds in the Gasoil Fund. The order of priority for allocation under this Decree is: (A) payment as compensation to toll road concessionaires, (B) payment for undergoing projects (some of these were prioritized, including two projects that are being executed by us – the Paso de Jama route and the Pilar-Villa Maria Road) and (C) the remainder of the funds after any allocations for (A) and (B) will be divided between SISVIAL (80%) and SIFER (20%).

Decree No. 652, dated April 19, 2002, (i) due to the increases in the price of diesel, establishes a tariff on diesel in the amount of 18.5% of the price of diesel before taxes, instead of a fixed amount of diesel; (ii) modifies the composition of SIT, defining that it will be formed by SISVIAL and by “SISTRANS,” or Sistema Integrado de Transporte Terrestre (the Integrated System of Ground Transportation), which, in turn, will be composed by SIFER and SISTAU, or Sistema Integrado de Transporte Automotor; and (iii) establishes a new allocation of the surplus of the Gasoil Fund after compensating the road concessionaires and the works that have been prioritized in accordance with Decree No. 1,377 (60% to SISVIAL and 40% to SISTRANS. Of the 40% allocated to SISTRANS, a maximum of 65% will be allocated to SISTAU and the remainder to SIFER). Joint Resolutions No. 61/02 of the Ministry of Economy and No. 11/02 of the Ministry of Production, both dated June 5, 2002, establish that 30% of the funds to SISTRANS are to be distributed monthly to each transportation company of the railway service in the Buenos Aires metropolitan area (including Metrovías), based on the total number of passengers transported by such company.

Rail Lines. The BAS subway is 40 kilometers long, has 67 stations and is connected to the Premetro, which is seven kilometers long and has 16 stations.

The offer of services has been adjusted to the present level of demand, based on the information provided by the ticket card software introduced in past years. These adjustments to the service have been recognized and approved by the federal government in accordance with Resolution No. 115/2002 of the Ministry of Production.

The BAS operates from 5:00 a.m. to 11:00 p.m., Monday through Saturday, and from 8:00 a.m. to 10 p.m. on Sundays. Trains run approximately three to four minutes apart during peak rush hours at operating speeds (including station and terminal stops) of between 16.1 kilometers per hour and 24.5 kilometers per hour, depending on the line served. Scheduled travel time is 19 minutes for the length of Line A, 19 minutes for Line B, 13 minutes for Line C, 25 minutes for Line D and 22 minutes for Line E. Trains consist of four to six cars, depending on the line served, with a capacity of between 152 and 190 passengers/car, of which 36 to 45 are seated passengers, giving the lines of the BAS a maximum one‑direction loading capacity of between approximately 8,900 passengers on Line E (the line with the least capacity) and 24,000 passengers on Line B (the line with the greatest capacity) per hour during peak periods.

The Premetro operates from 5:30 a.m. to 9:00 p.m., Monday through Saturday, and from 8:00 a.m. to 9:00 p.m. on Sundays. Trains run approximately six minutes apart at an operating speed of 17.8 kilometers per hour. Scheduled travel time for the length of the Premetro is approximately 22 minutes. Trains consist of one car with a capacity of 106 passengers, of which 24 are seated passengers, giving the Premetro a maximum one‑direction loading capacity of approximately 1,100 passengers per hour.

The Urquiza Line is 26 kilometers long and has 23 stations. The Urquiza Line operates 21 hours a day, seven days a week. Trains run 10 minutes apart during peak rush hours and 20 minutes apart during daytime off‑peak hours. Trains run at an operating speed of 32 kilometers per hour. Scheduled travel time for the length of the Urquiza Line is 49 minutes. Trains consist of six cars, each with a capacity of 192 passengers, of which 48 are seated passengers, giving the Urquiza Line a maximum one‑direction loading capacity of approximately 7,800 passengers per hour during peak periods.

Passengers. Improvements in the speed, convenience, reliability, comfort and safety of the BAS and the Urquiza Line have resulted in the growth in the number of passengers carried since Metrovías was granted the concession contract. Paying passengers increased from 231 million for the year ended June 30, 1997 to 285 million for the year ended June 30, 2000, and decreased thereafter, due to Argentina’s economic crisis, to 251 million passengers for the year ended June 30, 2002. We believe that future passenger growth will depend primarily on a general improvement of the Argentine economy, and the economy in the Buenos Aires metropolitan area. Passenger growth will also depend upon competition from alternative modes of public and private transportation and demographic factors.

The following table reflects the number of paying passengers for the periods indicated:

	Twelve months ended June 30,
	2002	2001	2000
	(in millions)
Line A	38.1	42.5	45.5
Line B	61.1	66.2	73.2
Line C	44.2	51.6	53.7
Line D	68.2	71.4	66.7
Line E	15.7	15.6	17.9
Premetro	2.7	3.0	2.3
Total BAS Lines	230.1	250.4	259.3
The Urquiza Line	20.9	24.3	25.6
Total Metrovías	251.0	274.7	284.8

Maintenance. Metrovías has a program of regular repairs and maintenance of its system plant and equipment intended to improve customer service and reliability. Metrovías personnel regularly inspect and repair rolling stock and conduct preventive maintenance. Metrovías personnel also inspect the tracks daily, both visually and with modern ultrasonic equipment. Sections of track known to be subject to significant wear are replaced in accordance with a predetermined schedule, and both rails and rail car wheels are frequently reground to insure a consistent wheel-to-rail profile. In addition, Metrovías has teams to maintain the different technical elements that make up the rail system, such as the power supply, escalators and pumps.

Outsourced Services. Metrovías has been carrying out a long-standing and active outsourcing policy. We are currently evaluating the outsourcing of services in response to the changes in the Argentine economy.

Metrovías has contracted with Construcciones y Auxiliares de Ferrocarriles S.A., or CAF, a Spanish company, to provide the fleet maintenance service for the cars used on Line B of the BAS and on the Urquiza Line, with Alstom Argentina S.A., a subsidiary of a French company, to provide the same service for Line D and the Premetro and, since July 1997, with Siemens to provide the same service for Line E of the BAS. We currently provide fleet maintenance for the cars on Lines A and C. The contracts require CAF, Alstom and Siemens to ensure 97% daily fleet availability as well as to supply all the materials required for fleet upkeep.

Metrovías has contracted with Prominente S.A., a corporation of the Roggio group, to provide the management and operations of its systems department.

Metrovías has contracted with Banco Suquía S.A., or Banco Suquía, to provide fare collection and reconciliation services. The services provided by Banco Suquía include: the transportation and safekeeping of the tickets before they are distributed to the stations, early morning delivery to each station of a “sale set” composed of a predetermined number of tickets and change money, review of the cash collected in the stations, the distribution of other products to be sold in the stations (such as movie theater tickets and lottery games, among others), and transferring and depositing money collected to Metrovías’ bank account. Because Banco Suquía assumes responsibility for the money collected at the time that it is collected from the stations, Metrovías is able to reduce its risk from robbery.

Metrovías entered into an agreement with two private security companies in the interest of increasing security, preventing crimes and controlling vandalism, as well as reducing fare evasion. Metrovías contracted with: (i) Organización Fiel S.A. for Line A and (ii) Seguridad y Custodia S.R.L. for Lines C, D, and E.

Clean trains and stations are critical elements of service quality. Metrovías has contracted with one of our waste management affiliates, Taym S.A., or Taym, to provide cleaning services for its stations and cars.

Electric Power. One of the principal resources used by Metrovías is electric power. Metrovías is one of the largest consumers of electric power in the Buenos Aires metropolitan area. In an effort to stabilize and reduce the cost of electrical power, Metrovías entered into a contract with Central Térmica Güemes S.A. in 1995 to provide power to Metrovías at a fixed rate. At first the contract was only for the Urquiza Line, but it was later expanded to cover all of the necessities of service. This contract was discharged in July 2002. Currently, we have contracts with Edenor and Edesur for the purchase of electric power. The tariffs in the contracts are regulated by the federal government, which guarantees us certain stability in our electric power charges over time and during the economic crisis that Argentina is undergoing.

Competition. Currently, there are other available means of passenger transportation, such as buses and taxis, which supply passengers with a service similar to the one that Metrovías provides, in terms of safety and comfort. The competitive advantages of Metrovías are the travel times and fares. Regarding the time factor, traffic jams and rush hours do not affect railway service. Whatever the hour, railway service is provided in the same time and with more frequency during rush hours. Regarding the price factor, taxi and bus fares are higher than the fares of Metrovías. The fares of the taxis depend on the distance and any waiting time, and the fares of the buses depend on the zones to be traveled.

Metronec. In order to focus its efforts on the management of its main activity (transporting passengers), on September 7, 2000 Metrovías entered into a contract with Metronec, a corporation under our control, that provides for the sub-concession to Metronec, with exclusivity, of the commercial exploitation of the areas covered by the concession contract. Under the sub-concession, Metronec may use, lease and license the areas located in the passenger stations, including areas that are used for subway services, corridors and passenger waiting areas, and can lease the available spaces for advertising in the stations, cars and properties of the concession. The terms of the use, lease and license agreements entered into will end with the term of the concession contract.

Metronec has developed its business utilizing the technology and capitalizing on the maximum benefit of servicing approximately 850,000 subway passengers daily.

Metronec’s principal activities include the following:

• the rental of the shops and of the advertising space offered in the stations, cars and properties under the Metrovías Concession Contract;
• the rental of fiber optical cables;
• the rental of spaces for the installation of antennas for cellular telephone communications;
• the sale of various items such as photography machines, rolls of film and telephone cards;
• the sale of movie theater passes;
• lottery games in which subway trips and cash prizes are awarded; and
• the “subtecard,” which is a card that allows passengers access to the subway without a trip to the ticket office, as it is connected to a credit or debit card. It gives holders discounts on ticket purchases for the railroad or other commercial establishments, such as movie theaters, restaurants, game parlors, etc. In November 2002, the “subtecard” adopted “contact-less” technology, by which it managed to achieve acceptance among the best railroads in the world through the use of a card that responds to a sensor. Management is currently attempting to expand this technology beyond the current uses for the “subtecard” to enable it to be used as a form of payment for other services and products.

Toll Road Management

Overview

We are one of Argentina’s largest toll road management companies in terms of kilometers of roadway under management, participating with other investors in seven companies that operate four national and one provincial highway and two other heavily traveled highways that form an integral part of the highway network in and around Buenos Aires. We are the operator of four, and we have a majority equity interest in two, of these seven toll roads. Three of our national highways service two major transportation corridors linking Rosario, Argentina’s third largest city, with certain northwestern provinces operated by Covinorte and Concanor, and with the area surrounding Córdoba, Argentina’s second largest city, operated by Covicentro. Our other national highway, operated by Red Vial, connects Córdoba with Río Cuarto, the province of Córdoba’s second important city, and recreational areas in the mountains. Our provincial highway services the principal route between Buenos Aires and the important city and summer vacation resort of Mar del Plata in the province of Buenos Aires, operated by Covisur S.A., or Covisur. The two highways in the greater Buenos Aires metropolitan area provide access to Buenos Aires from the southeast, operated by Coviares, and passage through the city from downtown Buenos Aires to the outskirts of Buenos Aires, operated by Covimet. Each of the seven corporations in which we participate currently collects tolls pursuant to long‑term concession contracts. In addition to highways in Argentina, we have a participation in the concession contract for the Rosario-Victoria Bridge over the Parana River, operated by Puentes del Litoral.

We also participate in the operation of a highway in Brazil, through Econorte S.A, or Econorte.

Our interests in Coviares and Covimet (in Argentina) and Econorte are held through Polledo. Our interest in Puentes del Litoral is held through BRH. All of our other interests in concessioned highways are held through Caminos. For the year ended June 30, 2002, revenue for the toll management segment was approximately Ps.90.2 million, considering that we consolidate revenues for Covicentro and Red Vial. For the year ended June 30, 2002, the pro rata revenue in all toll road companies in which we participate, on a non-consolidated basis, was approximately Ps.162.3 million.

Background and History

The Argentine highway system, or the Highway System, consists primarily of (i) national routes, which typically connect significant urban areas or regions of Argentina, (ii) provincial roads that provide a transportation network linking smaller population centers within a province and (iii) urban networks, which provide access to and passage through or around the urban areas served. Historically, the Highway System was built principally under programs of the public sector, including federal, provincial and local governments and state‑controlled enterprises, which served to stimulate private sector investment. Similarly, maintenance and operation of the Highway System were undertaken by public sector and federal government‑controlled entities. The costs of Highway System projects, as well as the maintenance and operational expenses associated with the Highway System, were traditionally financed through fuel levies and other taxes that were dedicated to the preservation of the Highway System.

During the 1980s, the federal and provincial governments in Argentina faced serious budgetary and fiscal constraints, and the amounts previously dedicated to Highway System projects were reduced. The resulting decrease in maintenance and capital expenditures resulted in a significant deterioration of the Highway System. In order to remedy this situation, in 1990 the federal government began to privatize the maintenance and operation and the improvement and/or expansion of the existing Highway System. Through this program, Argentine national, provincial and municipal government entities have awarded concession contracts with respect to approximately 9,400 kilometers of existing federal and provincial highways and roads.

As part of the privatization of the Highway System, in 1990 the federal government awarded concession contracts to various consortia to widen and improve the network of access roads into the federal district, as well as the expressways within Buenos Aires, or the Buenos Aires Highway Access Network. These roads were generally in need of modernization as well as expansion to address the significant increase in traffic in Buenos Aires at that time. As a result, each concession contract provides for required capital expenditures, agreed‑upon improvements and other additional projects, known as the Highway Investments. In particular, each of the concessions granted to improve the Buenos Aires Highway Access Network includes a significant construction component for the widening, extension, expansion or other improvement of the existing roadway, as well as the continued maintenance and operation of the highways.

Strategy

We participate in a significant portion, approximately 25%, of Argentina’s concessioned highways. We intend to consolidate our participations in toll management in Argentina. We do not anticipate significant new growth opportunities in this sector in Argentina, but we are prepared to study any possible new model of maintenance and concession for the roads and highways in Argentina that may be enacted.

The following chart summarizes information relating to those highways in which we hold an equity interest.

Name of Subsidiary (Name of Road)	Corridor Served	Company Ownership of Concessionaire (%)(1)	Kilometers Operated by Concessionaire	Toll Rate(2)	No. of Lanes(4)	Average Approximate Transactions per Day	Concession Contract Expiration
Covicentro*	Rosario – Córdoba	53.8	332	3.70	2	9,856	2003
(National Route 9)
Red Vial*	Cruz del Eje
(National Routes 38,	Córdoba
36 and A005)	Río Cuarto	57.0	309	4.50	2	8,851	2003
Concanor*	Santiago del Estero
(National Routes 9 and 34)	San Pedro	38.5	482	5.30	2	5,647	2003
Coviares.	La Plata – Buenos
(Southern Access Road)	Aires	31.8	63	3.80	4	107,000	2017
Covimet.
(9 de Julio Expressway)	Intra‑Buenos Aires	31.8	10	1.00	10	40,952	2018
Covinorte*	Rosario – Santiago
(National Route 34)	del Estero	38.5	714	7.50	2	6,884	2003
Covisur	Buenos Aires
(National Route 2)	Mar del Plata	25.0	364	6.50(7)	4	17,416	2012
Puentes del Litoral (6)	Rosario – Victoria
	Bridge	20.0	59	–	–	–	2023
Econorte .	Cities in the State	14.4	245	12.80(5)	2	15,200	2021
(Brazil)	of Paraná

_______________________________

* Indicates highway managed by us.

(1) Represents the direct interest of BRH, Caminos and Polledo in the subsidiary, unless otherwise specified.

(2) Rate is the total amount for the entire length (one-way) traveled by a two‑axle vehicle.

(3) Includes direct and indirect ownership.

(4) Total lanes in both directions.

(5) Expressed in Reais. As of September 30, 2002, R$1.00 equals Ps.0.96/1.10 (ask/bid rates).

(6) Operation has not commenced.

(7) Represents the actual tariff collected by Covisur as determined by Decrees No. 2,957 and 2,959 dated December 21, 2001, which provides for a 50% reduction in fares.

Argentine National and Provincial Highways

Covicentro. Covicentro operates the part of National Route 9 which links the city of Rosario (with a population of approximately 1.2 million) with the city of Córdoba (with a population of approximately 1.3 million). This highway is an important commercial corridor between the second and third largest cities in Argentina and links important agricultural, industrial and manufacturing centers, such as automobile plants in Córdoba, with the main urban areas of Argentina and the countries in the Mercosur. As a result, this route has a high level of truck and other commercial traffic, although there are local roads which generally follow the route of this highway.

Red Vial.Red Vial operates National Routes 5, 36 and 38, which connect Córdoba with Río Cuarto (with a population of approximately 150,000), the two principal cities in the province of Córdoba, as well as with the mountainous recreational area to the west of the city of Córdoba. National Routes 5 and 36 link two large manufacturing and commercial centers within the province and therefore have a high level of truck and other commercial traffic. Route 38 runs through the tourist areas of Carlos Paz, Cosquín and La Cumbre, and traffic on this highway consists primarily of passenger cars with little commercial traffic. There are no parallel routes or railway lines that compete with these highways.

Covinorte.Covinorte operates the part of National Route 34 which runs from the city of Rosario to the city of Santiago del Estero (with a population of approximately 264,000). This highway connects the city of Rosario to a number of agricultural areas and is the principal route for the transportation of food and agricultural products from the northwestern region of Argentina destined for Buenos Aires or to be shipped abroad for export. As a result, this route has a high level of truck and other commercial traffic.

Concanor.Concanor operates National Routes 9 and 34, which run north from the terminus of Covinorte’s concession contract in Santiago del Estero, linking this city with Salta (with a population of approximately 370,000) and Tucumán (with a population of approximately 630,000). These highways travel through a number of agricultural areas, including the principal sugar growing area in Argentina, and have a high incidence of truck and other commercial traffic. There are no parallel routes or railway lines that compete with these highways.

Covisur. Covisur operates Route No. 2, which links the greater Buenos Aires metropolitan area (with a population of approximately 14 million) with the summer resort city of Mar del Plata (with a population of approximately 520,000), located on the Atlantic Ocean in the southern portion of the province of Buenos Aires. This highway runs for approximately 363 kilometers and experiences a surge in traffic during the summer months of December, January and February as vacationers travel to the beach areas of Mar del Plata. Although there are local roads which generally follow this highway, there are no parallel routes which provide access to the full distance served by the highway. Railroad competition is provided by passenger trains operated by the province of Buenos Aires with daily service between Buenos Aires and Mar del Plata and between Buenos Aires and Pinamar. There are no cargo trains operating on this route. Competition from the railroad is minimal and not likely to affect the traffic volume on this highway significantly.

Buenos Aires Highway Access Network

Coviares. Coviares holds the concession contract for the construction and operation of the expressway, or the Southern Access Road, from Buenos Aires to La Plata, the capital of the province of Buenos Aires. This route also serves as one of the principal southern access roads to Buenos Aires and is one of the most heavily traveled in the greater Buenos Aires metropolitan area. The primary competition for the Coviares highway is a network of avenues running through the densely populated southern suburbs of Buenos Aires that lead to La Plata. Traffic on this road consists primarily of automobiles and other light vehicles and does not include large numbers of trucks or other commercial vehicles. Traffic volume is approximately 107,000 toll transactions per day. The concession contract granted to Coviares also provides for the construction of a six‑kilometer elevated highway running parallel to the Río de la Plata (the River Plata) and linking the Buenos Aires‑La Plata expressway in the south to the 9 de Julio Expressway to the north (see “Agreements and Renegotiations of Buenos Aires Highway Access Network Projects”). Polledo has a 31.8% direct and indirect interest in Coviares.

Covimet. Covimet holds the concession contract for the construction and operation of the expressway between the northern portion of Avenida General Paz to Avenida 9 de Julio in downtown Buenos Aires. Traffic on this road is also heavy (averaging approximately 41,000 toll transactions per day) and consists primarily of automobiles and other light vehicles. We have a 31.8% direct interest in Covimet held through Polledo.

International Toll Road and Other Operations

Econorte. Polledo holds a 14.4% interest in Econorte, through its controlled subsidiary Polledo do Brasil Ltda., which operates two highways in the state of Paraná in Brazil totaling 245 kilometers. These highways form part of an integrated highway system in Paraná connecting the cities of Londrina, Foz de Iguaçu, Guarapava, Ponta Grossa, Curitiba, Paranaguá, Cascavel and Maringá. This concession contract is for 24 years and began in June 1998.

Puentes del Litoral. Puentes del Litoral, in which we hold an interest, has been granted a concession contract to build and operate a bridge over the Paraná River connecting the city of Rosario in the province of Santa Fe with the city of Victoria in the province of Entre Ríos. This will be the fifth bridge over the Paraná River and will be a fundamental part of the transcontinental route stretching from the Atlantic Ocean in Porto Alegre, Brazil to the Pacific Ocean in Valparaíso, Chile. The operating concession contract is for 25 years.

Argentine Toll Road Concession Contracts

The terms of the concession contracts generally govern termination of the concessions, the work to be undertaken by the concessionaire and the federal government, operational and maintenance standards, federal government supervision, maintenance of reserve funds, certain fees payable to (or subsidies to be received from) the federal government, the tolls to be charged and any adjustment mechanism thereto. The concessionaire is required to correct any defects in the highway that arise during the term of the concession contract. In return for operating, maintaining and, in certain circumstances, building the highway in accordance with the terms of the concession contract, the concessionaire has the right to retain all of the revenues derived from operation of the concessioned highway for the term of the concession contract. Concessionaires may assign their rights and duties under the concession contract only with the prior approval of the federal government. Upon termination of the concession contract, the right to operate the highway and to collect toll revenues reverts to the federal government. The highway itself and the fixtures related to its operation remain the property of the federal government throughout the term of the concession contract, although vehicles and equipment purchased by the concessionaire are not required to be delivered to the federal government upon expiration of the concession contract.

Historically, concession contracts granted by the federal government have been subject to renegotiation from time to time to address breaches or failures to pay by the federal government or other circumstances which have adversely affected the economic rights of the parties.

Toll Revenues. Each concession contract sets forth a schedule of tolls by category of vehicle. The federal concession contracts provide for tolls denominated in Pesos and toll increases above the levels set forth in the concession contracts require government approval. Under all of the concession contracts, the concessionaire is permitted to offer discounts or other special pricing arrangements, subject to the maximum tolls set forth in the concession contracts.

Subsidies. The concession contracts for Covinorte, Concanor, Covicentro and Red Vial were amended in 1991 to modify the toll structure in order to significantly reduce the amount paid by customers. In exchange for the concessionaires’ agreement to reduce tolls, the federal government agreed to pay a monthly subsidy to Covinorte, Concanor, Covicentro and Red Vial to defray operating and maintenance costs and to assure compliance with the investment plan.

Recent Developments; Effects of Tolls and Subsidies. Over the last two years, the federal government of the Republic of Argentina and various provincial governments have undertaken a number of renegotiations of the highway toll concessions, enacted a series of decrees and resolutions and taken other actions that have dramatically affected this sector. Most significantly, the severe economic crisis in Argentina led to pesification, pursuant to the Public Emergency Law, which converted into Pesos any of our tariffs that were denominated in U.S. Dollars (as well as all tariffs of other public service providers), eliminated all readjustments of our tariffs and created a commission for the renegotiation of concession contracts for public services, thereby directly affecting our business. The pesification of our tariffs and the freeze on our tariffs directly impacted our results of operations. With the economic crisis there was a decrease in the number of vehicles on our toll roads. Our most important materials (such as asphalt, oil, and paint, among others) increased in price, which, together with the decrease in revenue, affected our toll road business, including our performance under our recently approved investment and development plan.

While the Public Emergency Law provided for the establishment of a commission for the renegotiation of concession contracts, including ours, little progress has been made on such a general renegotiation. The commission has requested that we present various documents to them for analysis, and as of the date of this Offering Memorandum, we are in the process of renegotiating our concession contracts (see “Risk Factors — Risks Related to Us — The tariffs that we charge customers are determined pursuant to concession contracts and controlled by the federal government”).

Agreements and Renegotiations of National Highways

On November 2, 2000, Covicentro, Covinorte, Concanor and Red Vial signed minutes of agreement with the Secretariat of Public Works, which were approved by the Executive Branch by Decree No. 92/2001 dated January 25, 2001, published in the Official Gazette on January 31, 2001.

The principal points dealt with in the above-mentioned minutes of agreement provide that the federal government recognize the amounts owed to concessionaires as of October 31, 2000 with respect to principal and interest related to toll fee increases not timely approved; subsidy increases not recognized; interest related to subsidies settled after their corresponding due dates; and principal and interest on special discounts borne by the federal government. The total debt recognized in favor of each concessionaire is shown in the table below:

Concessionaire	Debt to be settled through government bonds	Balance to be settled in cash at the date of approval of the memorandum	Balance to be settled at the end of the term of the concession contract	Total debt recognized
	(in thousands of Pesos)
Covicentro	20,658	1,695	2,119	24,472
Covinorte	15,806	1,973	2,467	20,246
Concanor	12,920	1,251	1,563	15,734
Red Vial	13,167	661	826	14,654

The federal government settled these debts mainly with federal government bonds (“Bonos Pro 6”). In addition, the portion of the balance to be settled in cash at the date of approval of the agreement and the remaining balance to be settled at the end of the term of the concession contract were rescheduled. Subsidies recognized in favor of the concessionaires since November 1, 2000 will be settled by the federal government at the end of the term of the concession contracts, plus interest accrued at that date. The difference between the actual toll fees collected by the concessionaires and the amount which should be applied in accordance with the concession contract until the end of its term will be settled by the federal government, plus interest accrued at that date at the end of the concession contract. The concessionaires agreed to comply with the execution plans of the existing projects so amended, where applicable.

On June 15, 2001, the federal government approved a reduction in toll fees of between 30% and 60%, depending on the type of vehicle, through Decree 802/01.

Decree No. 976/01, dated July 31, 2001, enacted the tax on diesel and established a trust fund by which the total amount of subsidy payments to toll road and railway concessionaires established by Decree No. 802/01 would be paid, as well as any debt and compensation that had been accounted for in the act signed in November 2000. See “— Gasoil Fund.”

In turn, through Resolution No. 304 dated August 30, 2001, the Ministry of Infrastructure and Housing established a new 30% reduction in toll tariffs for users of categories 4, 5 and 6 benefiting from the discount established by Clause 1.14 of the agreement to improve competitiveness and generate employment entered into by and between the federal government and the cargo transportation sector.

Furthermore, in addition to Decree No. 976, on September 17, 2001 the Secretariat of Public Works established, through Resolution No. 190, the method and date of payment of the corresponding tariff reductions mentioned above, and the suspension of cash payments that were to be made after the issue of the decree that approved those minutes, and the pending balance that was to be paid at the end of the term of the concession contract, as established by Exhibit III of the minutes of Agreement dated November 2, 2000.

Finally, on November 1, 2001, the National Executive Branch issued Decree No. 1,377, whereby the payment schedule established by Resolution No. 190 was redistributed.

In connection with the aforementioned decree, the Ministry of Infrastructure and Housing issued Resolution No. 586, dated December 14, 2001, instructing the Secretariat of Public Works to carry out negotiations through the Organo de Control de Concesiones Viales, or OCCOVI, the control authority of toll road concessions, in order to comply with Article 20 of Decree No. 1,377/01.

On February 12, 2002, the National Executive Branch issued Decree No. 293/02, by which it established that the Ministry of Economy should carry out the renegotiation of the contracts for Public Works and Utilities. The Commission of Work Contract Renegotiation and Public Services was created within the framework of Articles 8 and 9 of Law No. 25,561.

On September 16, 2002, the National Executive Branch set forth Decree No. 1,839/2002 by which it extended its term by 120 working days so that the Ministry of Economy could raise its proposals for the renegotiation of contracts arranged for in Article 8 Law 25,561 to the National Executive Branch. On the assumption that the proposals were processed but additional time was required to conclude the renegotiation, the Ministry of Economy was authorized to establish a new extension of the term that results from Article 1 of that Decree, up to a maximum of an extra 60 days.

Agreements and Renegotiations of Provincial Highways

Covisur. On April 7, 2000, Covisur and the province of Buenos Aires signed a Memorandum of Understanding, which establishes an 11% discount on toll fees for the Samborombón Toll Station (categories 1, 2 and 3) and in the Maipú Toll Station (category 1).

The Memorandum of Understanding states that the parties shall sign an agreement in order to establish the new term for the concession contract within 90 days. If the parties fail to reach an agreement, the terms contained in the concession contract prior to the execution of the Memorandum of Understanding mentioned above would be re‑established.

On December 29, 2000, a Memorandum of Understanding was signed between the Ministry of Works and Public Services and Covisur, pursuant to which a 60-day term was established for the execution of an addendum to the concession contract in force which envisages the execution of new projects, the reinstatement of the contractual toll fees and the extension of the term of the concession contract.

In light of the fact that the deadline for signing the addendum expired on March 26, 2001, on March 27, 2001, June 21, 2001 and September 27, 2001, through a letter addressed to the Minister of Public Works and Services of the province of Buenos Aires, Covisur requested approval for reinstating the contractual toll fees and also claimed the amounts not collected until such request is approved.

On December 21, 2001, through Decrees No. 2,957 and 2,959, the government of the province of Buenos Aires established the downward adjustment of the tariff by 50% of the contractual value for the period from January 1, 2002 to March 31, 2002. Later decrees of the government of the province of Buenos Aires renewed the life of the above-mentioned decrees until March 31, 2003.

The adjustment was made unilaterally without specifying the form and timing of the corresponding compensation. We filed an appeal for reconsideration of the resolution with the corresponding authorities. At the closing of this Offering Memorandum, no developments have taken place in this regard.

At the date of this Offering Memorandum, we presented requirements before the government of the province of Buenos Aires, which called for the recognition of the amounts that correspond to the income that had not been realized during the period in which Covisur has had to operate with a tariff reduced by 50%.

Agreements and Renegotiations of Buenos Aires Highway Access Network Projects

Coviares. On December 22, 2000, Coviares and the Secretariat of Public Works executed an Addendum to the Restatement Agreement in force for the concession contract.

The main amendments introduced are as follows: (i) an extension of a projects timetable (excluding the Riverside Highway); (ii) an extension of the settlement term of the debt with the federal government and an increase of interest rate (payments are to be made as from January 2012, with an annual average increase of 0.8% in the interest rate); and (iii) notice that the City of Buenos Aires Riverside Highway is excluded from the Addendum until such time as the route and preliminary proposal for this highway are defined. The parties must close an agreement for this highway within one year from such time as the route and preliminary proposal are specified, or by June 30, 2003, whichever occurs first. On that date an amendment to the Memorandum of Understanding should be issued, including the definitive economic and financial plan of the project.

On January 30, 2001, the federal government published in the Official Gazette Decree No. 85/2001, which approved the agreement mentioned above and stated a new timetable.

Through Resolution No. 144/02 dated December 4, 2002, the Legal and Administrative Secretary of the Ministry of Infrastructure and Housing established a process for public consultation for some of the concessionaires of the access road to the city of Buenos Aires, including Coviares. This process allows the public to comment on the emergency plans proposed by the concessionaires. The plan presented by Coviares, among others, requests a 42% tariff increase or, alternatively, a Ps.29 million subsidiary per annum. The concessionaire’s proposals, together with the comments received from the public, will be evaluated by the Renegotiation Commission, and its results will be presented to the federal government.

Covimet. During February 1999, Covimet reached an agreement with the municipality of Buenos Aires, or GCBA, which provides for: (i) the suspension of the term of the concession contract from May 1996 to February 1999; (ii) compensation of approximately Ps.27 million (including VAT) to Covimet for such suspension; (iii) the undertaking of a number of projects totaling approximately Ps.63.80 million; (iv) an increase in tolls from the Ps.1.00 in effect since March 1999 to Ps.1.30, upon completion of those projects; and (v) a waiver of any claims of any nature that may have arisen before the Covimet Renegotiation.

As a result of the economic crisis in Argentina, Covimet and the GCBA are not in compliance with their respective obligations under the contract. We cannot predict when we will reach an agreement and what the terms and conditions of such agreement will be.

Termination. The grantors of the concession contracts have the right to terminate the concession contracts without compensation before expiration upon the occurrence of specified events, including interruption of highway services, without cause, modification or alteration of the conditions under which the highway is operated without the consent of the Dirección Nacional de Vialidad (National Directorate of Roads, or the DNV), failure to make payment of any amounts due to the federal government, failure to comply with the conditions specified in the concession contract, negligence in the operation of the highway, failure to maintain the highway or the establishment of tolls in excess of those approved by the DNV. In the case of the national and provincial highways, the Argentine national or provincial government, as applicable, may also terminate a concession contract without cause prior to the expiration of the concession contract, in which event the concessionaire is entitled to compensation for all investments made during the term of the concession contract and for damages and lost profits. In the case of Coviares, the Organo de Control de la Red de Accesos a Buenos Aires, or the Controlling Body of the Buenos Aires Highway Network, or OCRABA, may also terminate the concession contract without cause prior to expiration of the concession contract, but compensation to the concessionaire is limited to investments made during the term of the concession contract, less accumulated depreciation, and does not include the loss of anticipated profits. See “Risk Factors — Risks Related to Us — We operate some of our businesses pursuant to concession contracts that are subject to termination.”

Construction

Overview

We believe that we are one of the largest construction companies in Argentina in terms of sales. We are engaged in a full range of infrastructure construction, including building construction, railway and highway construction, waterworks and industrial construction for the public and private sectors in Argentina and other Latin American countries, including Uruguay, Paraguay and Chile. We have participated in the construction of a broad range of infrastructure projects throughout Latin America, including highways and toll roads, waterworks, sewage systems, dams, airports and marine port facilities, and have also participated in industrial and commercial construction projects, including commercial and residential buildings, hospitals, schools, hotels, shopping centers, food processing and cement plants, oil refineries, gas pipelines and hydroelectric power plants. For the year ended June 30, 2002, our revenues for the construction segment were approximately Ps.148.3 million.

Construction Industry in Argentina

The construction industry in Argentina has a strong influence on the development of the economy in Argentina. On the other hand, the economy in Argentina also directly influences the construction industry. During the 1980s, the Argentine gross domestic product decreased, as did the construction industry, which registered a 50% decrease in the volume of activity during the course of ten years. In the 1990s, especially in the first half, due to the restructuring of the economy, the adoption of free trade and the increase in investment opportunities, Argentina experienced vast economic growth, followed by growth in the construction industry, until the crisis in Mexico, which was followed by the economic turbulence in Brazil.

In the last three years, and in particular during 2002, the economic crisis in Argentina further described elsewhere in this Offering Memorandum has severely impacted the construction industry in Argentina and neighboring countries. The economic retraction paralyzed the entire construction sector, and the majority of our projects stopped in 2002. Only a few contracts continued, and those were at a much slower pace.

Strategy

In response to the circumstances described above, we have focused our efforts on a comprehensive internal reorganization, in order to reduce costs, maintain our track record and respond to the requirements of our clients. We intend to be more conservative, and we expect to maintain a smaller backlog than in previous periods, but with a better yield and liquidity, and with minimum financial leverage.

Operations

We provide a variety of construction services to clients in a broad range of industries. The ability to supply such services enables us to provide clients, on our own or as part of a UTE, single‑source project responsibility for complex projects.

We are responsible for different types of projects. The following paragraphs contain summarized descriptions of the principal types of projects that are undertaken by us within each construction segment.

Building Construction. Examples of the types of buildings we have constructed include: office buildings, residential housing, hospitals, hotels and resorts, parking structures, shopping centers, stadiums, airports and bus stations. A representative list of our recent clients for building construction includes: the Ministry of Economy and Public Works and Services of Argentina, the government of the province of Córdoba, the Directorate of Planning of the province of Mendoza, the government of the province of Buenos Aires, the Universidad Católica Argentina, Antel (the Uruguayan telephone company), Metrovías, Telecom Argentina and Empalme S.A.

Railway and Highway Construction. We are heavily involved in the highway construction business both in Argentina and elsewhere in Latin America, in some cases in connection with toll highways in which we have an operating interest. Some of our recent clients include: the Dirección Nacional de Vialidad, Grupo Concesionario del Oeste S.A., Red Vial, Covisur, Covicentro, Covinorte, Concanor and Coviares. We are also involved in railway construction on the BAS.

Waterworks. Our waterworks projects have included hydroelectric dams, ports, tunnels and sewer systems. A representative list of clients in this sector includes: the Ministry of Economy of the province of Santa Cruz, the government of the province of Entre Ríos, Corporación de Obras Sanitarias (Paraguay), DIPOS Santiago del Estero, Aguas Provinciales de Santa Fe and Aguas Cordobesas S.A.

Industrial Construction. We have been involved in the construction of gas pipelines, plants for the processing of petroleum and derived products, and electricity distribution networks. Some of our recent clients in this sector are Empresa Provincial de Energía de Córdoba, Edesal S.A., Transportadora Gas del Sur S.A., and Distribuidora de Gas Cuyana S.A.

In our most recent years of construction activity, we have concentrated most heavily on road construction.

Revenue Origination

The crisis in Argentina, and its impact on our construction business, has been severe and affected our operations in recent years. Nevertheless, BRH’s long-standing reputation in the construction business, in Argentina and abroad, and its good relationships with existing customers aided BRH in the slow recovery of its construction business. For the fiscal year ended June 30, 2002, BRH was involved in various projects, including architectural and roadwork construction.

Backlog

Backlog represents the total revenues that we expect to receive from all signed or awarded construction contracts as of a specified date, less the aggregate amount of revenues earned with respect to such contracts as of such specified date. The following table sets forth our backlog as of September 30, 2002:

	As of September 30, 2002
	In millions of Pesos		Percentage
Public sector backlog	199.3		91.5%
Private sector backlog	18.4		8.5%
Total backlog	217.8		100.0%

The amount of backlog is not necessarily indicative of our future earnings related to the performance of such work. The backlog amounts assume that (i) neither any customer nor we default on our obligations under any construction contract and (ii) payments to us under signed contracts are made on a timely basis. Although backlog represents only business that is considered to be firm, there can be no assurance that cancellations or adjustments will not occur.

The following chart discloses the backlog as of September 30, 2002, and details works that have been discontinued and those that are in operation:

BACKLOG AS OF SEPTEMBER 30, 2002
Description	Discontinued/In Operation	Type of Work	Commission	Backlog (in millions of Pesos)
C. Re. Ma. Malla 308	In Operation	Public	Dirección Nacional de Vialidad	0.1
Plan Saneamiento Ambiental Maldonado	In Operation	Public	Administración Obras Sanit. del Estado O.S.E.	0.6
Gasoducto Punta Indio – Magdalena	Discontinued	Public	Ente Provincial Regulador Energético	0.1
Ruta 11 Campana	Discontinued	Public	Administración Provincial de Vialidad y Obras Públicas (La Rioja)	2.7
Conexion Vial. La Rioja – Chilecito	Discontinued	Public	Administración Provincial de Vialidad y Obras Públicas (La Rioja)	3.5
Modernización Linea A	Discontinued	Public	Secretaría de Transporte - Mterio. Economía y Obras y Ss. Públicos -	20.4
Planta Depuradora Mar Del Plata	Discontinued	Public	Obras Sanitarias - Mar del Plata - Sociedad del Estado	10.7
Subte D	In Operation	Public	SBASE	2.3
Torre Antel	In Operation	Public	Antel	1.8
Ruta 95	Discontinued	Public	Dirección Nacional de Vialidad	0.1
Cloacas Paraná	Discontinued	Public	Superior Gobierno de la Provincia de Entre Ríos	0.3
Ampliacion Linea E	Discontinued	Private	Metrovías	2.8
Rta. Nac. 76 Secc. I Y Ii L.Rioja	Discontinued	Public	Administración Provincial de Vialidad y Obras Públicas (La Rioja)	38.6
Ruta Nac. 34	Discontinued	Private	Covinorte	0.2
Paso De Jama*	In Operation	Public	Dirección Nacional de Vialidad	33.0
Ruta 9 – La Quiaca – Jujuy	In Operation	Public	Dirección Nacional de Vialidad	2.0
Autopista Pilar – Villa Maria*	In Operation	Public	Dirección Nacional de Vialidad	77.2
Complejo Carcelario Mujeres	In Operation	Public	Superior Gobierno de la Provincia de Córdoba	4.9
Conexion Vial Rosario – Córdoba	In Operation	Private	Covicentro	13.8
Crema Malla 207/304 Ruta 38Y79	In Operation	Public	Dirección Nacional de Vialidad	1.1
Aut. L.P.-Bs. As. (V. Elisa-L.P.)	Discontinued	Private	Coviares	1.7
TOTAL				217.8

_________________

* Funded with the Gasoil Fund. See “— Gasoil Fund.”

Materials and Supplies

We purchase materials and supplies from a wide variety of sources and have not encountered problems with suppliers or shortages, which could adversely affect our operations.

Capital Expenditures

Our capital expenditures related to our construction business are closely tied to the timing and nature of the projects awarded to us. Generally, these expenditures consist of construction equipment or, in the case of long‑term contracts, start‑up of operations. The vast majority of these expenditures are incurred at the commencement of a project as we purchase specialized equipment for use on site. During the fiscal years ended June 30, 2002, 2001 and 2000, our construction segment capital expenditures were Ps.2.0 million, Ps.3.2 million and Ps.4.0 million, respectively.

Competition

Of the Argentine domestic construction companies, we compete principally with Techint Compañía Técnica Internacional S.A.C. e I., Sade Skanska, Sideco Americana S.A., Jose Cartellone Construcciones Civiles S.A. and Dragados y Construcciones Argentina S.A. We have also faced competition from (i) a large number of smaller domestic construction companies and (ii) international construction companies following the liberalization of government rules that had previously inhibited the entry of foreign competitors into the domestic market. International firms’ participation in the Argentine market has typically been through consortia that include a local partner.

The recent economic crisis in Argentina affected many of our competitors. Present market conditions in Argentina are not attractive for the participation of foreign companies.

Other Activities

We first entered the waste management business in 1985. In June 2000, we started a significant reorganization of our waste management business, which, through a series of transactions, led to a limited participation in the waste management business in two projects: (i) Sehos S.A., or Sehos, in which we were responsible for maintenance and cleaning of hospitals and other buildings in Buenos Aires and Neuquén and (ii) Clima, in which we were responsible for waste management services in the City of La Paz, Bolivia.

Our Indebtedness

Our indebtedness is held at Clisa as well as many of our subsidiaries. We have certain guarantees for the performance by us of our obligations under certain concession contracts or bids. We consider those guarantees to be in the ordinary course of business, and therefore, they are not described below. Much of our indebtedness was initially denominated in U.S. Dollars, but with the enactment of Decree No. 214/2002, the Public Emergency Law and related legislation, many of these debts were converted to Pesos at a rate of Ps.1.00 = U.S.$1.00. Furthermore, the principal amount outstanding under each of these newly pesified debts is recalculated each month by application of the CER. As of January 15, 2003, the CER from the date of pesification is 40.75%. As a result, a U.S.$100 debt that was pesified is now recorded as a liability of Ps.140.75 on our books. This principal amount will continue to be adjusted each month for changes in CER. In addition, pursuant to Communication “A” 3507 of the Central Bank, the maximum rate at which interest can accrue on these pesified debts on and after February 4, 2002 is 8% per annum. See also our Consolidated Financial Statements. Described below is our indebtedness (loan facilities or guarantees) held at Clisa, the Guarantors and our controlled subsidiaries.

AIG Facility

Roggio and American International Group, or AIG, have executed an Agreement of Indemnity dated September 24, 2001 providing for the issuance of surety bonds, undertakings or instruments of guarantee on behalf of Roggio and/or any present or future subsidiary of Roggio. Pursuant to the terms of this agreement, subsidiaries of Roggio, such as Clisa and the Guarantors, are responsible for indemnifying AIG only for those bonds for which they have elected to be liable. Generally, in those circumstances, both Roggio and such subsidiary would be jointly and severally liable to AIG. We have agreed to provide AIG with security interests on (i) certain real property, (ii) our shareholdings in Polledo and (iii) cash accounts with approximately U.S.$800,000 to secure our reimbursement obligations under this agreement.

BRH Credit Facilities

In September 2000, BRH obtained a U.S.$25 million loan from Banco de Galicia y Buenos Aires S.A., or Banco Galicia, to finance the acquisition of 14.30% of Metrovías shares and 28% of Metronec’s shares, rights held by a previous shareholder of Metrovías under a technical assistance agreement, and to repay a loan secured by certain encumbrances. The loan is to be repaid in increasing monthly installments through September 2005. Amounts under this facility are secured by the fiduciary assignment of BRH’s rights under certain technical assistance agreements with Metrovías. In October 2001, the loan was assigned by Banco Galicia to Banco de Galicia Uruguay S.A. This loan was pesified in 2002. Since July 2002, BRH’s payments to Banco Galicia have been limited to the total amount paid by Metrovías under the technical assistance agreements that have been pledged under the fiduciary assignment. These funds have been sufficient to pay interest and the CER adjustment in full, but only part of the scheduled principal installments. As of December 31, 2002, the principal outstanding balance of this loan was Ps.25.7 million.

In June 2000, BRH obtained a U.S.$10.0 million loan from Citibank, N.A. to finance the acquisition of 10.00% of the shares of Metrovías, as well as rights held by another shareholder of Metrovías under a technical assistance agreement with Metrovías. The loan is repayable in variable annual installments through June 2005. Amounts under this loan agreement are secured by (i) the fiduciary assignment of BRH’s rights under the technical assistance agreement with Metrovías acquired with the loan proceeds, and (ii) a lien on the acquired shares and its corresponding dividends. This loan was pesified in 2002. BRH is current with all of its principal and interest payments due under this loan. As of December 31, 2002, the principal outstanding balance of this loan was Ps.6.0 million.

In June 2000, BRH obtained a U.S.$5 million loan from Banco Río de la Plata S.A., or Banco Río, which was secured by a pledge on a junior basis, on the shares of Covisur owned by Caminos. This loan was pesified in 2002. As of December 31, 2002, the principal outstanding balance of this loan was Ps.7.0 million; however, in January 2003, this loan was repaid.

BRH owes U.S.$0.7 million to Banco de la Nacion Argentina, or Banco Nacion, as a result of an unpaid reimbursement obligation arising from a drawing made under a standby letter of credit issued by Banco Nacion for the account of BRH and Roggio to secure repayment of principal installments under the loan facility to Clima. See “— Clima Financing” below. The loan is secured by the assignment of certain of Clima’s creditor rights against the municipality of La Paz (Bolivia) under its waste management concession. The principal amount of this debt is payable in 11 monthly installments at an applicable interest rate of 14.5%. This loan was not pesified, and as of December 31, 2002, the principal outstanding balance was U.S.$0.4 million.

BRH has obtained loan facilities from Banco Sudameris (Uruguay) and Discount Bank (Uruguay) to finance works in Antel Telecommunications building in Montevideo (Uruguay). Banco Sudameris is secured by the assignment of certain collection rights from Antel. Amounts owed under these loans accrue interest at 11.5% and 11%, respectively. The loans are payable in installments through May 2003. As of December 31, 2002, the principal outstanding balance of these loans was U.S.$1.7 million.

In June 2000, BRH obtained a U.S.$2 million loan from Banco Galicia to finance certain works. This loan is repayable in 60 monthly installments through January 2004. This loan was pesified in 2002. As of December 31, 2002, the principal outstanding balance of this loan was Ps.0.9 million.

Caminos Indebtedness

In August 2000, Caminos obtained a U.S.$10.0 million loan facility from Eurobanco Bank. Amounts under this loan agreement are secured by a pledge on shares of Covisur and accrue interest at a rate of 7% per annum. The principal amount is repayable in a single U.S.$10.0 million installment in May 2005.

Metrovías Financing

In October 2000, Metrovías obtained a U.S.$9.5 million loan from Banco Río to finance the acquisition of magnetic turnstiles to be installed in the Buenos Aires Subway. Amounts under this loan agreement are repayable in monthly installments through October 2004 and are secured by the purchased turnstiles. In 2002, this loan was pesified. As of December 31, 2002, the principal outstanding balance of this loan was Ps.8.7 million. Metrovías has not made payments of principal or interest on this loan since June 2002.

In August 2000, Metrovías obtained a U.S.$18.0 million loan from Banca Nazionale del Lavoro S.A., or BNL. Amounts under this loan agreement are repayable in monthly installments through April 2003 and are secured by the assignment of the fares collected by Metrovías. In 2002, this loan was pesified. Since June 2002, Metrovías has remained current on interest and CER adjustments on this loan but has only made partial payments of principal. As of December 31, 2002, the principal outstanding balance of this loan was Ps.8.4 million.

In May 2002, Metrovías acquired from Metroline S.A., or Metroline, a Roggio subsidiary, certain railcars, some of which Metrovías was already leasing. As part of the purchase price, Metrovías assumed all obligations and liabilities under the following loan facilities:

• U.S.$20.2 million loan granted by Banco Galicia to finance the acquisition of 24 railcars, which were leased to Metrovías. The loan is to be repaid in 48 monthly installments through October 2004. Amounts under this loan agreement were initially secured by (i) a pledge on the railcars and (ii) the fiduciary assignment of the proceeds of a railcar-leasing contract and a railcar maintenance contract with Metrovías (although this assignment was later released in May 2002 when the underlying contracts were revoked). In addition, Roggio has granted Banco Galicia a put option to sell the loan to Roggio at par under certain circumstances. This loan was pesified in 2002. Since June 2002, Metrovías has not paid principal or interest due under this loan. As of December 31, 2002, the principal outstanding balance of this loan was Ps.17.7 million.
• U.S.$21.0 million loan granted by Banco Río in March 1999, to finance the acquisition of 30 railcars, which were leased to Metrovías. The loan provided for repayment in eight semi-annual installments ending in June 2003. Amounts under this loan agreement were initially secured by (i) a pledge on the railcars and (ii) the fiduciary assignment of the proceeds of a railcar-leasing contract and a railcar maintenance contract with Metrovías (although this assignment was later released in May 2002 when the underlying contracts were revoked). In addition, Roggio has granted Banco Río a put option to sell the loan to Roggio at par under certain circumstances. In 2002, this loan was pesified. Since June 2002, Metrovías has not paid principal or interest due under this loan. As of December 31, 2002, the principal outstanding balance of this loan was Ps.10.1 million.
• Ps.15.7 million under an overdraft incurred with Banco Río in May 2002 originating from a trade letter of credit issued to pay for 24 railcars purchased by Metrovías. This debt is unsecured and is payable upon demand (i.e., it has no established maturity). Interest accrues at a variable rate set by Banco Río for such overdrafts. As of December 31, 2002, the outstanding principal amount owed under this overdraft was Ps.21.4 million.

Metrovías is currently negotiating with BNL, Banco Río and Banco Galicia to restructure all five loan facilities. We have reached agreement in principal with these banks on many of the terms of this restructuring. We anticipate executing documentation to formalize these agreements in the coming weeks. Amounts due under these new, restructured loan facilities will be secured by a fiduciary assignment of a portion of Metrovías’ fare collections.

Polledo Indebtedness

As of December 31, 2002, Polledo had approximately Ps.9.6 million in indebtedness outstanding, arising from the following transactions:

• Ps.9.4 million under a credit facility granted to refinance outstanding debt, in November 1995 by a banking syndicate, originally denominated in U.S. Dollars and pesified in 2002. Principal amounts thereunder are to be repaid in full by November 2003. Polledo has not made principal or interest payments due in November 2002 under this loan facility. Polledo is currently in discussions with the members of the loan syndicate to restructure this debt.
• Ps.0.2 million under two small loans that mature in October 2003. Both were originally denominated in U.S. Dollars and were converted into Pesos in 2002 by Decree No. 214/2002.

Clima Financing

In November 1997, Clima obtained a U.S.$3.8 million loan from Banco de la Nacion Argentina, La Paz Branch (Bolivia), to finance the acquisition of trucks. The loan is to be repaid in five annual installments through August 2004. Amounts under this facility are secured by a stand-by letter of credit issued by Banco Nacion for the account of BRH. The applicable interest rate is 11% per annum. As of December 31, 2002, the principal outstanding balance of this loan was Ps.1.2 million.

Other Contingent Liabilities

Coviares Obligations. We have the following contingent liabilities arising from Coviares, a Company in which Polledo holds a 31.8% interest:

1. In March 2001, Coviares obtained a long-term loan for U.S.$239 million from a syndicate of banks in which HSBC Bank Argentina S.A. acted as administrative agent, the proceeds of which are to be used exclusively in the ordinary business of Coviares, including the settlement of liabilities and the construction of works envisaged by the concession contract and amendments. The loan provides for the payment of principal amounts drawn thereunder in 72 increasing monthly installments, commencing in May 2003. This loan is secured by (i) a first pledge of the majority shareholders of Coviares (including Polledo) of common shares representing 60% of the capital stock and voting rights of Coviares and (ii) the fiduciary assignment of the toll fees collected by Coviares under its concession contract. These pledged shares also secure (on a junior basis) payment by Coviares of amounts payable to Banco de la Provincia de Buenos Aires under the guarantee mentioned in clause (ii), granted to the federal government. This loan was pesified in 2002. As of December 31, 2002, the principal outstanding balance under these two facilities was approximately Ps.348 million. Furthermore, BRH and Polledo are severally responsible with the other shareholders for the performance by Coviares of its obligations towards Banco de la Provincia de Buenos Aires S.A., or Banco Provincia, under the above mentioned syndicated loan agreement for up to Ps.19.5 million and Ps.18.8 million, respectively. This guarantee is enforceable only in the case of an anticipated rescission of Coviares’ concession contract imputable to Coviares.
2. BRH and Polledo are severally responsible with the other shareholders under a guarantee issued by Banco Provincia for the fulfillment of Coviares’ obligations under the toll road concession contract for up to Ps.2.0 million and Ps.1.9 million, respectively;

Covisur Obligations. We have two contingent liabilities related to Covisur, in which Caminos holds a 25% interest:

(i) Caminos, in case of an anticipated rescission of Covisur’s concession contract imputable to Covisur, guarantees up to Ps.9.7 million of the amounts due under a U.S.$34 million loan obtained by Covisur from Banco Provincia to finance the performance of works. Principal of the loan is to be repaid in sixteen semi-annual installments, from June 2000 through December 2007. This loan was pesified in 2002. To secure payment, Covisur has pledged its rights to the toll fees collection under the toll road concession. As of December 31, 2002, the principal amount outstanding under this contract was approximately Ps.36.5 million. Since June 2002, Covisur has not paid principal installments and has performed only partial payments of interest. Covisur is currently in negotiations with Banco Provincia to restructure its debt.

(ii) BRH guarantees up to Ps.1.9 million of the amounts due under a U.S.$18 million loan obtained by Covisur from Banco Provincia (and Banco de Inversión y Comercio Exterior S.A. through an on‑lending arrangement with Banco Provincia) to finance the performance of works. Principal of the loan is to be repaid in semi-annual installments through March 2003. This loan was pesified in 2002. To secure payment, Covisur has pledged its rights to the toll fees collection under the toll road concession. As of December 31, 2002, the principal amount outstanding under this loan was approximately Ps.6.9 million. Since March 2002, Covisur has failed to perform payments of principal and interests due under the loan and it is currently in negotiations with Banco Provincia to restructure its debt.

Covimet Obligations: Covimet, in which Polledo holds a 31.8% interest, received loans from Banco Provincia (and Banco de Inversión y Comercio Exterior S.A. through an on-lending arrangement with Banco Provincia) for U.S.$14.0 million. The principal of the loans is to be repaid in semi-annual installments through March 2005. This loan was pesified in 2002. As of December 31, 2002, the principal amount outstanding under these loans was approximately Ps.4.5 million. Caminos and Polledo guarantee up to Ps.0.8 million and Ps.0.7 million, respectively, of the amounts due under these loans.

Insurance

We believe that we maintain the types and amounts of insurance customary in the industries in which we operate, including coverage for employee‑related accidents and injuries, property damage, fire and theft. We consider our insurance coverage to be adequate both as to risks and amounts for the business conducted by us.

Metrovías maintains, as required by the concession contract, insurance against civil judgments. Under the insurance contract and the concession contract, Metrovías pays the first U.S.$200,000 of any judgment, the insurance company pays the remainder of the judgment up to Ps.2.0 million, and any amount in excess of Ps.2.0 million is paid by the federal government. Metrovías also maintains a guarantee policy as required by the terms of the concession contract, for which the insurance company will pay up to Ps.30.0 million.

Even though it is not required under the concession contract, Metrovías also maintains insurance against property damage under which it is responsible for the first U.S.$500,000, and the insurance company will pay any amounts due in excess of U.S.$500,000, up to U.S.$1,444.3 million.

In connection with employment-related matters, we have insurance coverage with Administradoras de Riesgos del Trabajo and other insurance companies. The insurance provided by Administradoras de Riesgos del Trabajo is a workers’ compensation insurance system which provides insurance against damages caused directly or indirectly as a result of any work-related activity. This insurance program is managed by the Superintendencia de Riesgos del Trabajo de la Nación pursuant to Law No. 24,557. In addition, we have insurance coverage through other insurance companies that provide the Seguro de Vida Obligatorio (Mandatory Life Insurance), which is managed by the Superintendencia de Seguros de la Nación and is regulated under Decree No. 1,567/74. This insurance provides life insurance for all employees regardless of the cause of death and is independent of any other insurance coverage.

Employees

Mass Transportation Management. As of December 31, 2002, the mass transportation management segment employed approximately 2,468 persons, of whom approximately 1,871 were union employees and approximately 597 were non-union employees. Metrovías’ employees belong to five unions.

Toll Road Management. As of December 31, 2002, the toll road management segment employed approximately 457 persons for the projects in which we are the operating manager, of whom 10 were union employees and 447 were non-union employees.

Construction. As of December 31, 2002, the construction segment directly employed 297 persons at our construction business headquarters and in construction projects undertaken solely by us, of whom 263 were union employees and 34 were non‑union employees. The construction segment’s employees belong to two unions.

As of December 31, 2002, we employed approximately 3,222 persons, of whom approximately 2,144 were union employees and approximately 1,078 were non-union employees.

Strikes. Although Argentina has experienced general strikes in the past in which our employees have participated, and from time to time strikes have occurred against specific projects involving us, very few strikes have been directed at us as a whole in the past five years, and we have arrived at legal resolutions in each of those situations. We believe our relationship with our employees and their labor unions is good.

Government Regulation

General. Generally, we are not subject to any special governmental regulation other than the terms imposed by governmental entities in the concession contracts to which we are a party. We believe that we are in material compliance with Argentine laws and regulations relating to our business.

Labor Law. We must comply with labor legislation enacted by the federal government and with extensive regulations issued by the Ministry of Labor and Social Security and various other agencies thereunder. The legal framework for labor contracts in Argentina is established by Argentine Law No. 20,744, as amended, and as supplemented by various other laws, which provides certain terms with which all labor contracts must comply, including duration, vacations and termination. In addition, management and union representatives in each industry may, from time to time, negotiate collective agreements providing for specific wage scales and other conditions. Employees are entitled to an annual bonus, in addition to their salaries or wages, which is paid in two installments in June and December, with each installment equivalent to 50% of the highest monthly wage received during the preceding six-month period. Employers are also required to contribute amounts equal to specified percentages of their payroll to the National Social Security Institute and to various social welfare agencies. Such percentages vary by region. Argentine law does not require compulsory profit‑sharing.

Argentine Law No. 24,557, known as the Work Risks Law, established a compulsory insurance plan to cover work‑related injuries and illnesses on a comprehensive basis (see “Insurance”). We must further comply with the provisions of Argentine Law No. 19,587, as amended, on Work Hygiene and Safety. These regulations establish minimum standards which must be met by all employers, covering on‑site safety and sanitary conditions such as living conditions of personnel, ventilation of installations, handling of tools and machines, and noise and air pollution, among others.

Property and Equipment

General Corporate Property

Our headquarters are located at 1050 Leandro N. Alem, 9th Floor, 1001 Buenos Aires, Argentina. We own our headquarters. The headquarters of the mass transportation management segment and the facilities of the BAS and the Urquiza Line are owned by SBASE and MEYOSP and are used by us pursuant to Metrovías’ concession contract. The headquarters of the construction segment are located in Córdoba. We own the headquarters for the construction segment, as well as facilities in Córdoba for the storage of the construction segment’s equipment. The rights‑of‑way, highways and related facilities of the concessioned highways are owned by municipalities and provincial and federal authorities and are used by us pursuant to the concession contracts relating to such highways.

Toll Road Concession Contracts

The terms of the concession contracts generally govern termination of the concessions, the work to be undertaken by the concessionaire and the federal government, operational and maintenance standards, government supervision, maintenance reserve funds, certain fees payable to (or subsidies to be received from) the federal government, the tolls to be charged and any adjustment mechanism thereto. The concessionaire is required to correct any defects in the highway that arise during the term of the concession contract. Concessionaires may assign their rights and duties under their concession contract only with the prior approval of the federal government. Upon termination of the concession contract, the right to operate the highway and to collect toll revenues reverts to the federal government. The highway itself and the fixtures related to its operation remain the property of the federal government throughout the term of the concession contract. Vehicles and equipment purchased by the concessionaire are not required to be delivered to the federal government upon expiration of the concession contract.

Metrovías

The tunnels, roadbeds, tracks, stations, cars and most other operating equipment used by Metrovías under the concession contract are owned by SBASE and FEMESA. Under the concession contract, Metrovías has the right to use these facilities during the term of the concession contract. Metrovías also leases certain equipment from third parties and related vendors for use in the system.

The right to use all property and equipment owned by SBASE and FEMESA reverts to SBASE and FEMESA, respectively, upon the expiration or termination of the concession contract. Under the terms of the concession contract, Metrovías will be responsible for returning the property and equipment used under the concession contract in well-maintained working condition, allowing for normal wear and tear and the passage of time. In addition, at the end of the concession contract, these investments (other than rolling stock) revert to SBASE or FEMESA, as the case may be.

Construction

We own cranes, transportation equipment, water pumps, air compressors, back-up generation plants, electrical equipment, concrete mixers and dispensers and other equipment related to construction. We also provide maintenance services for this equipment. The net book value of the property, plant and equipment held by us for use in the construction segment was approximately Ps.51.0 million as of June 30, 2002.

Legal Proceedings

We are party to various legal actions that we believe to be routine litigation incidental to our business. We have certain contingent liabilities with respect to existing or potential claims, lawsuits and other proceedings, including those involving labor and other matters. We accrue liabilities when it is probable that future costs will be incurred and such costs can be reasonably estimated. Described below are the lawsuits for which we have not made any provisions.

Polledo: lawsuit concerning the CONEMAR joint venture. In December 1994, Polledo was officially informed of the judicial decision concerning the lawsuit that the CONEMAR joint venture formed by Seminara S.A., Ecofisa S.A., Conipa S.A., Francisco Natino e Hijos S.A. and Polledo had filed against Proyectos Especiales de Mar del Plata Sociedad del Estado (PEMSE). Under this decision, the court ordered the joint venture to pay a fine of Ps.50,000 plus interest to PEMSE. The parties have appealed the judgment. Additionally, Polledo filed a counterclaim for a significant amount owed to it by PEMSE. In July 1998, the Supreme Court of Justice of the province of Buenos Aires held that the aforementioned sentence was excessive and ordered a reassessment of the fine determined in the first proceeding. Consequently, Polledo decided not to recognize any liability in connection with this litigation.

Covimet: appeal of VAT assessment. Polledo holds a 31.802% equity interest in Covimet. Covimet filed an appeal before the fiscal court against a resolution issued by the Federal Public Revenue Authority claiming the payment of VAT for the fiscal years 1994 and 1995, for a total amount of Ps.4,171,000, including fines and interest as of December 22, 2000. The appeal was based on the fact that, under that resolution, Covimet is not permitted to exempt from the VAT tax the interest specified in Law 21,392, nor is it allowed to take the deduction envisaged by that Law. On the basis of its tax advisors’ opinion, Covimet considers that the final resolution of this claim will be favorable, so it has not recorded any liability for the claim.

Coviares: asset tax levied by the Tax Authority. Polledo holds a direct and indirect equity interest of 31.78% in Coviares. On October 31, 1997, the Tax Authority made an official assessment of the asset tax for a nominal amount of approximately Ps.4.90 million, based on a criterion confirmed by the tax court. As specified in the original concession contract, Coviares had recognized its investment in construction works as inventory. A similar treatment had been given to construction work costs in connection with the asset tax. Coviares believes that this assessment was made as a result of a change in the criteria used by the Tax Authority, which has historically issued opinions that accord with the position of Coviares. Coviares filed an appeal of this assessment, which was dismissed. Thereafter, an ordinary appeal was filed with that court requesting that the appeal be submitted to the National Supreme Court of Justice. In view of the denial to grant the requested appeal, a complaint was filed before the National Supreme Court of Justice on May 9, 2002, which as of the date of this Offering Memorandum, has not issued a decision in this respect.

On the basis of the tax and legal counsel’s opinion and in consideration of legal grounds, administrative doctrine and case law, including the decisions issued by the National Supreme Court of Justice which support the position of Coviares, we believe that the final outcome of the appeal filed before the National Supreme Court of Justice is likely to be favorable, and as a result no liability has been recorded in this respect.

Coviares: gross revenue tax — province of Buenos Aires. The Revenue Board of the province of Buenos Aires issued a restraining order preventing Coviares from encumbering or selling property as a result of a tax auditor’s claim that Coviares had not settled its gross revenue tax for a nominal amount of approximately Ps.2.0 million. This debt assessment has not been approved by Coviares. As a consequence of this restraining order, on December 7, 1999, Coviares took out a fidelity bond insurance policy for Ps.2,154,495. On July 18, 2000, a summary assessment proceeding was initiated, and on December 18, 2001, the Revenue Board of the province of Buenos Aires (DRPBA) notified Coviares that it owed Ps.1,220,727 for principal plus compensatory interest accrued until the payment date, and a fine equivalent to 10% of the unpaid amount to the DRPBA. On February 10, 2002, Coviares filed an action before the Arbitration Committee and on February 11, 2002 the corresponding appeal was filed before the Fiscal Court. The differences claimed by the DRPBA have not been approved by Coviares because they do not conform to the provisions of the Multilateral Tax Sharing Agreement or to the rules on accruals and tax rates. Coviares believes that the final outcome of this claim will be favorable to its interests, as per the advice of its tax advisors. Accordingly, Coviares has decided not to recognize any liability in this connection.

Covisur: fiscal obligations. On March 26, 1998, the Revenue Board of the province of Buenos Aires (Dirección Provincial de Rentas) called upon Covisur, a company in which Caminos has an equity interest of 25%, to pay stamp dutyandaccessory charges for (i) a total amount of Ps.7,398,236, plus surcharges and interest, for the Addendum to the concession contract signed between Covisur and the Highway Authority of the province of Buenos Aires, as approved by provincial Decree No. 4211/91 dated December 2, 1991 and (ii) Ps.205,073 in connection with the proposals made to Shell CAPSA and OPESSA. A summary proceeding was filed concurrently in order to determine whether grounds for imposing fines exist.

With regard to the matter referred to in point (i), on December 14, 1999, the Revenue Board resolved to close the debt assessment and summary proceeding, whereby it assessed the fiscal obligation incumbent on Covisur arising from the execution of the aforementioned agreement. Furthermore, it set a fine of 5%. On February 10, 2000, Covisur filed an appeal with the Fiscal Court of Appeals of the province, which is currently under way. Covisur argues that both the contract originally signed and the Addendum thereto are exempt from this tax. Covisur argues that exemption had been stated in one of the clauses of the Addendum, and also that such exemption had been implicitly ratified in the first contract, and expressly ratified in the second one. In addition, it is arguing that as the addendum is beyond the scope of the tax, it has become free of charge.

With regard to the matter referred to in point (ii), on April 24, 2000, the Provincial Revenue Board decided to close the assessment and summary proceeding, and assessed a tax obligation against Covisur plus a 10% fine. On June 21, 2000, Covisur brought an appeal before the Fiscal Court of Appeals of the province of Buenos Aires, which is currently under way. Covisur alleges the absolute non-existence of any signed instrument by both parties.

In light of the above, and according to its tax advisors’ opinion, Covisur believes that the final outcome of these claims will be favorable to its interests, so it has decided not to recognize any liability in this connection.

Covisur: Value Added Tax (VAT). Through Resolution No. 270/01 dated December 19, 2001, the tax authorities notified Covisur of a debt assessment of Ps.6,128,714 corresponding to the VAT and accrued interest on subsidies collected between December 1995 and November 1999. Covisur filed an appeal before the Tax Court claiming non-taxability of the subsidies collected or consideration of the tax as forming part of the total amount, since the operations were performed with tax-exempt persons. Based on the above, and according to the opinion of its tax advisors, Covisur estimates that the final outcome will be favorable to its interests and, therefore, no liability has been recorded in this connection.

Concanor: gross revenue tax.Caminos has an equity interest of 38.46% in Concanor. On May 22, 2001, the Revenue authority of the province of Tucumán notified Concanor of the assessment of differences in gross revenue tax for the fiscal periods from January 1994 to October 2000, amounting to Ps.1,996,497, including interest up to that date. On June 6, 2001, Concanor filed a motion with the Revenue authority to overturn this assessment, which was dismissed in September 2001. In October 2001, Concanor filed an appeal before the Provincial Fiscal Court of Appeals requesting the reversal of this decision, which was denied. Concanor may now begin a judicial procedure to contest this matter. On the basis of its tax advisors’ opinion, Concanor considers that the final outcome of this claim will be favorable to its interests, so it has not recorded any liability in this respect.

Metrovías: tax assessments. Metrovías was served notice of an official assessment proceeding being filed against it by the Federal Public Revenue Tax Authority which calls upon Metrovías to pay the value added tax and income tax in respect of the income obtained from the permits subject to revocation. The Tax Authority deemed those permits to be within the framework of private sub-concessions. Tax differences claimed amount to Ps.4.40 million, with Ps.2.5 million corresponding to principal and Ps.1.9 million corresponding to interest accrued until December 31, 1999, and relating to the fiscal years from 1994 to 1997 for income tax and from January 1994 to June 1998 for value added tax.

On May 30, 2002, Metrovías was notified of the Fiscal Court’s dismissal of the appeal for reconsideration. On July 12, 2002, Metrovías lodged a limited appeal in the Fiscal Court. In the opinion of its legal and tax advisors, Metrovías considers there to be sound doctrinal arguments to support its position, and believes that the final outcome of this claim will be favorable to its interests.

Despite the sound normative arguments invoked in the appeal, as well as the favorable decision expected, on September 3, 2002, a presentation was made before the Tax Authority requesting a stay of the execution of the administrative act until a final resolution has been issued by the court. On October 16, 2002, the Tax Authority notified Metrovías of the decision to suspend the issue of the debt voucher (a step taken prior to tax foreclosure) until a final decision has been made in this situation. In the event that the Tax Authority’s claim succeeds, the contingency as of September 30, 2002 amounts to Ps.10.1 million, which includes Ps.3.9 million of capital and Ps.6.2 million of accrued interest.

MANAGEMENT

Board of Directors

We are managed by our Directorio, or Board of Directors. In accordance with our charter, the Board of Directors may consist of three to nine members as determined by the annual ordinary shareholders’ meeting. The directors are elected at the annual ordinary shareholders’ meeting for a term of one fiscal year, and there is no limit on the number of terms a director can serve. In addition, certain directors also have managerial responsibilities for various segments of our operations and serve as managing directors, known as Managing Directors.

Listed below is certain information concerning our directors and officers:

Name Position Since Age

Aldo Benito Roggio Chairman of the Board 1996 58

Alberto Esteban Verra Vice President of the Board, 1996 52

Managing Director — Mass Transportation

Segment

Sergio Oscar Roggio Director 1996 45

Carlos Alfredo Ferla Managing Director — Legal 1996 48

Alejandro Carlos Roggio Managing Director — Toll Road 1996 42

Graciela Amalia Roggio Director 1996 54

Adalberto Omar Campana Chief Financial Officer 2001 40

Aldo Benito Roggio is the Chairman of the Board of Clisa and the CEO of Roggio. He holds a degree in civil engineering from the Universidad Nacional de Córdoba. He joined BRH in 1968. Since 1978, he has held executive positions in various subsidiaries of BRH. Currently, he is President of Roggio; Vice President of Las Heras S.A.; Vice President of Doya S.A., or Doya; President of BRH; Vice President of Caminos; Director of Servicios Del Centro S.A.; President of Alvear S.A.I.C.I.F.; Director of Cliba Ingenieria Ambiental S.A.; President of El Mundo S.A.; President of Patricios S.A.; Vice President of Rail; President of Comarse S.A.; President of Petroser S.A.; President of Metrovías; Director of Plan Azul S.A.; President of Fruta S.A.; President of Polledo, Director of Fundespa S.A.; President of Intelcel S.A. de Inversion; Director of BRH; President of Catastros y Relevamientos S.A.; Vice President of Metronec and Vice President of Grancor S.A. Mr. Roggio is a grandson of Benito Roggio, brother to Graciela Amalia Roggio, and cousin to Sergio Oscar Roggio and Alejandro Carlos Roggio.

Sergio Oscar Roggio is a Director of Clisa and the Managing Director — Waste Management Operations of Roggio. He holds a degree in civil engineering from the Universidad Católica Argentina and a Master of Science in Engineering from The University of California, Santa Barbara. He is a member of the American Society of Engineers and of the College of Civil Engineers of the province of Córdoba. He joined BRH in 1980 and has worked on some of BRH’s most important construction projects. Currently, Mr. Roggio runs our waste management operations. He became a Director of BRH in 1986 and of Roggio in 1995. Mr. Roggio is a grandson of Benito Roggio, brother to Alejandro Carlos Roggio, and cousin to Aldo Benito Roggio and Graciela Amalia Roggio.

Alberto Esteban Verra is the Vice President of the Board and Managing Director — Mass Transportation Segment of Clisa and the deputy CEO of Roggio. He holds a graduate degree in accounting from the Universidad Nacional de Córdoba. After heading the accounting department for BRH, he left in 1987 to work for Grupo Macri, one of BRH’s main competitors. He was the Administrative Director of Accounting and Finance, President, Vice President and a Director for various Grupo Macri entities until 1992, when he returned to BRH. Mr. Verra is also Managing Director of Inversar.

Alejandro Carlos Roggio is a Managing Director — Toll Road of Clisa. He holds a degree in architecture from the Universidad de Buenos Aires. He is the Vice President of the BRH, Clisa and President of Caminos. He has worked in Buenos Aires as an architect since 1984. He joined BRH as an Alternate Director in 1986 and has served as a Director of BRH since 1992. Mr. Roggio is a grandson of Benito Roggio, brother to Sergio Oscar Roggio, and cousin to Aldo Benito Roggio and Graciela Amalia Roggio.

Graciela Amalia Roggio is a Director of Clisa. She holds a degree in computer system analysis from the Instituto Superior Pascal. She joined BRH as a Director in 1984. She is Coordinator of Administrative Systems for BRH and Roggio. Ms. Graciela Roggio is a granddaughter of Benito Roggio, sister to Aldo Benito Roggio, and cousin to Sergio Oscar Roggio and Alejandro Carlos Roggio.

Carlos Alberto Ferla is the Managing Director — Legal of Clisa. He holds a degree in law from the Universidad Nacional de Córdoba. He has also studied negotiation and mediation at the University of San Francisco and at Harvard University. He has served as counsel to the Secretary of Public Works and Services of Argentina, Director of El Comercio de Córdoba Cia. Arg. de Seg. S.A., member of the Legislation Department of the Argentine Industrial Union and as a consultant to a number of construction, service and banking companies.

Adalberto Omar Campana is the Chief Financial Officer of Clisa. Mr. Campana received a Bachelors in Accounting from the Universidad Nacional de Córdoba and a Masters in Business Administration from the Universidad Católica de Córdoba. He joined BRH in 1988 and has worked directly for Clisa since 1997, first as a controller and now as CFO. He is also Director of various Clisa subsidiaries, including Metrovías, Polledo and Sehos.

Duties and Liabilities of Directors

Under Argentine law, directors have the obligation to perform their duties with the loyalty and the diligence of a prudent business person. Directors are jointly and severally liable to us, the shareholders and third parties for the improper performance of their duties, for violating the law, the by-laws of Clisa (the “By-Laws”) or applicable regulations, if any, and for any damage caused by fraud, abuse of authority or gross negligence. Under Argentine law, specific duties may be assigned to a director by the by-laws or by a resolution of a shareholders’ meeting. In such cases, a director’s liability will be determined with reference to the performance of such duties, provided that certain recording requirements are met. Under Argentine law, directors are prohibited from engaging in activities in competition with Clisa without express shareholders’ authorization. Certain transactions between directors and Clisa are subject to ratification procedures established by Argentine law; these procedures do not apply in connection with transactions between directors of affiliates and Clisa or between shareholders and Clisa. A director must inform the Board of Directors of any conflicting interest he may have in a proposed transaction and must abstain from voting thereon.

A director will not be liable if, notwithstanding his presence at the meeting at which a resolution was adopted or his knowledge of such resolution, a written record exists of his opposition thereto and he reports his opposition to the Supervisory Committee before any complaint against him is brought to the Board of Directors, the Supervisory Committee, a shareholders’ meeting, a competent governmental agency or the courts. Except in the event of our mandatory liquidation or bankruptcy, shareholders’ approval of a director’s performance terminates any liability of a director vis-à-vis Clisa, provided that shareholders representing at least 5% of our capital stock do not object, and provided further that such liability does not result from a violation of the law or the By-Laws.

Clisa may initiate causes of action against directors upon a majority vote of shareholders. If a cause of action has not been initiated within three months of a shareholders’ resolution approving its initiation, any shareholder may start the action on behalf and for the account of Clisa.

Supervisory Committee

We also have a Comisión Fiscalizadora, or Supervisory Committee, which is in charge of our supervision. Under Argentine law, the Supervisory Committee is responsible for overseeing our compliance with our By‑Laws and Argentine law and is required to present to the shareholders at the annual ordinary general meeting a report in respect of the financial information presented to such holders by the Board of Directors. The síndicos, or members of the Supervisory Committee, also are authorized (i) to call ordinary or extraordinary shareholders’ meetings under certain circumstances, (ii) to place items on the agenda for meetings of shareholders, (iii) to attend meetings of shareholders and (iv) generally to monitor our affairs. Our By‑Laws provide that the Supervisory Committee will be formed by three members and three alternate members appointed at the shareholders’ meeting for a term of one fiscal year with the possibility of re‑election.

The members of our Supervisory Committee are Sergio Mario Muzi, Julio Antonio Carri Pérez and Arístides Jorge Ruival. The alternate members of our Supervisory Committee are Ariel Michelini, Luis Alejandro Fadda and Carlos José Molina.

Compensation

The aggregate total amount of compensation paid by us to our directors and executive officers in fiscal year 2002 was Ps.0.3 million. Currently, our directors, Managing Directors, officers and members of the Supervisory Committee do not hold options to purchase our shares, and there is no stock option or similar plan in effect. We do not have a pension or retirement plan for directors or officers and did not pay any amount into any such plan during fiscal year 2002. We do not have a profit-sharing plan involving directors.

Pursuant to the Existing Indenture under which the Existing Notes were issued, we have agreed that so long as the Existing Notes are outstanding, the aggregate annual remuneration paid to the directors (including Managing Directors) and executive officers in each fiscal year shall not exceed the greatest of (i) U.S.$2.0 million (as adjusted for changes in the “Consumer Price Index — All Items” of the United States since the date of issuance of the Existing Notes), (ii) Ps.2.0 million (as adjusted for changes in the “Consumer Price Index” of Argentina since the date of the issuance of the Existing Notes) and (iii) Ps.2.0 million plus 8.0% of our Consolidated EBITDA in excess of Ps.50.0 million for such fiscal year. The Existing Indenture further provides that compensation attributable to the value of options to purchase our Common Stock shall be excluded from the calculation of such aggregate remunerations.

There are no labor contracts between our directors and us or members of our Supervisory Committee, except in the case of Aldo Benito Roggio, Alberto Esteban Verra, and Adalberto Omar Campana. There are no contracts between our directors and us, members of our Supervisory Committee or executive officers in which such directors, members of our Supervisory Committee or executive officers have an interest contrary to our interest according to Section 272 of the Argentine Corporation Law.

PRINCIPAL SHAREHOLDERS

We have one class of Common Stock outstanding with a par value of Ps.1.00 per share and with the right to five votes per share. The following table sets forth certain information as of June 30, 2002 regarding the beneficial ownership of share capital: (i) each person known to us to own beneficially 5% or more of our outstanding share capital, (ii) shares owned by each member of our Board of Directors and each executive officer and (iii) shares owned by all directors and executive officers as a group. See “Business — History.”

Name of Beneficial Owner	Number of Shares	Percentage of Shares
Roggio.	94,204,214	97.531%
Inversar	2,316,482	2.398%
Doya	18,410	0.019%
Directors and Executive Officers (1)	48,020	0.049%
Others (2)	1,570	0.001%

________________

(1) Includes 12,767 shares held by Aldo Benito Roggio, 11,755 shares held by Graciela Roggio, 11,749 shares held by Sergio Oscar Roggio and 11,749 shares held by Alejandro Carlos Roggio.

(2) Includes 393 shares held by Enrique Sargiotto, 393 shares held by Guillermo Sargiotto, 392 shares held by Ricardo Sargiotto and 392 shares held by Elena Sargiotto.

The predecessor to Roggio, our parent, was founded in 1908 by Benito Roggio. Currently, Roggio is owned and controlled principally by Aldo Benito Roggio and Graciela Roggio, both children of Remo Roggio, one of Benito Roggio’s sons, and Sergio Oscar Roggio and Alejandro Carlos Roggio, both sons of Héctor Marcelo Roggio, another of Benito Roggio’s sons.

As of September 30, 2002, Roggio’s capital stock consisted of 10,957,347 shares of class A Common Stock, each with par value of Ps.1.00 per share and one vote per share, the Roggio Class A Stock. As of September 30, 2002: (i) Aldo Benito Roggio owned 2,213,957 shares of Roggio Class A Stock, or 20.21% of the outstanding Roggio Class A Stock; (ii) Graciela Roggio owned 2,038,510 shares of Roggio Class A Stock, or 18.60% of the outstanding Roggio Class A Stock; (iii) Sergio Oscar Roggio owned 1,630,850 shares of Roggio Class A Stock, or 14.88% of the outstanding Roggio Class A Stock; (iv) Alejandro Carlos Roggio owned 2,037,530 shares of Roggio Class A Common Stock, or 18.60% of the outstanding Roggio Class A Stock; and (v) Doya owned 3,036,500 shares of Roggio Class A Stock, or 27.71% of the outstanding Roggio Class A Stock. Doya, at this time, is held by Aldo Benito Roggio, Graciela Roggio, Sergio Oscar Roggio and Alejandro Carlos Roggio, each with 18.15% of its capital stock and voting rights, and by Fundación Benito Roggio, with 27.40% of Doya’s capital stock and voting rights.

CERTAIN TRANSACTIONS WITH RELATED PARTIES

There have been no material transactions during the last three years involving us or our subsidiaries, and any of the following persons: (i) any of our directors or officers; (ii) any of our controlling shareholders that is a natural person; and (iii) any relative or spouse of the above persons, or relative of such spouse with the same home as such person or who is a director or officer of our parent or any of our subsidiaries.

We have not made any loans to any of our directors or officers.

In the ordinary course of our business, we engage in a variety of transactions with our affiliates and Roggio and some of its affiliates. The principal transactions with those related parties from July 1, 1999 to September 30, 2002, are as follows:

Purchases and Sales of Services

Taym, a corporation in which Roggio holds an indirect participation of 20% of the common stock, provides cleaning and other similar services to us, totaling Ps.10.1 million, Ps.13.1 million, and Ps.13.5 million for the years ended June 30, 2002, 2001, and 2000, respectively, and Ps.1.0 million for the three‑month period ended September 30, 2002.

Prominente S.A., a corporation controlled by Roggio, provides system and computing services to us, totaling Ps.2.5 million, Ps.3.7 million, and Ps.3.4 million for the years ended June 30, 2002, 2001, and 2000, respectively, and Ps.0.3 million for the three‑month period ended September 30, 2002.

Through BRH and Caminos, we provide construction services and engineering advisory services to many of the corporations holding toll road concessions in which we hold a minority interest. Sales to GCO, Concanor, Covinorte, Covisur, Coviares, Covimet, Puentes del Litoral and Centrovías, collectively known as the Minority Toll Road Concessionaires, totaled Ps.25.4 million, Ps.27.5 million, and Ps.43.6 million for the years ended June 30, 2002, 2001 and 2000, respectively, and Ps.0.9 million for the three‑month period ended September 30, 2002.

In the year ended June 30, 2000, through BRH, we also provided construction services to Aguas Cordobesas S.A., a minority investor of Roggio. These services amounted to Ps.2.8 million.

Metroline, a corporation controlled by Roggio, provides, through CAF (an independent contractor), fleet maintenance service to Metrovías. These services amounted to Ps.7.1 million, Ps.9.0 million, and Ps.4.4 million for the years ended June 30, 2002, 2001, and 2000, respectively, and Ps.0.9 million for the three-month period ended September 30, 2002.

From time to time since the formation of Clisa, Roggio has provided certain management, financial, engineering, commercial and other advisory services to our subsidiaries, when necessary. These services amounted to Ps.1.1 million, Ps.8.6 million and Ps.7.9 million for the years ended June 30, 2002, 2001, and 2000, respectively, and Ps.0.1 million for the three-month period ended September 30, 2002.

Intercompany Balances

We and other shareholders of the Minority Toll Road Concessionaires maintain intercompany lines of credit with each of the Minority Toll Road Concessionaires in order to facilitate temporary cash injections and other flows of funds to meet working capital requirements, the distribution of cash to shareholders pending the declaration of dividends at the end of each fiscal year and payment of amounts due for construction and other services rendered to these concessionaires. The amounts lent to us accrue interest at annual rates of 12% in the case of U.S. Dollar-denominated loans, and 28% in the case of Peso-denominated loans. As of September 30, 2002, we owed, on a net basis, Ps.2.0 million to the Minority Toll Road Concessionaires.

We also maintain similar lines of credit with Roggio and some of its affiliates. Some of these lines accrue interest between 8% and 12%. As of September 30, 2002, we were owed, on a net basis, approximately Ps.104.6 million by Roggio and some of its affiliates.

Purchase of Electric Railway Cars

In March 1999 and in January 2000, Metrovías and Metroline entered into leasing contracts related to the acquisition by Metrovías from Metroline of 30 electric railway cars, and 24 electric railway cars, respectively. Since then, and until May 2002, Metrovías exercised purchase options to buy 15 of those electric railway cars.

In May 2002, Metrovías exercised the purchase option in those contracts for a total amount of Ps.27.7 million (including VAT and accrued fees for leasing and maintenance services) corresponding to the remaining 39 railway cars being held by Metroline. The payment provisions agreed were as follows: (1) Metrovías assumed the debt that Metroline had with Banco Río under the loan contract dated March 15, 1999 for an original amount of U.S.$21.0 million, the outstanding balance of which at that date was Ps.8.1 million; (2) Metrovías assumed the debt that Metroline had with Banco de Galicia under the loan contract dated January 31, 2000 for an original amount of U.S.$20.1 million, the outstanding balance of which at that date amounted to Ps.14.5 million and (3) the balance was paid through the transfer of the rights to which Metrovías was entitled, arising from the Contratos de Préstamos Garantizados PRO6 at the variable rate in U.S. Dollars executed within the framework of Decree No. 1,387/01, for an original nominal amount of U.S.$6.6 million, and transferred at a price equal to their book value, which was in the amount of Ps.5.1 million.

Also in May 2002, Metrovías acquired from Metroline another 24 used electric railway cars, in the amount of Ps.24.0 million, which was settled as follows: (i) Metrovías assumed the debt that Metroline had with Banco Río under the Letter of Credit No. D002972 issued on June 14, 2002, which at that date amounted to Ps.15.7 and (2) the balance was paid through the transfer of the rights to which Metrovías was entitled, arising from the Contratos de Préstamos Garantizados PRO6 at the variable rate in U.S. Dollars executed within the framework of Decree No. 1,387/01, for an original nominal amount of U.S.$10.7 million, and transferred at a price equal to their book value, which was in the amount of Ps.8.2 million.

DESCRIPTION OF THE EXISTING NOTES

We currently have outstanding Existing Notes that were authorized by the Unanimous Resolution of an Extraordinary General Meeting of our Shareholders dated January 17, 1997, while the terms and conditions of the Existing Notes were established by Resolutions of our Board of Directors dated January 17, 1997 and May 21, 1997. The Existing Notes were issued under an indenture dated May 29, 1997, or the Existing Indenture, among us, as Issuer, and BRH and Caminos as Guarantors, The Bank of New York, as Trustee, or Trustee, Co‑Registrar and Principal Paying Agent and The Bank of New York S.A., as Registrar, Transfer Agent, Paying Agent and Representative of the Trustee in Argentina. Each of BRH, Caminos and each other Person who becomes a guarantor of the Existing Notes under the terms of the Existing Indenture is referred to as a Guarantor and, together, the Guarantors. The terms of the Existing Notes include those stated in the Existing Indenture and those made part of the Existing Indenture by reference to the Trust Indenture Act of 1939, or the Trust Indenture Act, as in effect on the date of the Existing Indenture. The Existing Notes are subject to all such terms and holders of the Existing Notes are referred to the Existing Indenture and the Trust Indenture Act for a statement thereof. The following summary of certain provisions of the Existing Indenture does not purport to be complete and is qualified in its entirety by reference to the Indenture, including the definitions therein of certain terms used below. Copies of the Existing Indenture are available for inspection at our offices, at the specified offices of the Trustee, at the offices of The Bank of New York S.A., the Trustee’s representative in Buenos Aires, the principal office of the Information Agent and at the offices of the Paying Agent.

In the following summary the terms “Company,” “Issuer” or “Clisa” refer to us, excluding our subsidiaries.

General

The Existing Notes are the senior unsecured obligations of the Issuer limited to U.S.$100.0 million in aggregate principal amount and will mature on June 1, 2004. The Existing Notes are guaranteed, on a senior basis, by the Guarantors. The Existing Notes bear interest at the rate per annum of 11⅝%, payable semi‑annually on June 1 and December 1 of each year to holders of record of the Existing Notes at the close of business on the May 15 or November 15 preceding the next interest payment date. The first interest payment date was December 1, 1997, and interest accrues from the date of original issuance. Interest is computed on the basis of a 360‑day year of twelve 30‑day months. Additional interest is also due on the Existing Notes if the Issuer fails to satisfy certain terms of the Registration Rights Agreement. See “— Certain Registration and Exchange Rights.” The Existing Notes were issued only in registered form, without coupons, in denominations of U.S.$1,000 and integral multiples thereof.

Principal of, premium, if any, and interest on the Existing Notes are payable in U.S. Dollars, and the Existing Notes are transferable at the corporate trust office or agency of the Trustee in New York City. In addition, at the option of the Issuer, interest may be paid by wire transfer or check mailed to the Person entitled thereto as shown on the register for the Existing Notes. No service charge will be made for any registration of transfer or exchange of the Existing Notes. The Trustee will act as Principal Paying Agent, Transfer Agent and Co‑Registrar and The Bank of New York S.A. will act as Registrar, Transfer Agent, Paying Agent and Representative of the Trustee in Argentina. The Issuer may change Principal Paying Agent, any other Paying Agent, Transfer Agent, Registrar or Co‑Registrar, provided that prior notice is given to the holders. None of the Issuer, any of its Subsidiaries or any of its Affiliates may act as Principal Paying Agent or Paying Agent. The Existing Notes are Negotiable Obligations under, and were issued pursuant to and in compliance with, all the requirements of the Negotiable Obligations Law and other applicable Argentine regulations. The public offering of the Existing Notes in Argentina has been authorized by the CNV by Resolution No. 11,735 dated May 15, 1997. So long as the Existing Notes are authorized for their public offering in Argentina and the rules of the CNV or other applicable Argentine law so requires, the Issuer maintains a Paying Agent, a Transfer Agent and a Registrar in Argentina.

Taxation; Redemption for Taxation Reasons

All payments by the Issuer or any Guarantor in respect of the Existing Notes or any Guarantee are made without withholding or deduction for or on account of any present or future taxes, duties, assessments or other governmental charges of whatsoever nature, including penalties, interest and any other liabilities related thereto, or Taxes, imposed or levied by or on behalf of Argentina or any political subdivision or authority thereof or therein having power to tax, unless the Issuer or such Guarantor is compelled by law to deduct or withhold such taxes, duties, assessments or other governmental charges. In such event, the Issuer or such Guarantor shall pay such additional amounts, or Additional Amounts, as may be necessary to ensure that the net amounts received by the holders after such withholding or deduction shall equal the respective amounts of principal and interest that would have been receivable in respect of the Existing Notes in the absence of such withholding or deduction, except that no such Additional Amounts shall be payable in respect of any Existing Note (i) presented for payment of principal more than 30 days after the later of (x) the date on which such payment first became due and (y) if the full amount payable has not been received in New York City by the Trustee on or prior to such date, the date on which, the full amount having been so received, notice to that effect shall have been given to the holders by the Trustee, except to the extent that the holder would have been entitled to such Additional Amounts on presenting such Existing Note for payment on the last day of the applicable 30‑day period, (ii) if any tax, assessment or other governmental charge is imposed or withheld by reason of the holder’s failure to comply with a timely request by the Issuer or such Guarantor addressed to such holder to provide information, documents or other evidence concerning the nationality, residence, identity or connection with Argentina of such holder or beneficial owner which is required by a statute, treaty, regulation or administrative practice of Argentina as a precondition to exemption from all or part of such tax, assessment or governmental charge, (iii) held by or on behalf of a holder who is liable for taxes in respect of such Existing Note by reason of having some connection with Argentina (or any political subdivision or authority thereof) other than the mere acquisition, holding or disposition of any Existing Note, or the receipt of principal or interest in respect thereof, or (iv) any combination of (i), (ii) or (iii), nor shall Additional Amounts be paid with respect to any payment of the principal of, or any interest on, any Existing Note to any holder who is a fiduciary or partnership or other than the sole beneficial owner of such payment to the extent that a beneficiary or settlor or beneficial owner would not have been entitled to any Additional Amounts had such beneficiary or settlor or beneficial owner been the holder. The Issuer will also (i) make such withholding or deduction as required by applicable law and (ii) remit the full amount deducted or withheld to the relevant authority in accordance with applicable law. The Issuer will furnish copies of receipts evidencing the payment of any Taxes so deducted or withheld by the Trustee within 60 days after the date of such withholding or deduction. The Trustee will make such evidence available to the holders upon request.

All references herein and in the Existing Indenture or the Existing Notes to the principal of or interest on an Existing Note shall be deemed to include any Additional Amounts payable in connection therewith.

The Issuer and the Guarantors have agreed to pay any present or future stamp, court or documentary taxes or any other excise or property taxes, charges or similar levies that arise in any jurisdiction from the execution, delivery or registration of the Existing Notes or any other document or instrument referred to in the Existing Indenture or Existing Notes, excluding any such taxes, charges or similar levies imposed by any jurisdiction outside of Argentina.

Existing Notes may be redeemed, at the option of the Issuer, as a whole, but not in part, at any time, upon giving notice to the holders not less than 30 days nor more than 60 days prior to the date fixed for redemption (which notice shall be irrevocable and shall be given in the manner described in the next paragraph), at a redemption price equal to 100% of the principal amount thereof, together with interest accrued to the date fixed for redemption and any Additional Amounts payable with respect thereto, if the Issuer determines and certifies to the Trustee immediately prior to the giving of such notice that (i) it has or will become obligated to pay Additional Amounts in respect of such Existing Notes as a result of any change in or amendment to the laws (or any regulations or rulings promulgated thereunder) of Argentina or any political subdivision or taxing authority thereof or therein affecting taxation or any change in the official position regarding the application or interpretation of such laws, regulations or rulings (including a holding by a court of competent jurisdiction) which change, amendment, application or interpretation becomes effective on or after the date of issuance of such Existing Notes and (ii) such obligation cannot be avoided by the Issuer’s taking reasonable measures available to it; provided that no such notice of redemption shall be given earlier than 60 days prior to the earliest date on which the Issuer would be obligated to pay such Additional Amounts if a payment in respect of such Existing Notes were then due. Prior to the giving of any notice of redemption described in this paragraph, the Issuer shall deliver to the Trustee an Officers’ Certificate (together with a copy of an independent Opinion of Counsel to the effect that the Issuer will become obligated to pay Additional Amounts as a result of a change, amendment, official interpretation or application described above), stating that the Issuer is entitled to effect such redemption in accordance with the terms set forth in the Existing Indenture and setting forth in reasonable detail a statement of the facts relating thereto.

Waiver of Right to Reimbursement for Personal Assets Taxes

In the event that the Issuer or any Guarantor pays any Personal Assets Tax in respect of outstanding Existing Notes, the Issuer and each Guarantor have agreed to waive any right they may have to seek reimbursement (whether by way of foreclosing on such Existing Notes, by deduction from payments of principal or interest on such Existing Notes or otherwise) from holders or direct owners of the Existing Notes of any such amounts paid. See “Argentine Taxation.”

Optional Redemption of Existing Notes upon Initial Public Offering

Other than in the following limited circumstances and as set forth under “— Taxation; Redemption for Taxation Reasons,” the Existing Notes will not be redeemable, in whole or in part, at the option of the Issuer, at any time. Prior to June l, 2000, the Issuer may use the net proceeds of an Initial Public Offering to redeem (on a pro rata basis) up to 25% of the originally issued principal amount of Existing Notes at a redemption price of 111⅝% of the principal amount thereof plus accrued and unpaid interest, if any, to the redemption date; provided that (i) any such redemption must be effected within 90 days of the Initial Public Offering upon not less than 30 nor more than 60 days’ notice and (ii) an aggregate of not less than 75% of the originally issued principal amount of Existing Notes would remain outstanding after giving effect to any such redemption.

Selection of Existing Notes for redemption following any Initial Public Offering will be made by the Trustee in compliance with the requirements of the principal securities exchange, if any, on which the Existing Notes are then listed or, if the Existing Notes are not listed on a securities exchange, on a pro rata basis, by lot or by such method as the Trustee shall deem fair and appropriate; provided, however, that no Existing Notes of U.S.$1,000 or less will be redeemed in part. Notice of redemption shall be mailed by first-class mail at least 30 but not more than 60 days before the redemption date to each holder to be redeemed at its registered address. If any Existing Note is to be redeemed in part only, the notice of redemption that relates to such Existing Note shall state the portion of the principal amount thereof to be redeemed. A New Note in a principal amount equal to the unredeemed portion thereof will be issued in the name of the holder thereof upon cancellation of the original Existing Note. On and after the redemption date, interest will cease to accrue on Existing Notes or portions thereof called for redemption.

Change of Control

In the event of a Change of Control of the Issuer or the Parent (the date of such occurrence being the Change of Control Date), the Issuer will notify the holders in writing of such occurrence and will make an offer to purchase, or the Change of Control Offer, on a business day not later than 60 calendar days following the Change of Control Date, the Change of Control Payment Date, all Existing Notes then outstanding at a purchase price equal to 101% of the principal amount thereof plus accrued and unpaid interest, if any, from the Change of Control Payment Date. Notice of a Change of Control Offer shall be mailed by the Issuer to the holders not less than 30 calendar days nor more than 45 calendar days before the Change of Control Payment Date. The Change of Control Offer will remain open for at least 20 Business Days and until the close of business on the Change of Control Payment Date.

The Issuer will comply, to the extent applicable, with the requirements of Section 14(e) under the United States Securities Exchange Act of 1934, as amended, the Exchange Act, and all other applicable United States and Argentine securities laws or regulations and the applicable rules of the principal securities exchange, if any, on which the Existing Notes are listed in connection with the repurchase of any Existing Notes pursuant to a Change of Control Offer.

Ranking and Guarantees

The Indebtedness of the Issuer evidenced by the Existing Notes will rank pari passu in right of payment with all existing or future Indebtedness of the Issuer. With respect to any secured obligations of the Issuer, such secured obligations will be senior in right of payment to the Existing Notes with respect to the assets securing such secured obligations. The Issuer’s obligations under the Existing Notes will be jointly and severally guaranteed by each of the Guarantors, known as the Guarantees. The Guarantees will rank pari passu in right of payment to all existing or future senior Indebtedness of each of the Guarantors. With respect to any secured obligations of a Guarantor, such secured obligations will be senior in right of payment to such Guarantor’s obligations under its Guarantee with respect to the assets securing such secured obligations.

Each Guarantor will fully and unconditionally guarantee, jointly and severally, on a senior basis to each holder of Existing Notes, the due and punctual payment of the principal of, premium, if any, and interest on, and all other amounts owing in respect of such Existing Notes (including any Additional Amounts payable in respect thereof) and under the Existing Indenture.

Pursuant to each Guarantee, if the Issuer defaults on payment of any amount owing in respect of any Existing Notes, the Guarantor will be obligated to duly and punctually pay the same. Pursuant to the terms of the Existing Indenture, each of the Guarantors has agreed that its obligations under its Guarantee will be unconditional, irrespective of the validity, regularity or enforceability of the Existing Notes or the Existing Indenture, the absence of any action to enforce the same or any other circumstance which might otherwise constitute a legal or equitable discharge of a guarantor.

Certain Covenants

Set forth below are descriptions of certain covenants which are contained in the Existing Indenture.

Reports. Pursuant to the Indenture, whether or not required by the rules and regulations of the Commission, so long as any Existing Notes are outstanding, the Issuer will distribute or cause to be distributed to the holders and the Initial Purchaser copies of financial and other information that would have been contained in such annual, quarterly and other reports that the Issuer and the Guarantors would have been required to file with the Commission pursuant to the Exchange Act if the Issuer and the Guarantors were subject to the reporting requirements of the Exchange Act and, to the extent permissible, will file such reports with the Commission. Such financial and other information shall include (i) within 150 days following the end of each fiscal year, annual reports containing Consolidated Financial Statements and notes thereto in Argentine GAAP, together with an opinion thereon expressed by an internationally recognized independent public accounting firm, management’s discussion and analysis of financial condition and results of operations, and shall also contain a statement of the Consolidated EBITDA, Consolidated EBITDA Coverage Ratio, Consolidated Net Income of the Issuer and the Restricted Subsidiaries, as each such term is defined in the Indenture and the consolidated interest expense and consolidated debt of the Issuer and the Restricted Subsidiaries at the end of such period, and additional information substantially equivalent to the information required to be included in Form 20-F (or any successor form) under the Exchange Act, (ii) within 60 days following the end of each of the first three quarters of each fiscal year (75 days following the end of the fiscal quarter ending September 30, 1997), quarterly reports containing unaudited interim Consolidated Financial Statements in Argentine GAAP, together with a review report thereon setting forth the results of a review of such unaudited interim Consolidated Financial Statements conducted in accordance with the procedures specified by the American Institute of Certified Public Accountants for a review of interim financial information as described in SAS 71, Interim Financial Information, by an internationally recognized independent accounting firm, management’s discussion and analysis of financial condition and results of operations, and shall also contain a statement of the Consolidated EBITDA, Consolidated EBITDA Coverage Ratio and Consolidated Net Income of the Issuer and the Restricted Subsidiaries as each such term is defined in the Indenture and the consolidated interest expense and consolidated debt of the Issuer and the Restricted Subsidiaries at the end of such period, and additional information substantially equivalent to the information required to be included by domestic issuers on Form 10‑Q (or any successor form) and (iii) promptly from time to time after the occurrence of an event which would be required to be reported on Form 6-K (or any successor form) information of the type required to be reported on such form. The Issuer will also make such reports available to prospective purchasers of the Existing Notes, securities analysts and broker-dealers upon their request. In addition, the Issuer has agreed to furnish to holders and prospective purchasers of the Existing Notes designated by the Initial Purchaser, upon its request, the information required to be delivered pursuant to Rule 144A(d)(4) under the Act until such time as the Issuer either consummates an Exchange Offer or has registered the Existing Notes for resale under the Act and at certain other times thereafter. See “— Certain Registration and Exchange Rights.”

Notices of Default. The Issuer will promptly notify the Trustee by facsimile (receipt confirmed telephonically and promptly thereafter confirmed by mail in writing) and the CNV of the occurrence of any Event of Default, or any condition or event which with the giving of notice, lapse of time or satisfaction of any other condition or any combination of the foregoing would, unless cured or waived, become an Event of Default. Each notice given pursuant to this paragraph shall be accompanied by a certificate of the chief financial officer of the Issuer setting forth the details of the occurrence referred to therein and stating what action the Issuer proposes to take with respect thereto.

Limitation on Additional Indebtedness. The Indenture provides that the Issuer shall not, and shall not permit any Restricted Subsidiary to, create, incur, assume or issue, directly or indirectly, guarantee or in any manner become, directly or indirectly, liable for or with respect to the payment of (“incur”), or suffer to exist, any Indebtedness (including any Acquired Indebtedness) except for Permitted Indebtedness; provided that the Issuer or any Restricted Subsidiary will be permitted to incur any Indebtedness (including Acquired Indebtedness), if, after giving pro forma effect to such incurrence and any concurrent financing (including the application of the net proceeds therefrom), the Consolidated EBITDA Coverage Ratio of the Issuer determined on a pro forma basis as if any such Indebtedness had been incurred and the proceeds thereof had been applied at the beginning of the period comprising the most recent fiscal quarter for which Consolidated Financial Statements are available, would be equal to or greater than (i) in the case of Pro Rata Credit Support Indebtedness incurred by the Issuer or any Guarantor with respect to the Indebtedness of any Minority Investee, 3.0 to l.0 and (ii) in the case of all other Indebtedness, 2.75 to 1.0.

Notwithstanding the foregoing limitation, the Indebtedness set forth in the following clauses (each of which shall be given independent effect) shall be permitted (“Permitted Indebtedness”):

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Indebtedness of the Issuer and the Guarantors under the Existing Notes, the Exchange Existing Notes and the Guarantees;

Indebtedness of the Issuer and the Restricted Subsidiaries outstanding on the Issue Date, other than any Indebtedness thereunder to be repaid or retired with the net proceeds from the sale of the Existing Notes;

Indebtedness of the Issuer and the Restricted Subsidiaries under the Revolving Credit Agreement in an aggregate principal amount at any one time outstanding or available not to exceed (x) U.S.$25.0 million minus (y) any amount of the Revolving Credit Agreement permanently repaid as provided in the penultimate sentence of the second paragraph of the covenant described under “— Limitation on Asset Sales”;

Replacements, renewals, refinancings and extensions of outstanding Indebtedness incurred under clauses (i) and (ii) of the proviso to the first paragraph of this description of this covenant and clauses (a) and (b) of this definition of Permitted Indebtedness; provided that (i) any such replacement, renewal, refinancing or extension (including related expenses) shall not (A) exceed the principal amount (plus accrued interest and any applicable premium) of the Indebtedness being replaced, renewed, refinanced or extended or (B) provide for any mandatory redemption, amortization or sinking fund requirement in an amount greater than or at a time prior to the amounts and times specified in the Indebtedness being replaced, renewed, refinanced or extended, and (ii) Indebtedness of the Issuer or a Guarantor may not be replaced, renewed, refinanced or extended under this paragraph (d) with Indebtedness of a Subsidiary (other than a Guarantor);

Indebtedness of the Issuer or a Restricted Subsidiary incurred in connection with Hedging Obligations of the Issuer or such Restricted Subsidiary pursuant to (i) Interest Rate Agreements in respect of Indebtedness permitted to be incurred by the Issuer or such Restricted Subsidiary pursuant to the Indenture to the extent the notional principal amount of such Indebtedness does not exceed the principal amount of Indebtedness to which such Interest Rate Agreements relate, and (ii) Currency Agreements in respect of foreign exchange exposures incurred by the Issuer or such Restricted Subsidiary in the ordinary course of business;

Capitalized Lease Obligations of the Issuer and the Restricted Subsidiaries in an aggregate amount not to exceed U.S.$5.0 million at any one time outstanding;

Indebtedness in respect of (x) surety bonds, undertakings or instruments issued under Permitted Bonding Facilities which insure the performance by the Issuer or a Restricted Subsidiary of its obligations under contracts or bids in the ordinary course of business and (y) trade letters of credit incurred in the ordinary course of business, in each case, which would not otherwise constitute Indebtedness; provided that any Indebtedness of the Issuer or a Restricted Subsidiary arising from a payment made by the issuer of such a surety bond, undertaking, instrument, or letter of credit, or incurred to fund any reimbursement obligation under such a surety bond, undertaking, instrument, or letter of credit, shall be deemed to have been incurred on the date which is 30 days after any such payment by the issuer thereof;

Indebtedness under Government-Backed Investment Program Commitments in an aggregate principal amount not to exceed U.S.$20.0 million at any one time outstanding;

Indebtedness of the Issuer or any Restricted Subsidiary owed to and held by the Issuer, a Wholly Owned Restricted Subsidiary or a Guarantor; provided that a new incurrence of Indebtedness shall be deemed to have occurred upon (i) any subsequent issuance or transfer of any Capital Stock which results in any such Subsidiary which is not a Guarantor ceasing to be a Wholly Owned Restricted Subsidiary, (ii) any transfer of such Indebtedness to a Person other than a Wholly Owned Restricted Subsidiary of the Issuer or a Guarantor or (iii) the Designation of a Restricted Subsidiary which holds Indebtedness of the Issuer or Indebtedness of another Restricted Subsidiary as an Unrestricted Subsidiary;

Indebtedness of the Issuer or any Guarantor owed to and held by Metrovías and which is subordinated in right of payment to the Existing Notes and the Guarantees, in an aggregate amount not to exceed U.S.$10.0 million at any one time outstanding;

Indebtedness of any Restricted Subsidiary of the Issuer owed to the Issuer or any Guarantor that is senior in right of payment to all Indebtedness of such Restricted Subsidiary which is subordinated in right of payment to any other Indebtedness of such Subsidiary;

Indebtedness of Covicentro which is Specified Non-Recourse Debt of Covicentro, in an aggregate principal amount at any one time outstanding not to exceed the greater of (i) U.S.$25.0 million, or (ii) 45% of the amounts committed by either the Argentine federal or the applicable provincial government for the Covicentro Expansion Project; provided, however, that in no event shall such Indebtedness exceed, in the aggregate, U.S.$75.0 million at any one time outstanding; and

Indebtedness of the Issuer and the Restricted Subsidiaries in an aggregate principal amount which, together with all other Indebtedness of the Issuer and the Restricted Subsidiaries then outstanding (other than Indebtedness permitted by paragraphs (a) through (l) of this covenant), does not exceed U.S.$10.0 million at any one time outstanding.

Limitation on Restricted Payments. The Indenture provides that the Issuer will not make, and will not cause or permit any of its Restricted Subsidiaries to make, directly or indirectly, any Restricted Payment, unless:

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no Default or Event of Default shall have occurred and be continuing under the Existing Indenture at the time of and after giving effect to such Restricted Payment; and

the Issuer could incur U.S.$1.00 of additional Indebtedness pursuant to the first paragraph of the covenant described under “— Limitation on Additional Indebtedness”; and

immediately after giving effect to such Restricted Payment, the aggregate amount of all Restricted Payments declared or made after the Issue Date does not exceed the sum of (i) 50% of the Issuer’s aggregate cumulative Consolidated Net Income accrued on a cumulative basis during the period (taken as one accounting period) beginning on the first day of the fiscal quarter immediately following the Issue Date and ending on the last day of the most recent fiscal quarter ending prior to the date of such Restricted Payment for which financial statements are available (or in the event such Consolidated Net Income shall be a deficit, minus 100% of such deficit) plus (ii) the aggregate Net Proceeds, including the Fair Market Value of property other than cash, received by the Issuer either (x) as capital contributions to the Issuer after the Issue Date or (y) from the issuance or sale of Capital Stock (excluding Disqualified Capital Stock, but including Capital Stock issued upon the conversion of convertible debt and from the exercise of options, warrants or rights to purchase Capital Stock (other than Disqualified Capital Stock)) of the Issuer to any Person (other than to a Subsidiary of the Issuer) after the Issue Date plus (iii) 100% of the net reduction in Investments (other than Permitted Investments) resulting (A) from payments of interest on Indebtedness, dividends, return of capital, repayments of loans or advances or other transfers of assets, in each case, to the Issuer or any Restricted Subsidiary of the Issuer, from the Person in whom such Investment was made (except to the extent that any such amount is included in the calculation of Consolidated Net Income) or (B) from the expiration or cancellation of Pro Rata Credit Support Indebtedness to the extent not funded by the Issuer or any Guarantor or (C) from the Revocation of a Designation of an Unrestricted Subsidiary, in each case, which have not been applied to reduce the outstanding amount of Investments made pursuant to clause (iii) of the following paragraph, provided that the amount included in this clause (iii) shall not exceed the amount of Investments previously made by the Issuer and its Restricted Subsidiaries in such Person.

The Existing Indenture also provides that the provisions of this covenant shall not prohibit (i) the payment of any dividend within 60 calendar days after the date of declaration thereof, if at such date of declaration such payment would comply with the provisions of such Existing Indenture, (ii) Restricted Payments made to other shareholders of a Restricted Subsidiary in connection with pro rata payments to the Issuer or any Wholly Owned Restricted Subsidiary, (iii) so long as no Default or Event of Default shall have occurred and be continuing, any Investment constituting a Restricted Payment by the Issuer or any Restricted Subsidiary in any Person (including any Unrestricted Subsidiary) made after the Issue Date in an aggregate amount not to exceed U.S.$10.0 million to all such Persons at any one time outstanding, (iv) commitments existing on the Issue Date to contribute U.S.$5.0 million to GCO, (v) the distribution of any asset or transfer of any Capital Stock in accordance with the Polledo Transaction, (vi) Restricted Payments arising from the incurrence of Pro Rata Credit Support Indebtedness by the Issuer or any Guarantor, (vii) Restricted Payments made to, or on behalf of, a Minority Investee which are legally required to be made under Pro Rata Credit Support Indebtedness incurred in compliance with the Existing Indenture; provided that such Minority Investee has executed, or simultaneously with such Restricted Payment will execute, an Additional Subsidiary Guarantee, (viii) Minority Investee Guarantee Payments, and (ix) Restricted Payments in respect of reductions in capital of the Issuer in an aggregate amount not to exceed the equivalent in U.S. Dollars of Ps.70.0 million made pursuant to public notice of such capital reduction commenced on April 24, 1997; provided that all amounts payable in respect of Restricted Payments permitted pursuant to this clause (ix) are offset against Indebtedness owed to the Issuer by the equityholders of the Issuer.

The amounts previously expended pursuant to clauses (ii) and (vi) above shall be included as Restricted Payments in determining the amount of any particular Restricted Payment permissible pursuant to this covenant. For purposes of determining the amount expended for Restricted Payments, cash distributed or invested shall be valued at the face amount thereof and property other than cash shall be valued at its Fair Market Value.

Limitation on Liens. The Existing Indenture provides that the Issuer will not, and will not permit, cause or suffer any of its Restricted Subsidiaries to, directly or indirectly, incur or suffer to exist any Lien of any kind upon any of its property or assets owned or acquired by it on or after the Issue Date except for the following (each of which clauses shall be given independent effect):

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Liens existing as of the Issue Date;

Permitted Liens;

Liens on the assets or property of the Issuer or a Subsidiary of the Issuer that (i) existed prior to the time such assets or property were acquired by the Issuer or such Subsidiary, (ii) were not incurred as a result of (or in connection with or in anticipation of) such acquisition, and (iii) do not extend to or cover any property or assets of the Issuer or any of its Restricted Subsidiaries other than the property or assets so acquired;

Liens pursuant to real property leases in the ordinary course securing the landlord’s interest under such real property leases;

Liens securing Indebtedness which are permitted to be incurred under clauses (a), (c), (e), (f), (h) and (l) of the covenant described under “— Limitation on Additional Indebtedness”; provided, however, that (i) in the case of Indebtedness permitted pursuant to paragraphs (f) and (h), such Liens do not extend to or cover any property or assets of the Issuer or any of the Restricted Subsidiaries other than the property or assets financed by such Indebtedness and (ii) in the case of Indebtedness permitted pursuant to paragraph (l), such Liens cover only the assets of Covicentro and do not extend to or cover any property or assets of the Issuer or any of its other Restricted Subsidiaries;

Liens securing Indebtedness which are incurred to refinance Indebtedness which has been secured by a Lien permitted under this covenant and which are permitted to be refinanced under paragraph (d) of the covenant described under “— Limitation on Additional Indebtedness”; provided, however, that such Liens do not extend to or cover any property or assets of the Issuer or any of the Restricted Subsidiaries not securing the Indebtedness so refinanced prior to such refinancing;

Liens in favor of the Issuer or any Guarantor; and

Liens not otherwise specified in clauses (a) through (g) above securing the deferred purchase price of goods and services purchased in the ordinary course of business; provided, however, that the aggregate amount of Indebtedness secured by such Liens shall not exceed U.S.$10.0 million in aggregate principal amount at any one time outstanding.

Additional Subsidiary Guarantees; Release of Guarantors. The Existing Indenture provides that if the Issuer or any of its Restricted Subsidiaries makes capital contributions, advances or loans to, or guarantees any loan to, any Restricted Subsidiary which is not a Guarantor in an aggregate amount for all such capital contributions, advances, loans or guarantees with respect to such Restricted Subsidiary (or to more than one Restricted Subsidiary in a series of related transactions) in excess of U.S.$10.0 million (valuing any assets, businesses, divisions, real property or equipment so contributed at the greater of (x) the Fair Market Value of such assets, businesses, divisions, real property or equipment or (y) the book value of such assets, businesses, divisions, real property or equipment) (other than, subject to the covenant described under “— Limitation on Transactions with Affiliates,” transfers of goods in the ordinary course of business), the Issuer shall (a) cause each such transferee Subsidiary to execute a Guarantee (an “Additional Subsidiary Guarantee”), and (b) deliver an Opinion of Counsel as to certain matters, including the enforceability of each such Additional Subsidiary Guarantee (which Opinion of Counsel may include only such customary limitations as are set forth in the Existing Indenture), in accordance with the terms of the Existing Indenture. Notwithstanding the foregoing, in determining the amount of capital contributions, advances or loans or guarantees of loans to any Restricted Subsidiary which is not a Guarantor, the Issuer may elect to exclude (“Excluded Subsidiary Funding”) any such amount if (x) at the time the Issuer or such Restricted Subsidiary makes such capital contribution, advance or loan or guarantees any loan to such Restricted Subsidiary which is not a Guarantor, the Issuer would have been permitted to make a Restricted Payment in the amount of such capital contribution, advance or loan or guarantee of any loan and (y) the Issuer elects to treat such amount as a Restricted Payment for all purposes under the Existing Indenture as evidenced by a Board Resolution to such effect delivered to the Trustee at the time of making such capital contribution, loan or guarantee. The Existing Indenture also sets forth certain limitations on the consolidation or merger of any Guarantor.

If no Default exists or would exist under the Existing Indenture, concurrently with any sale or disposition (by merger or otherwise) of any Guarantor (other than a transaction subject to the provisions described under
“— Limitation on Consolidations, Mergers and Sales of Assets”) by the Issuer or a Restricted Subsidiary to any person that is not an Affiliate of the Issuer or any of the Restricted Subsidiaries or Guarantors which is in compliance with the terms of the Existing Indenture, such Guarantor will automatically and unconditionally be released from all obligations under its Guarantee.

Limitation on Dividends and Other Payment Restrictions Affecting Restricted Subsidiaries. The Existing Indenture provides that the Issuer will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to exist or become effective any consensual encumbrance or restriction of any kind on the ability of any Restricted Subsidiary to (a) pay dividends, in cash or otherwise, or make any other distributions on its Capital Stock or any other interest or participation in, or measured by, its profits owned by, or pay any Indebtedness owed to, the Issuer or a Restricted Subsidiary, (b) make any loans or advances to the Issuer or any Restricted Subsidiary or (c) transfer any of its properties or assets to the Issuer or to any Restricted Subsidiary, except, in each case, for such encumbrances or restrictions existing under or contemplated by or by reason of (i) applicable law, (ii) the Existing Notes and the Guarantees or any refinancings or replacements thereof, (iii) the Revolving Credit Agreement, (iv) any restrictions, with respect to a Restricted Subsidiary that is not a Restricted Subsidiary of the Issuer on the Issue Date, in existence at the time such Person becomes a Restricted Subsidiary (but not created in contemplation of such Person becoming a Restricted Subsidiary), (v) any lease to the extent such lease encumbers or restricts the transfer of the leasehold interest governed by such lease and (vi) any restrictions existing under any agreement that refinances or replaces an agreement containing a restriction permitted by clause (ii), (iii) or (iv) above; provided, however, that the terms and conditions of any such restrictions permitted under this clause (vi) are not materially less favorable to holders than those under or pursuant to the agreement being replaced or the agreement evidencing the Indebtedness refinanced.

Limitation on Preferred Stock Issuances by Subsidiaries. The Existing Indenture prohibits the Issuer or any Restricted Subsidiary from causing or permitting the issuance by any Restricted Subsidiary of any Capital Stock other than Common Stock or causing or permitting any Restricted Subsidiary to, at any time, have outstanding any shares of Capital Stock other than Common Stock, except issuances of Capital Stock to the Issuer or a Wholly Owned Restricted Subsidiary that is a Guarantor.

Limitation on Asset Sales. The Existing Indenture provides that the Issuer will not, and will not permit any of its Restricted Subsidiaries to, make any Asset Sale unless (i) at least 85% of the consideration therefor received by the Issuer or such Restricted Subsidiary is in the form of cash or Cash Equivalents and (ii) such Asset Sale is for Fair Market Value; provided, however, that the amount of (a) any trade liabilities (as shown on the Issuer’s or such Restricted Subsidiary’s most recent balance sheet or in the notes thereto) of the Issuer or any such Restricted Subsidiary that are assumed without recourse to the Issuer or any Restricted Subsidiary by the transferee of any asset pursuant to such Asset Sale, (b) any cash or Cash Equivalents received by the Issuer or any Restricted Subsidiary from the sale by the Issuer or such Restricted Subsidiary of any asset received from the transferee pursuant to such Asset Sale that is converted by the Issuer or such Restricted Subsidiary into cash or Cash Equivalents substantially concurrently with the receipt of such asset by the Issuer or such Restricted Subsidiary and (c) accounts receivable not more than ninety days old of another Person assigned to the Issuer or a Restricted Subsidiary (net of the amount of appropriate Argentine GAAP reserves relating to such accounts receivable) received by the Issuer or a Restricted Subsidiary from the transferee pursuant to such Asset Sale, shall be deemed to be cash for purposes of this provision. The Issuer or such Restricted Subsidiary may apply the Net Cash Proceeds of any Asset Sale, at its option, to investments in assets of a kind then used or usable in any Permitted Business, or Productive Assets; provided, however, that the Net Cash Proceeds from any Asset Sale by the Issuer or a Guarantor which are invested in Productive Assets may only be invested in Productive Assets of the Issuer or a Guarantor.

Within 120 calendar days following the consummation of an Asset Sale, the Issuer or such Restricted Subsidiary will notify the Trustee in writing of such Asset Sale and whether it has elected to apply all or a portion of the Net Cash Proceeds of such Asset Sale to investments in Productive Assets. If the Issuer or such Subsidiary does not elect to apply all or any portion of the Net Cash Proceeds of such Asset Sale to investments in Productive Assets, or if having notified the Trustee of its election to do so, it fails to so apply such Net Cash Proceeds within 180 calendar days following the consummation of such Asset Sale (the Net Cash Proceeds not so applied are hereinafter referred to as “Excess Proceeds”), the Issuer shall, within 135 days following such Asset Sale, make an offer to purchase (an “Asset Sale Offer”) from all holders, an amount of Existing Notes equal to such Excess Proceeds at a purchase price equal to 100% of the principal amount thereof plus accrued interest thereon, if any, to the date of purchase (the “Asset Sale Purchase Date”), which shall be a date not later than the 180th day following such Asset Sale; provided, however, that the Issuer’s obligation to make an Asset Sale Offer shall not commence until the aggregate Excess Proceeds received by the Issuer and its Restricted Subsidiaries subsequent to the Issue Date exceed U.S.$10.0 million (at which time the entire unutilized Excess Proceeds (and not just the amount in excess of U.S.$10.0 million) shall be applied as required pursuant to this paragraph within the specified time periods with respect to the most recent Asset Sale). Notwithstanding the foregoing, the amount of Excess Proceeds required to be used in an Asset Sale Offer shall be reduced by the amount of any Net Cash Proceeds used by the Issuer or such Restricted Subsidiary within 180 calendar days following the consummation of such Asset Sale, to repay, permanently reduce commitments under, and reduce the amounts available for any future borrowings of, Indebtedness incurred pursuant to clauses (c), (f) and (h) of the covenant described under “— Limitation on Additional Indebtedness.” Notwithstanding the foregoing, pending the application of Net Cash Proceeds as provided in this covenant, the Issuer or such Restricted Subsidiary may invest such Net Cash Proceeds on a temporary basis in Permitted Investments of the types specified in clauses (i) through (vi) of the definition of Permitted Investments, or may temporarily repay amounts under the Revolving Credit Agreement.

The Existing Indenture further provides that the Issuer shall not cause or permit any direct or indirect sale, transfer or redemption of Capital Stock of Metrovías which results in either (x) Metrovías no longer being effectively controlled by the Issuer or (y) Metrovías no longer being a consolidated subsidiary of the Issuer under Argentine GAAP; provided, however, that the foregoing shall not prohibit the Issuer from effecting a sale of all (but not less than all) of the Capital Stock of Metrovías in compliance with all of the provisions of this covenant.

Notice of an Asset Sale Offer shall be mailed by the Issuer to the holders not less than 25 calendar days nor more than 45 calendar days before an Asset Sale Purchase Date and the Asset Sale Offer will remain open for at least 20 business days. To the extent the Asset Sale Offer is not fully subscribed to by the holders, the Issuer may retain such unutilized portion of the Excess Proceeds.

The Issuer will comply, to the extent applicable, with the requirements of Section 14(e) under the Exchange Act and any other applicable United States and Argentine securities laws or regulations in connection with the repurchase of Existing Notes or Exchange Existing Notes pursuant to an Asset Sale Offer.

Limitation on Transactions with Affiliates. The Existing Indenture will provide that the Issuer will not, and will not permit or cause any of its Subsidiaries to, enter into any transaction or series of transactions with or for the benefit of any of their respective Affiliates (each, an “Affiliate Transaction”), except in good faith and on terms that are no less favorable to the Issuer or such Subsidiary, as the case may be, than those that could have been obtained in a comparable transaction on an arm’s-length basis from a Person that is not an Affiliate of the Issuer or such Subsidiary. Notwithstanding the preceding sentence, all Affiliate Transactions (and each series of related Affiliate Transactions which are similar or part of a common plan) involving aggregate payments in excess of U.S.$2.5 million shall be approved by the Board of Directors of the Issuer, such approval to be evidenced by a Board Resolution (and if required pursuant to the definition of Fair Market Value, an opinion of an Independent Financial Advisor) stating that such Board of Directors has determined that such transaction has been made at Fair Market Value. Notwithstanding the foregoing, the restrictions set forth in this covenant shall not apply to (i) transactions with or among Restricted Subsidiaries of the Issuer; provided that, in any such case, no officer, director or beneficial holder of 10% or more of any class of Capital Stock of the Issuer shall beneficially own any Capital Stock of any such Restricted Subsidiary (otherwise than by such officer’s, director’s or beneficial holder’s interest in the Issuer); (ii) customary directors’ fees, including, without limitation, any management or other fees payable to the Issuer by Metrovías or BRH, indemnification and similar arrangements, consulting fees, employee salaries or benefits, bonuses or legal fees; and (iii) Indebtedness permitted under clause (j) of the covenant described under
“— Limitation on Additional Indebtedness.”

Limitation on Certain Remuneration. The Existing Indenture provides that the Issuer shall not pay (or permit any of its Subsidiaries to pay) aggregate annual remuneration to the directors (including Managing Directors) and executive officers of the Issuer in any given fiscal year which is in excess of the greatest of (i) U.S.$2.0 million (as adjusted for changes in the “Consumer Price Index — All Items” of the United States since the Issue Date), (ii) Ps.2.0 million (as adjusted for changes in the “Consumer Price Index” of Argentina since the Issue Date) and (iii) Ps.2.0 million plus 8.0% of the Issuer’s Consolidated EBITDA in excess of Ps.50.0 million for such fiscal year; provided, however, that compensation attributable to the value of options to purchase our Common Stock shall be excluded from the calculation of such aggregate remuneration.

Special Covenants of the Guarantors. The Existing Indenture provides that each Guarantor of the Existing Notes will comply with each covenant of the Issuer contained in such Existing Indenture, to the extent applicable.

Limitation on Designations of Unrestricted Subsidiaries. The Existing Indenture provides that the Issuer may designate any Subsidiary of the Issuer (other than a Guarantor) as an “Unrestricted Subsidiary” under the Existing Indenture (a “Designation”) only if:

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no Default shall have occurred and be continuing at the time of, or after giving effect to, such Designation; and

the Issuer would be permitted under the Existing Indenture to make an Investment under all applicable provisions of the covenant described under “— Limitation on Restricted Payments” at the time of Designation (assuming the effectiveness of such Designation) in an amount (the “Designation Amount”) equal to the greater of (x) the book value of such Subsidiary on such date or (y) the Fair Market Value of such Subsidiary on such date.

In the event of any such Designation, the Issuer shall be deemed to have made an Investment constituting a Restricted Payment pursuant to the covenant described under “— Limitation on Restricted Payments” for all purposes of the Existing Indenture in the Designation Amount. The Existing Indenture will further provide that the Issuer shall not and shall not permit any Restricted Subsidiary to, at any time (x) guarantee any Indebtedness of any Unrestricted Subsidiary (including any undertaking, agreement or instrument evidencing such Indebtedness); provided, however, that the Issuer or any Restricted Subsidiary may pledge the Capital Stock or Indebtedness of any Unrestricted Subsidiary on a nonrecourse basis such that the pledgee has no claim whatsoever against the pledgor other than to obtain such pledged property or (y) be directly or indirectly liable for any Indebtedness of any Unrestricted Subsidiary or (z) be directly or indirectly liable for any Indebtedness which provides that the holder thereof may (upon notice, lapse of time, or both) declare a default thereon or cause the payment thereof to be accelerated or payable prior to its final scheduled maturity upon the occurrence of a default with respect to any Indebtedness of any Unrestricted Subsidiary (including any right to take enforcement action against such Unrestricted Subsidiary), except in the case of clause (x) or (y) to the extent permitted under the covenant described under “— Limitation on Restricted Payments.”

The Existing Indenture further provides that the Issuer may revoke any Designation of a Subsidiary as an Unrestricted Subsidiary (a “Revocation”) if:

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no Default shall have occurred and be continuing at the time of, and after giving effect to, such Revocation; and

all Liens, Indebtedness and Preferred Stock of such Unrestricted Subsidiary outstanding immediately following such Revocation would, if incurred or issued, as the case may be, at such time, have been permitted to be incurred for all purposes of the Existing Indenture.

All Designations and Revocations shall be evidenced by a duly adopted Board Resolution of the Issuer delivered to the Trustee certifying compliance with this covenant; provided, however, that upon consummation of the Polledo Transaction, Polledo shall be deemed to be an Unrestricted Subsidiary without any requirement of a Board Resolution.

Limitation on Consolidations, Mergers and Sales of Assets. The Existing Indenture provides that the Issuer will not consolidate with or merge with or into any other person or sell, assign, convey, lease or transfer all or substantially all of its properties and assets in a single transaction or through a series of transactions, and the Issuer will not permit any of its Restricted Subsidiaries to enter into any such transaction or series of transactions, if such transaction or series of transactions would result in a sale, conveyance, lease, transfer or other disposition of all or substantially all of the properties and assets of the Issuer and its Restricted Subsidiaries taken as a whole, unless (i) the resulting, surviving or transferee person (the “surviving entity”) is (x) the Issuer, (y) a sociedad anónima organized under the laws of the Republic of Argentina or (z) a corporation organized and existing under the laws of the United States or any State thereof or the District of Columbia; (ii) the surviving entity shall have expressly assumed, by a supplemental indenture executed and delivered to the Trustee, in form and substance reasonably satisfactory to the Trustee, all of the obligations of the Issuer under the Existing Indenture and the Existing Notes; (iii) immediately after giving effect to such transaction or series of transactions on a pro forma basis (including, without limitation, giving effect to any Indebtedness incurred or anticipated to be incurred in connection with or in respect of such transaction or series of transactions), no Default or Event of Default shall have occurred and be continuing under the Existing Indenture; (iv) the surviving entity shall, immediately after giving effect to such transaction or series of transactions on a pro forma basis (including, without limitation, giving effect to any Indebtedness incurred or anticipated to be incurred in connection with or in respect of the transaction or series of transactions), have a Consolidated Net Worth equal to or greater than the Consolidated Net Worth of the Issuer immediately prior to such transaction or series of transactions; (v) except in the case of a transaction or series of transactions involving only the Issuer and one or more of its Restricted Subsidiaries, immediately after giving effect to such transaction or series of transactions on a pro forma basis, the surviving entity would be able to incur at least U.S.$1.00 of additional Indebtedness under the first paragraph of the covenant described under “— Limitation on Additional Indebtedness”; (vi) the surviving entity shall have delivered to the Trustee under the Existing Indenture an Officer’s Certificate and an Opinion of Counsel, each stating that such consolidation, merger, conveyance, transfer or lease and, if a supplemental indenture is required in connection with such transaction or series of transactions, such supplemental indenture complies with this covenant and that all conditions precedent in the Existing Indenture relating to the transaction or series of transactions have been satisfied; and (vii) each Guarantor under the Existing Indenture shall have confirmed, by supplemental indenture, that its Guarantee shall apply to the surviving entity’s obligations under the Existing Indenture, as modified by such supplemental indenture and the Existing Notes, and shall have confirmed the due and punctual performance of such Guarantee and every covenant in the Existing Indenture on the part of such Guarantor to be performed or observed.

Events of Default

Each of the following is an Event of Default (“Event of Default”) under the Existing Indenture:

default in the payment of any interest on the Existing Notes when it becomes due and payable, and continuance of any such default for a period of 30 calendar days;

default in the payment of the principal of, or premium, if any, on the Existing Notes, when due, at maturity, upon redemption, pursuant to an offer to purchase required under the Existing Indenture (including the failure to make any required repurchase in the event of a Change of Control), by acceleration or otherwise;

default in the performance, or breach, of any covenant of the Issuer or any Guarantor contained in the Existing Notes, any Guarantee or the Existing Indenture (other than defaults specified in clauses (i) or (ii) above), and continuance of such default or breach for a period of 30 calendar days after written notice to the Issuer by the Trustee or to the Issuer and the Trustee by the holders of at least 25% in aggregate principal amount of the outstanding Existing Notes;

failure by the Issuer, any Restricted Subsidiary or any Guarantor (a) to make any payment when due (including, with respect to any interest payment only, the giving effect to any applicable grace period) with respect to any Indebtedness in an aggregate principal amount of U.S.$10.0 million or more under one or more classes or issues of Indebtedness; or (b) to perform any term, covenant, condition, or provision of one or more classes or issues of other Indebtedness in an aggregate principal amount of U.S.$10.0 million or more, which failure, in the case of this clause (b), results in an acceleration of the maturity thereof;

one or more judgments, orders or decrees for the payment of money in excess of U.S.$10.0 million (to the extent not covered by insurance), either individually or in an aggregate amount, shall be entered against the Issuer, any Restricted Subsidiary or any Guarantor or any of their respective properties and shall not be discharged or fully bonded and there shall have been a period of 60 calendar days during which a stay of enforcement of such judgment or order, by reason of pending appeal or otherwise, shall not be in effect;

the Issuer or any of its Material Restricted Subsidiaries or any Guarantor shall (a) apply for or consent to the appointment of a receiver, trustee, liquidator or the like for itself or of its property, (b) be unable or admit in writing its inability to pay its debts as they mature, (c) make a general assignment for the benefit of its creditors, (d) be adjudicated bankrupt or insolvent, (e) file a voluntary petition in bankruptcy or a petition or an answer seeking reorganization or an arrangement with creditors or a judicial or extrajudicial “concurso preventivo de acreedores” or seeking to take advantage of any applicable insolvency law, (f) file any answer admitting the material allegation of a petition filed against it in any bankruptcy, reorganization or insolvency proceeding, or (g) take any corporate action for the purpose of effecting any of the foregoing or the equivalent thereof under the laws of Argentina;

without its application, approval or consent, a proceeding shall be instituted in any court of competent jurisdiction seeking in respect of the Issuer or any of its Material Restricted Subsidiaries or any Guarantor: adjudication in bankruptcy, reorganization, dissolution, winding-up, liquidation, a composition or arrangement with creditors, a re-adjustment of debt, the appointment of a trustee, receiver, liquidator or the like of the Issuer or any of its Material Restricted Subsidiaries or any Guarantor or of all or any of the assets thereof or other like relief in respect of the Issuer or any of its Material Restricted Subsidiaries or any Guarantor under any applicable bankruptcy or insolvency law; and either (a) such proceeding shall not be actively contested by the Issuer or such Material Restricted Subsidiaries or any Guarantor in good faith, or (b) such proceeding shall continue undismissed for any period of 60 consecutive calendar days, or (c) any order, judgment or decree shall be entered by any court of competent jurisdiction to effect any of the foregoing;

the authorization of the CNV pursuant to Law No. 17,811, as amended, and the rules and regulations of the CNV thereunder shall cease to be in full force and effect;

any authorization, consent, approval, license, filing or registration now or hereafter necessary to enable the Issuer or any Guarantor to perform its obligations under the Existing Indenture, or any law, rule or regulation necessary for a holder to enforce the Issuer’s or any Guarantor’s obligations under the Existing Indenture in accordance with the terms of the Existing Indenture, shall be revoked, withdrawn, withheld or modified or shall cease to remain in full force and effect, or it shall become unlawful for the Issuer or any Guarantor to perform its obligations thereunder or any governmental agency shall contest the legality or validity of any of the Existing Notes in a formal administrative, legislative or judicial proceeding;

any condemnation, seizure, compulsory purchase or expropriation by any governmental authority or agency of assets of the Issuer or any Restricted Subsidiary or Guarantor which, in the aggregate, would be reasonably likely to have a material adverse effect upon the business and results of operations of the Issuer or such Guarantor, as the case may be;

a general moratorium shall be agreed or declared in respect of the payment or performance of the obligations of the Issuer or any of its Restricted Subsidiaries; and

any Guarantee shall be held in any judicial proceeding to be unenforceable or invalid or shall cease for any reason to be in full force and effect or any Guarantor, or any Person acting on behalf of any Guarantor, shall deny or disaffirm its obligations under its Guarantee.

If an Event of Default (other than an Event of Default specified in clauses (vi) or (vii) with respect to the Issuer or (viii) or (xi) above) occurs and is continuing, then the holders of at least 25% in aggregate principal amount of the outstanding Existing Notes may, by written notice, and the Trustee upon the request of the holders of not less than 25% in aggregate principal amount of the outstanding Existing Notes shall, declare the principal of, premium, if any, accrued interest and any other amounts (including Additional Amounts, if any), on all the Existing Notes to be immediately due and payable. Upon any such declaration such amounts shall become due and payable immediately. If an Event of Default specified in clauses (vi) or (vii) with respect to the Issuer or (viii) or (xi) above occurs and is continuing, then the principal of, premium, if any, accrued interest and any other amounts (including Additional Amounts, if any) on all the Existing Notes shall ipso facto become and be immediately due and payable without any declaration or other act on the part of the Trustee or any holder.

After a declaration of acceleration, the holders of a majority in aggregate principal amount of outstanding Existing Notes may, by notice to the Trustee, rescind such declaration of acceleration if all existing Events of Default have been cured or waived, other than nonpayment of principal of, premium, if any, and accrued interest on such Existing Notes, that has become due solely as a result of the acceleration thereof, and if the rescission of acceleration would not conflict with any judgment or decree. Past defaults under the Existing Indenture (except a default in the payment of the principal of, premium, if any, or interest on any Existing Note issued thereunder or in respect of a covenant or a provision which cannot be modified or amended without the consent of all holders of such Existing Notes) may be waived by the holders of a majority in aggregate principal amount of the outstanding Existing Notes.

No holder of any Existing Note has any right to institute any proceeding with respect to the Existing Indenture or any remedy thereunder, unless the holders of at least 25% in aggregate principal amount of the outstanding Existing Notes have made written request, and offered reasonable indemnity, to the Trustee to institute such proceeding as Trustee, the Trustee has failed to institute such proceeding within 15 calendar days after receipt of such notice and the Trustee has not within such 15-day period received directions inconsistent with such written request by holders of a majority in aggregate principal amount of the outstanding Existing Notes. Such limitations do not apply, however, to a suit instituted by a holder of an Existing Note for the enforcement of the payment of the principal of, premium, if any, accrued interest and any other amounts (including Additional Amounts, if any), on such Existing Note on or after the respective due dates expressed in such Existing Note or to institute suit (including any “acción ejecutiva individual” pursuant to Article 29 of the Negotiable Obligations Law of Argentina) for the enforcement of any such payment on or after such respective dates, shall not be impaired or affected without the prior consent of such holder.

During the existence of an Event of Default under the Existing Indenture, the Trustee is required to exercise such rights and powers vested in it under the Existing Indenture and use the same degree of care and skill in its exercise thereof as a prudent Person would exercise under the circumstances in the conduct of such Person’s own affairs. Subject to the provisions of the Existing Indenture relating to the duties of the Trustee, in case an Event of Default shall occur and be continuing under the Existing Indenture, the Trustee is not under any obligation to exercise any of its rights or powers under the Existing Indenture at the request or direction of any of the holders of the Existing Notes, unless such holders shall have offered to the Trustee reasonable security or indemnity. Subject to certain provisions of the Existing Indenture concerning the rights of the Trustee, the holders of a majority in aggregate principal amount of the outstanding Existing Notes have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee under the Existing Indenture, or exercising any trust, or power conferred on the Trustee.

Defeasance

The Issuer may at any time terminate all of its obligations with respect to the Existing Notes (“defeasance”), except for certain obligations, including those regarding any trust established for a defeasance and obligations to register the transfer or exchange of the Existing Notes, to replace mutilated, destroyed, lost or stolen Existing Notes, and to maintain agencies in respect of the Existing Notes. The Issuer may at any time terminate its obligations under certain covenants set forth in the Existing Indenture, some of which are described under “—Certain Covenants” above, and, from and after such time, any omission to comply with such obligations shall not constitute a Default or an Event of Default with respect to the Existing Notes (“covenant defeasance”). In order to exercise either defeasance or covenant defeasance, the Issuer must irrevocably deposit in trust, for the benefit of the holders of the Existing Notes, with the Trustee money or U.S. government obligations, or a combination thereof, in such amounts as will be sufficient to pay the principal of, premium, if any, and interest on the Existing Notes to redemption or maturity and comply with certain other conditions, including the delivery of an opinion as to certain tax matters.

Satisfaction and Discharge

The Existing Indenture will be discharged and will cease to be of further effect (except as to surviving rights or registration of transfer or exchange of Existing Notes) as to all outstanding Existing Notes issued thereunder, when either (a) all such Existing Notes theretofore authenticated and delivered (except lost, stolen or destroyed Existing Notes which have been replaced or paid) have been delivered to the Trustee for cancellation; or (b) (i) all such Existing Notes not theretofore delivered to such Trustee for cancellation have become due and payable and the Issuer has irrevocably deposited or caused to be deposited with such Trustee as trust funds in trust for the purpose an amount of money sufficient to pay and discharge the entire indebtedness on such Existing Notes not theretofore delivered to such Trustee for cancellation, for principal, premium, if any, and accrued interest to the date of maturity or redemption; and (ii) the Issuer has delivered irrevocable instructions to the Trustee to apply the deposited money toward the payment of such Existing Notes at maturity or the redemption date, as the case may be. In addition, the Issuer must deliver an Officer’s Certificate and an Opinion of Counsel to the Trustee stating that all conditions precedent to satisfaction and discharge have been complied with.

Consents and Waivers

From time to time, the Issuer and the Guarantors, when authorized by resolutions of their respective Boards of Directors, and the Trustee may, without the consent of the holders of the Existing Notes, amend, waive or supplement the Existing Indenture or the Existing Notes for certain specified purposes, including, among other things, curing ambiguities, defects or inconsistencies, maintaining the qualification of the Existing Indenture under the Trust Indenture Act, or making any change that does not adversely affect the rights of any holder of the Existing Notes issued thereunder; provided, however, that the Issuer and the Guarantors shall have delivered to the Trustee an Opinion of Counsel stating that such change does not adversely affect the rights of any such holder. Other amendments and modifications of the Existing Indenture or the Existing Notes may be made by the Issuer, the Guarantors and Trustee with the consent of the holders of not less than a majority of the outstanding aggregate principal amount of the Existing Notes; provided, however, that no such modification or amendment may, without the consent of the holder of each outstanding Existing Note affected thereby, (i) reduce the principal amount of, extend the fixed maturity of, or alter the redemption provisions of the Existing Notes, (ii) change the currency in which the Existing Notes or any premium or the interest thereon is payable, (iii) reduce the percentage in outstanding principal amount of the Existing Notes that must consent to an amendment, supplement or waiver or consent to take any action under the Existing Notes, the Guarantees or the Existing Indenture, (iv) impair the right to institute suit for the enforcement of any payment on or with respect to the Existing Notes or the Guarantees, (v) alter the Issuer’s obligation upon the occurrence of a Change of Control or an Asset Sale to purchase such Existing Notes in accordance with the Existing Indenture or waive any default in the performance thereof, (vi) waive a default in payment with respect to the Existing Notes, (vii) reduce or change the rate or time for payment of interest, Additional Amounts or Additional Interest on the Existing Notes, (viii) affect the ranking of the Existing Notes or (ix) except in strict compliance with the terms of the Existing Indenture, release any Guarantor from any of its obligations under its Guarantee of such Existing Notes or the Existing Indenture.

Promptly after the execution by the Issuer and the Trustee of any supplemental indenture, the Issuer or the Trustee is required to give notice thereof as specified in the Existing Indenture (as described below under
“— Notices”), and shall additionally give notice thereof to the CNV, setting forth in general terms the substance of such amendment or modification. Any failure of the Issuer or the Trustee to give such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such supplemental indenture.

Meetings of Security Holders

The Existing Indenture contains provisions permitting the Issuer or the Trustee at any time to call meetings of the holders for the purpose of entering into a supplemental indenture as provided above or approving a modification or amendment to, or obtaining a waiver of, any provision of the Existing Indenture or the Existing Notes (an “extraordinary meeting”). In addition, the Issuer or the Trustee shall upon the request of the holders of at least 5% in aggregate principal amount of Existing Notes at the time outstanding call such a meeting and such meeting shall be convened within 40 days from the date such request is received by the Issuer or the Trustee.

The holders, whether present or represented by proxy, entitled to vote 75% in aggregate principal amount of the Existing Notes at the time outstanding will be required for a quorum at an extraordinary meeting. In the absence of a quorum at any such meeting, the meeting may be adjourned for a period of not less than 10 days nor more than 30 days, as determined by the chairman of the meeting.

At an extraordinary meeting at which the proper quorum is present, (i) any resolution to modify or amend, or to waive compliance with, any of the provisions of the Existing Notes shall be effectively passed and decided (except for those matters set forth above requiring the consent of the holder of each outstanding Existing Note affected thereby) if approved by the persons entitled to vote in excess of 66⅔% in aggregate principal amount of Existing Notes outstanding and (ii) any resolution to modify or amend, or to waive compliance with, any of the provisions of the Existing Notes set forth above requiring the consent of the holder of each outstanding Existing Note affected thereby shall be effectively passed and decided only if all holders of Existing Notes are present or represented by proxy at such meeting and the unanimous vote of all holders is obtained with respect to such matter.

The Existing Indenture also sets forth certain additional requirements as to the credentials necessary for attendance at a meeting of holders in person or by proxy and as to the procedures to be observed at any such meeting.

Notices

Notices shall be mailed to the holders of the Existing Notes at their registered addresses. Notice sent by first-class mail, postage prepaid at a U.S. post office, shall be deemed to have been given, made or served on the date of receipt of such notice by the holder of the Existing Notes to whom such notice is addressed.

In addition, the Issuer shall cause all such other publications of such notices as may be required from time to time by applicable Argentine law, including, without limitation, those required under the regulations issued by the CNV, including the event of redemption of the Existing Notes as contemplated in those terms and conditions.

Regarding the Trustee

The Bank of New York with offices at 101 Barclay Street, Floor 21W, New York, New York 10286 serves as Trustee under the Existing Indenture. The Bank of New York S.A., with offices at 25 Mayo 195, Floor 9, 1002 Buenos Aires, Argentina, will serve as representative of the Trustee in Argentina.

The recitals contained in the Existing Indenture and in the Existing Notes, except the Trustee’s certificates of authentication, shall be taken as the statements of the Issuer, and the Trustee assumes no responsibility for the correctness of the same, it being understood, however, that pursuant to the obligations imposed on the Trustee by paragraph (c) of Section 13 of the Negotiable Obligations Law, the Trustee has confirmed through the Issuer, the Issuer’s attorneys and accountants and its own attorneys, the accuracy of the information required to be confirmed as set forth in the Existing Indenture. The Trustee makes no representation as to the validity or sufficiency of the Existing Indenture or of the Existing Notes. The Trustee shall not be accountable for the use or application by the Issuer of any of the Existing Notes or of the proceeds thereof.

Governing Law; Service of Process

The Existing Indenture, the Existing Notes and the Guarantees shall be construed in accordance with and governed by the laws of the State of New York without regard to principles of conflict of laws; provided, however, that all matters relating to the due authorization, execution, issuance and delivery of the Existing Notes and the Guarantees, the capacity of the Issuer or any Guarantor and matters relating to the legal requirements necessary in order for the Existing Notes to qualify as Negotiable Obligations under Argentine law shall be governed by the Negotiable Obligations Law and other applicable Argentine laws and regulations.

Any suit, action or proceeding against the Issuer or any Guarantor or any of their respective properties, assets or revenues with respect to the Existing Indenture, the Existing Notes or any Guarantee (a “Related Proceeding”) may be brought in the Supreme Court of the State of New York, County of New York, in the United States District Court for the Southern District of New York, in the courts of Argentina that sit in Buenos Aires, or in the courts of any other jurisdiction as provided by the terms of the Existing Notes. The Issuer and each Guarantor has consented to the non‑exclusive jurisdiction of each such court for the purposes of any Related Proceeding, and has irrevocably waived, to the fullest extent it may effectively do so, any objection to the laying of venue of any Related Proceeding in any such court and the defense of an inconvenient forum to the maintenance of any Related Proceeding in any such court.

The Issuer and each Guarantor has agreed that service of all writs, process and summonses in any Related Proceeding brought against it in the State of New York may be made upon CT Corporation System in New York City, presently located at 1633 Broadway, New York, New York 10019, the Process Agent, and the Issuer has irrevocably appointed the Process Agent as its agent and true and lawful attorney-in-fact in its name, place and stead to accept such service of any and all such writs, claims, process and summonses, and has agreed that the failure of the Process Agent to give any notice to it of any such service of process shall not impair or affect the validity of such service or of any judgment based thereon. The Issuer and each Guarantor has agreed to maintain at all times an agent reasonably acceptable to the Trustee with an office in New York City to act as Process Agent as aforesaid. Nothing in the Existing Indenture shall in any way be deemed to limit the ability to serve any such writs, process and summonses in any other manner permitted by applicable law.

Waiver of Immunities

To the extent that the Issuer or any Guarantor or any of their respective revenues, assets or properties shall be entitled, with respect to any Related Proceeding at any time brought against the Issuer or any Guarantor or any of their respective revenues, assets or properties in the courts identified above, to any immunity from suit, from attachment prior to judgment, from attachment in aid of execution of judgment, or from any other legal or judicial process or remedy, and to the extent that in any such jurisdiction there shall be attributed such an immunity, the Issuer and each Guarantor has irrevocably agreed not to claim and has irrevocably waived such immunity to the extent permitted by law (including, without limitation, the Foreign Sovereign Immunities Act of 1976 of the United States) in respect of its obligations under the Existing Indenture and any Existing Note. The Issuer and each Guarantor has agreed that final judgment in any such suit, action or proceeding brought in such a court shall be conclusive and binding on it and may be enforced in any court to the jurisdiction of which the Issuer or any Guarantor is subject by a suit upon such judgment, provided that service of process is effected upon the Issuer or such Guarantor in the manner specified above or as otherwise permitted by law.

Judgment Currency

If for the purpose of obtaining judgment in any court it is necessary to convert a sum due under the Existing Indenture or under the Existing Notes or the Guarantees from one currency into another currency, the Issuer and each Guarantor have agreed and each holder agrees, to the fullest extent that they may effectively do so, that the rate of exchange used shall be that at which in accordance with normal banking procedures such holder could purchase the first currency with such other currency in the city that is the principal financial center of the country of issue of the first currency on the day two Business Days preceding the day on which final judgment is given.

The obligation of the Issuer or any Guarantor in respect of any sum payable by it to the holders of the Existing Notes or the Guarantees shall, notwithstanding any judgment in a currency (the “Judgment Currency”) other than that in which such sum is denominated in accordance with the applicable provisions of the Existing Indenture or such Existing Note or Guarantee (the “Security Currency”), be discharged only to the extent that on the Business Day following receipt by such holder of such Existing Note or Guarantee of any sum adjudged to be so due in the Judgment Currency, such holder may in accordance with normal banking procedures purchase the Security Currency with the Judgment Currency; if the amount of the Security Currency so purchased is less than the sum originally due to the holder of such Existing Note or Guarantee in the Security Currency (determined in the manner set forth above), the Issuer and each Guarantor has agreed, as a separate obligation and notwithstanding any such judgment, to indemnify the holder of such Existing Note or Guarantee against such loss, and if the amount of the Security Currency so purchased exceeds the sum originally due to such holder, such holder agrees to remit to the Issuer or the applicable Guarantor such excess, provided that such holder shall have no obligation to remit any such excess as long as the Issuer or any Guarantor shall have failed to pay such holder any obligation due and payable under the Existing Indenture or any Existing Note or Guarantee, in which case any such excess may be applied to such obligations of the Issuer and the Guarantors under the Existing Indenture, the Existing Notes or the Guarantees.

Foreign Exchange Restrictions

Under the terms and conditions of the Existing Notes and the Guarantees, in the event of any foreign exchange restriction or prohibition in Argentina, any and all payments in respect of the Existing Notes and the Guarantees will be made in U.S. Dollars through (i) the sale of Bonos Externos de la República Argentina (“BONEX”) or of any other public or private bond issued in U.S. Dollars in Argentina or (ii) any other legal mechanism for the acquisition of U.S. Dollars in any exchange market. All costs, including any taxes, relative to such operations to obtain U.S. Dollars will be borne by the Issuer and the Guarantors.

Transfer and Exchange

A holder may transfer or exchange the Existing Notes in accordance with the Existing Indenture. The Registrar may require a holder, among other things, to furnish appropriate endorsements and transfer documents, and to pay any taxes and fees required by law or permitted by the Existing Indenture. The Registrar is not required to transfer or exchange any Existing Notes selected for redemption. Also, the Registrar is not required to transfer or exchange any Existing Notes selected for a period of 15 days before a selection of the Existing Notes is to be redeemed.

Certain Definitions

Set forth below is a summary of certain defined terms used in the Existing Indenture. Reference is made to the Existing Indenture for the full definition of all such terms, as well as any other capitalized terms used herein for which no definition is provided.

“Acquired Indebtedness” means Indebtedness of a Person existing at the time such Person becomes a Restricted Subsidiary of the Issuer or assumed in connection with an Asset Acquisition of such Person, including, without limitation, Indebtedness incurred in connection with, or in anticipation of, (i) such Person’s becoming a Restricted Subsidiary of the Issuer or (ii) such Asset Acquisition.

“Act” means the Securities Act of 1933, as amended.

“Affiliate” means, with respect to any specified Person, any other Person which, directly or indirectly, controls, is controlled by or is under direct or indirect common control with, such specified Person. For the purposes of this definition, “control,” when used with respect to any Person, means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise, and the terms “controlling” and “controlled” have meanings correlative to the foregoing. For avoidance of doubt, each Unrestricted Subsidiary shall be deemed to be an Affiliate of the Issuer and of each Restricted Subsidiary.

“Argentine GAAP” means generally accepted accounting principles in Argentina.

“Argentine Personal Assets Tax” means the personal assets tax (“impuesto a los bienes personales”) set forth under Argentine Law 23,966, as amended from time to time.

“Asset Acquisition” means (i) any capital contribution (by means of transfers of cash or other property to others or payments for property or services for the account or use of others, or otherwise) by the Issuer or any of its Restricted Subsidiaries in any other Person, or purchase or acquisition of Capital Stock, by the Issuer or any of its Restricted Subsidiaries of any other Person, in either case pursuant to which such other Person shall become a Restricted Subsidiary of the Issuer or any of its Restricted Subsidiaries or shall be merged with or into the Issuer or any of its Restricted Subsidiaries or (ii) any acquisition by the Issuer or any of its Restricted Subsidiaries of assets of any Person which constitute substantially all of an operating unit or business of such Person.

“Asset Sale” means any direct or indirect sale, conveyance, transfer, lease or other disposition by the Issuer or a Restricted Subsidiary to any Person (other than the Issuer or any Restricted Subsidiary) in one transaction or a series of related transactions (including by way of sale and leaseback) of (i) any Capital Stock of any Restricted Subsidiary or (ii) any other property or asset of the Issuer or any Restricted Subsidiary of the Issuer, in each case, other than isolated transactions which do not exceed U.S.$1.0 million individually. For the purposes of this definition, the term “Asset Sale” shall not include (a) any disposition of properties and assets of the Issuer or any Restricted Subsidiary that is governed under and complies with the requirements set forth in the covenant described under “— Limitation on Consolidations, Mergers and Sales of Assets” above, (b) any sale by the Issuer of its Capital Stock (other than Disqualified Stock), (c) sales or other dispositions of equipment that has become obsolete or no longer useful in the business of the Issuer or its Restricted Subsidiaries, or inventory of the Issuer or any Restricted Subsidiaries sold or disposed of in the ordinary course of its business and not in the form of a bulk sale or liquidation of such inventory, (d) sales of property and equipment to SBASE, FEMESA or any other federal governmental entity or agency on the dates and in the manner set forth in the Metrovías Concession Contract, (e) any sale, discount, conveyance or other disposition of receivables pursuant to a Permitted Receivables Transaction, (f) the transfer of shares in Coviares and Covimet (and interests in the joint venture to build the Yacyreta hydro-electric dam) in connection with the Polledo Transaction and (g) the assignment to Parent by the Issuer or any of its Subsidiaries of its right to receive payment from one or more Argentine federal, provincial or municipal government(s) or agencies thereof in connection with the concurrent assumption by Parent of the obligations of the Issuer or such Subsidiaries under Self-Liquidating Financings in existence on the Issue Date.

“Authorized Officer,” with respect to any Person, means the President of its Board of Directors, any other member of its Board of Directors, its Chief Financial Officer or any other officer appointed as an “Authorized Officer” by the Board of Directors of the Issuer, as certified to the Trustee in a Board Resolution.

“Board Resolution” means a copy of a resolution signed by the President or any Director who is a full time employee of the Issuer, any Wholly Owned Restricted Subsidiary or the Parent of the Board of Directors of the Issuer or a Guarantor, as appropriate, and certified as having been duly adopted by the Board of Directors of the Issuer or a Guarantor, as appropriate, and to be in full force and effect on the date of such certification, and delivered to the Trustee.

“Capital Stock” means, with respect to any Person, any and all shares, partnership interests, participations, rights in, or other equivalents (however designated and whether voting or non-voting) of, any Person, whether outstanding on the Issue Date or issued after the Issue Date, and any and all rights, warrants or options exchangeable for or convertible into any of the foregoing.

“Capitalized Lease Obligation” means any obligation to pay rent or other amounts under a lease of (or other agreement conveying the right to use) any property (whether real, personal or mixed) that is required to be classified and accounted for as a capital lease obligation under Argentine GAAP, and, for the purpose of the Existing Indenture, the amount of such obligation at any date shall be the capitalized amount thereof at such date, determined in accordance with Argentine GAAP.

“Cash Equivalents” means, at any time (i) any evidence of Indebtedness with a maturity of 180 calendar days or less issued or directly and fully guaranteed or insured by the United States of America or any agency or instrumentality thereof (provided that the full faith and credit of the United States of America is pledged in support thereof); (ii) certificates of deposit or banker’s acceptances with a maturity of 180 calendar days or less of any financial institution that is a member of the Federal Reserve System having combined capital and surplus and undivided profits of not less than U.S.$500.0 million; (iii) commercial paper with a maturity of 180 calendar days or less issued by a corporation (except an Affiliate of the Issuer) organized under the laws of any state of the United States or the District of Columbia and rated at least A-1 by S&P or at least P-l by Moody’s; (iv) repurchase agreements and reverse repurchase agreements relating to marketable direct obligations issued or unconditionally guaranteed by the United States of America or issued by any agency thereof and backed by the full faith and credit of the United States of America, in each case maturing within one year from the date of acquisition, provided that the terms of such agreements comply with the guidelines set forth in the Federal Financial Agreements of Depository Institutions with Securities Dealers and Others, as adopted by the Comptroller of the Currency of the United States.

“Change of Control” of the Issuer or the Parent, as the case may be, means the occurrence of any of the following events: (a) any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act), other than one or more Permitted Stockholders, is or becomes the “beneficial owner” (as defined in Rules 13d‑3 and 13d‑5 under the Exchange Act, except that a person shall be deemed to have “beneficial ownership” of all securities that such person has the right to acquire, whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of more than 50% of the outstanding Voting Stock of the Issuer or the Parent, as the case may be; or (b) the Issuer or the Parent, as the case may be, consolidates with, or merges with or into, another Person or sells, assigns, conveys, transfers, leases or otherwise disposes of all or substantially all of its assets to any Person, or any Person consolidates with, or merges with or into, the Issuer or the Parent, as the case may be, in any such case, pursuant to a transaction in which the outstanding Voting Stock of the Issuer or the Parent, as the case may be, is converted into or exchanged for cash, securities or other property, other than any such transaction (i) in which the outstanding Voting Stock of the Issuer or the Parent, as the case may be, is converted into or exchanged for (l) Voting Stock (other than Disqualified Stock) of the surviving or transferee corporation and/or (2) cash, securities and other property in an amount which could be paid by the Issuer or the Parent, as the case may be, as a Restricted Payment under the Existing Indenture and (ii) as a result of which no “person” or “group” (excluding Permitted Stockholders) owns more than 50% of the outstanding Voting Stock of the Issuer or the Parent, as the case may be; or (c) during any consecutive two-year period, individuals who at the beginning of such period constituted the Board of Directors of the Issuer or the Parent, as the case may be (together with any new directors whose election by the Board of Directors of the Issuer or the Parent, as the case may be, or whose nomination for election by the stockholders of the Issuer or the Parent, as the case may be, was approved by a vote of a majority of the directors then still in office who were either directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason (other than by action of the Permitted Stockholders) to constitute a majority of the Board of Directors of the Issuer or the Parent, as the case may be, then in office.

“Commission” means the United States Securities and Exchange Commission.

“Common Stock” with respect to any person organized under the laws of Argentina means acciones ordinarias of such Person and with respect to any other Person, means such class of shares, quotas or other equity interests as constitute the common equity capital of such Person, regardless of how such claims may be denominated.

“Consolidated EBITDA” means, with respect to any period, the Consolidated Net Income of the Issuer and the Restricted Subsidiaries for such period, (A) increased (to the extent deducted in calculating Consolidated Net Income) by the sum of: (i) all income taxes of the Issuer and the Restricted Subsidiaries paid or accrued in accordance with Argentine GAAP for such period (other than income taxes attributable to extraordinary, unusual or nonrecurring gains or losses); (ii) all financial results generated by liabilities of the Issuer and the Restricted Subsidiaries paid or accrued for such period (including amortization of original issue discount and interest with respect to Capitalized Lease Obligations), other than any interest paid by the Issuer and the Restricted Subsidiaries to the Issuer or any of the Restricted Subsidiaries; (iii) all depreciation expense of the Issuer and the Restricted Subsidiaries; (iv) amortization expense of the Issuer and the Restricted Subsidiaries, including, without limitation, amortization of capitalized debt issuance costs; (v) deferred toll revenue of the Issuer and the Restricted Subsidiaries; (vi) adjustments to Consolidated Net Income for interests of minority shareholders in Restricted Subsidiaries; and (vii) any other extraordinary noncash charges of the Issuer and the Restricted Subsidiaries, to the extent deducted in determining the Consolidated Net Income of the Issuer, and (B) reduced (without duplication) by the sum of (i) the aggregate amount of dividends or other distributions actually paid to minority shareholders of Restricted Subsidiaries, (ii) financial results generated by assets of the Issuer and the Restricted Subsidiaries, (iii) charges for the reversal of the revaluation reserve of the Issuer and the Restricted Subsidiaries, (iv) amortization of negative goodwill, and (v) other income, net (if positive), all determined on a consolidated basis in accordance with Argentine GAAP.

“Consolidated EBITDA Coverage Ratio” means the ratio of (i) Consolidated EBITDA for the four full fiscal quarter periods (the “Reference Period”) for which financial statements are available that immediately precedes the date (the “Transaction Date”) of the transaction or other circumstances giving rise to the need to calculate the Consolidated EBITDA Coverage Ratio, to (ii) the sum of (a) all Interest Expense of the Issuer and the Restricted Subsidiaries paid or accrued (including amortization of original issue discount and interest with respect to Capitalized Lease Obligations), other than any Interest Expense paid or accrued by the Issuer and the Restricted Subsidiaries to the Issuer or any of the Restricted Subsidiaries, and (b) the aggregate amount of cash dividends and other cash distributions declared or paid on Capital Stock (other than Common Stock) of the Issuer and the Restricted Subsidiaries, other than any dividends paid by the Issuer and the Restricted Subsidiaries to the Issuer or any Wholly Owned Restricted Subsidiary, in each case, for such Reference Period. For purposes of this definition, if the Transaction Date occurs prior to the date on which the Issuer’s Consolidated Financial Statements for the four full fiscal quarter periods immediately subsequent to the Issue Date are first available, “Consolidated EBITDA” and the items referred to in the preceding clause (ii) shall be calculated after giving effect on a pro forma basis to the Existing Notes outstanding on the Transaction Date as if they were issued on the first day of such four full fiscal quarter period. In addition to and without limitation of the foregoing, for purposes of this definition, “Consolidated EBITDA” and the items referred to in the preceding clause (ii) shall be calculated after giving effect on a pro forma basis for the period of such calculation to (i) the incurrence of any Indebtedness of the Issuer or any of the Restricted Subsidiaries at any time during the Reference Period, including, without limitation, the incurrence of the Indebtedness, if any, giving rise to the need to make such calculation, as if such incurrence occurred on the first day of the Reference Period; and (ii) any Asset Sales or Asset Acquisitions (including, without limitation, any Asset Acquisition giving rise to the need to make such calculation as a result of the Issuer or any of the Restricted Subsidiaries (including any Person who becomes such Restricted Subsidiary as a result of the Asset Acquisition) incurring Acquired Indebtedness) occurring during the Reference Period and any retirement of Indebtedness in connection with such Asset Sales, as if such Asset Sale or Asset Acquisition and/or retirement occurred on the first day of the Reference Period. Furthermore, in calculating the denominator (but not the numerator) of the “Consolidated EBITDA Coverage Ratio,” (1) interest on Indebtedness determined on a fluctuating basis as of the Transaction Date and which will continue to be so determined thereafter shall be deemed to accrue at a fixed rate per annum equal to the rate of interest on such Indebtedness in effect on the Transaction Date; (2) if interest on any Indebtedness actually incurred on the Transaction Date may optionally be determined at an interest rate based upon a factor of a prime or similar rate, a eurocurrency interbank offered rate, or other rates, then the interest rate based upon a factor of a prime or similar rate shall be deemed to have been in effect; and (3) notwithstanding clause (1) above, interest on Indebtedness determined on a fluctuating basis, to the extent such interest is covered by agreements relating to Hedging Obligations, shall be deemed to accrue at the rate per annum resulting after giving effect to the operation of such agreements. If the Issuer or any of the Restricted Subsidiaries directly or indirectly guarantees Indebtedness of any other Person (other than the Issuer or any of the Restricted Subsidiaries), this definition shall give effect to the incurrence of such guaranteed Indebtedness as if the Issuer or the Restricted Subsidiary had directly incurred such guaranteed Indebtedness, to the extent of such guarantee (and, in the case of a guarantee on a joint and several basis, shall give effect to the incurrence as if the Issuer or such Restricted Subsidiary were obligated for the entire amount of such Indebtedness).

“Consolidated Net Income” means, with respect to any period, the consolidated net income (or loss) of the Issuer and the Restricted Subsidiaries for such period as determined in accordance with Argentine GAAP, adjusted by excluding, without duplication (to the extent included in calculating such consolidated net income): (i) all extraordinary gains or losses, (ii) any Net Income or loss of any Person if such Person is not a Restricted Subsidiary, except that the Issuer’s equity in the net income of any such Person for such period shall be included in such Consolidated Net Income up to the aggregate amount of cash actually distributed by such Person during such period to the Issuer or a Wholly Owned Restricted Subsidiary as a dividend or other distribution, (iii) net income of any Person combined with such Person or one of its Restricted Subsidiaries on a “pooling of interests” basis attributable to any period prior to the date of combination, (iv) any gain or loss realized upon the termination of any employee pension benefit plan (on an after-tax basis), (v) gains or losses in respect of any Asset Sales by the Issuer or any of the Restricted Subsidiaries, and (vi) the Net Income of any Restricted Subsidiary to the extent that the declaration of dividends or the making of distributions by such Restricted Subsidiary of such net income is not at the time permitted, directly or indirectly, by operation of the terms of its charter or similar organizational document or any agreement, instrument, judgment, decree, order, statute, law, rule or governmental regulations applicable to such Restricted Subsidiary or its stockholders.

“Consolidated Net Worth” means, with respect to any Person at any date of determination, the consolidated equity represented by the shares of such Person’s Capital Stock (other than Disqualified Stock) at such date, as determined on a consolidated basis in accordance with Argentine GAAP.

“Covicentro Expansion Project” means any project for the expansion of the existing highway system operated by Covicentro between Rosario and Córdoba.

“Currency Agreement” in respect of a Person means any foreign exchange contract, currency swap agreement, currency option or other similar financial agreement or arrangement to which such Person is a party or a beneficiary.

“Default” means any event that is, or after notice or passage of time or both would be, an Event of Default.

“Disqualified Stock” means, with respect to any Person, any Capital Stock of such Person which, by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable), or upon the happening of any event, matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or is exchangeable for Indebtedness, or is redeemable at the option of the holder thereof, in whole or in part, on or prior to the date which is 180 days after the final Maturity Date of the Existing Notes and, if applicable, the Exchange Existing Notes.

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“Exchange Existing Note” means any debt securities of the Issuer registered under the Securities Act with terms substantially identical to those of the Existing Notes (except that the Exchange Existing Notes will not contain terms with respect to transfer restrictions under the Securities Act) issued in exchange for Existing Notes pursuant to the Registration Rights Agreement.

“Exchange Offer” means an offer to exchange the Existing Notes for Exchange Existing Notes made by the Issuer pursuant to the Registration Rights Agreement.

“Fair Market Value” means, with respect to any asset, property or services provided, the price that could be negotiated in an arm’s-length free market transaction, for cash, between a willing seller and a willing buyer, neither of whom is under undue pressure or compulsion to complete the transaction. Fair Market Value shall be determined by a majority of the members of the Board of Directors acting in good faith and shall be evidenced by a Board Resolution delivered to the Trustee and, in the case of an asset or other property, may be greater than or less than the book value thereof, provided that in the case of any transaction or series of related transactions with respect to assets, property or services which involve aggregate consideration of U.S.$5.0 million or more, Fair Market Value shall also be determined by an Independent Financial Advisor, provided further that in the case of any transaction or series of related transactions with respect to construction services to be rendered by the Issuer or a Restricted Subsidiary to an Affiliate of the Issuer or any Restricted Subsidiary, Fair Market Value shall be determined in the case of any such transaction or series of related transactions which involve aggregate consideration of (x) less than U.S.$5.0 million, by the good faith judgment of an appropriate executive officer of the Issuer without any requirement of a Board Resolution, (y) more than U.S.$5.0 million and less than U.S.$10.0 million by the Board of Directors acting in good faith and evidenced by a Board Resolution delivered to the Trustee and (z) in excess of U.S.$10.0 million, by the Board of Directors acting in good faith and evidenced by a Board Resolution delivered to the Trustee and shall also be determined by an Independent Financial Advisor.

“Government-Backed Investment Program Commitments” means any long-term lease, installment sale or similar agreement between Metrovías S.A. and any vendor or supplier of equipment, or provider of services (or any financial institution providing financing to facilitate a sale by a vendor of equipment or provider of services) which provides for (i) the use of such equipment by, or provision of services to, Metrovías S.A. during the term of the Metrovías Concession Contract, (ii) the payment of all amounts owing under such agreement (whether on account of interest, principal, required capital reduction or otherwise) to be made on or prior to any due date thereof, either (x) by the federal government of the Republic of Argentina or (y) by any municipality or other political subdivision of the Republic of Argentina which is, at the date of incurrence of such obligation, rated BB or higher by Standard & Poor’s.

“Guarantee” means the guarantee of the Existing Notes and any Exchange Existing Notes made by each Guarantor.

“Guarantor” means (i) each of BRH and Caminos, (ii) each of the Issuer’s Subsidiaries which becomes a guarantor of the Existing Notes and, if applicable, the Exchange Existing Notes pursuant to the covenant described under “— Additional Subsidiary Guarantees,” and (iii) each of the Issuer’s Subsidiaries that executes a supplemental indenture in which such Subsidiary agrees to be bound by the terms of the Guarantee.

“Hedging Obligations” of any Person means the obligations of such Person pursuant to any Interest Rate Agreement or Currency Agreement.

“Holder” means the Person in whose name an Existing Note or Exchange Note is registered on the Registrar’s books.

“Incur” means, with respect to any Indebtedness, to directly or indirectly create, incur, assume, guarantee or in any manner become liable (whether by contract, by operation of law or otherwise) for such Indebtedness, whether contingently or otherwise.

“Indebtedness” means, with respect to any Person, without duplication, (i) all obligations for borrowed money, (ii) all obligations evidenced by bonds, debentures or notes, (iii) all Capitalized Lease Obligations, (iv) all obligations issued or assumed as the deferred purchase price of property, all conditional sale obligations and all obligations under any title retention agreement (but excluding trade accounts payable arising in the ordinary course of business and financing for the purchase by the Issuer or any of its Subsidiaries of property or equipment that is not accounted for as property, plant and equipment of the Issuer and its consolidated subsidiaries pursuant to Argentine GAAP), (v) all obligations issued or contracted for as payment in consideration of the purchase by such Person of the stock or substantially all the assets of another Person or a merger or consolidation, (vi) all obligations for the reimbursement of any obligor on any letter of credit, banker’s acceptance or similar credit transactions entered into in the ordinary course of business (other than any letter of credit, banker’s acceptance or similar credit transaction entered into as credit support for the purchase by the Issuer or any of its Subsidiaries of property or equipment that is not accounted for as property, plant and equipment of the Issuer and its consolidated subsidiaries pursuant to Argentine GAAP), (vii) all obligations of the type referred to in clauses (i) through (vi) of other Persons and all dividends of other Persons for the payment of which, in either case, such Person is directly or indirectly responsible or liable as obligor, guarantor or otherwise, but only to the extent that such Person is liable as obligor, guarantor or otherwise, and (viii) all obligations of the type referred to in clauses (i) through (vii) of other Persons which are secured by any non-recourse Lien on any property or asset of such Person, the amount of such obligation being deemed to be the lesser of the Fair Market Value of such property or asset or the amount of the obligation so secured.

“Independent Financial Advisor” means, as appropriate, (i) an investment or merchant banking firm or public accounting firm of international standing or (ii) an internationally recognized construction engineering consulting firm, in either case, (x) which does not, and whose directors and executive officers and Affiliates do not, have a material investment in the Issuer or any of its Affiliates and (y) which, in the judgment of the Board of Directors of the Issuer, is otherwise independent with respect to the Issuer and its Affiliates and qualified to perform the task for which it is to be engaged. A trustee or nominee for the true parties in interest shall not be excluded from the definition of “Independent Financial Advisor” solely as a result of such trustee or nominee status.

“Initial Public Offering” means the first underwritten registered public offering of Common Stock (acciones ordinárias) of the Issuer (whether or not represented by American Depositary Receipts) pursuant to either (i) a registration statement that has been declared effective by the Commission or (ii) a public offering in Argentina registered with the CNV, in either case resulting in gross proceeds to the Issuer of not less than U.S.$25.0 million.

“Interest Expense of the Issuer and its Restricted Subsidiaries” means financial results generated by liabilities of the Issuer and its Restricted Subsidiaries as determined in accordance with Argentine GAAP consistently applied by the Issuer in accordance with past practices, in any fiscal period during which inflationary accounting shall be in effect in accordance with Argentine GAAP, the aggregate of effects of inflation included in financial results generated by liabilities shall be excluded.

“Interest Rate Agreement” means with respect to any Person any interest rate swap agreement, interest rate cap agreement, interest rate collar agreement or other financial agreement or arrangement designed to protect such Person or its Subsidiaries (or in the case of the Issuer, the Issuer and its Restricted Subsidiaries) against fluctuations in interest rates with respect to Indebtedness of such Person.

“Investment” by any Person means any capital contributions, advances or loans to (including any guarantees of loans to), or investments or purchases of Capital Stock in, any other Person.

“Issue Date” means the date that the Existing Notes are originally issued.

“Latin American country” means any of the United Mexican States and any country located in South America, Central America or the Caribbean basin.

“Lien” means any mortgage, lien (statutory or other), pledge, security interest, encumbrance, claim, hypothecation, assignment for security, deposit arrangement or preference or other security agreement of any kind or nature whatsoever. For purposes of the Existing Indenture, a Person shall be deemed to own, subject to a Lien, any property which it has acquired or holds subject to the interest of a vendor or lessor under any conditional sale agreement, capital lease or other title retention agreement relating to Indebtedness of such Person and shall not be deemed to own, subject to a Lien, any receivables sold, discounted, conveyed or otherwise disposed of for cash or Cash Equivalents pursuant to a Permitted Receivables Transaction.

“Material Restricted Subsidiary” means any Restricted Subsidiary of the Issuer which, at any time of determination, would have been a “Significant Subsidiary” under the definition of such term in Rule 1-02 of Regulation S‑X issued under the Securities Act, as in effect on the Issue Date.

“Maturity Date,” when used with respect to any Existing Note or Exchange Note, means the date specified in such Existing Note or Exchange Note as the fixed date on which the principal of such Existing Note or Exchange Note is due and payable.

“Metrovías Concession Contract” means the Contrato de Concesión dated November 25, 1993 between Metrovías and the Ministry of Economy and Public Works and Services of the Republic of Argentina, as amended by the Agreement among Metrovías, The Municipality of the City of Buenos Aires and the Ministry of Economy and Public Works and Services of the Republic of Argentina dated August 18, 1994.

“Minority Investee” means any Person in which the Issuer or any Subsidiary holds an equity participation but not more than 50% of such Person’s Capital Stock.

“Minority Investee Guarantee Payments” means Restricted Payments made to, or on behalf of, a Minority Investee in respect of obligations of the Issuer or a Guarantor under Pro Rata Credit Support Indebtedness; provided that simultaneously with such Restricted Payment, payments on the Underlying Indebtedness are made by or on behalf of other owners of the equity capital of such Minority Investee in an aggregate percentage of such Underlying Indebtedness equal to or greater than (x) 100% minus (y) the Issuer’s Ownership Percentage in such Minority Investee.

“Moody’s” means Moody’s Investors Service, Inc. and its successors.

“Net Cash Proceeds” means, with respect to any Asset Sale, the proceeds thereof in the form of cash or Cash Equivalents, including payments in respect of deferred payment obligations when received in the form of cash or Cash Equivalents, net of (i) brokerage commissions and other reasonable fees and expenses (including reasonable fees and expenses of counsel and investment bankers) related to such Asset Sale; (ii) provisions for all taxes payable as a result of such Asset Sale; (iii) payments made to retire Indebtedness secured by the assets subject to such Asset Sale to the extent required pursuant to the terms of such Indebtedness; and (iv) appropriate amounts to be provided by the Issuer or any of its Subsidiaries, as the case may be, as a reserve, in accordance with Argentine GAAP, against any liabilities associated with such Asset Sale and retained by the Issuer or such Subsidiary, as the case may be, after such Asset Sale, including, without limitation, pension and other post-employment benefit liabilities, liabilities related to environmental matters and liabilities under any indemnification obligations associated with such Asset Sale.

“Net Income” means, with respect to any Person for any period, the net income (loss) of such Person for such period determined in accordance with Argentine GAAP.

“Net Proceeds” means (i) in the case of any sale of Capital Stock (other than Disqualified Stock) by the Issuer, the aggregate net proceeds received by the Issuer, after payment of expenses, commissions and the like incurred in connection therewith, whether such proceeds are in cash or in property (valued at the Fair Market Value thereof as of the time of receipt), and (ii) in the case of the issuance of Capital Stock upon the conversion of convertible debt or the exercise of options, warrants or rights, the net cash proceeds received by the Issuer upon the issuance of such convertible debt, options, warrants or rights plus any incremental amount of cash received by the Issuer upon the conversion or exercise thereof.

“Officers’ Certificate” means, with respect to any Person, a certificate signed by an Authorized Officer of such Person.

“Opinion of Counsel” means a written opinion from legal counsel which and who are reasonably acceptable to the Trustee, complying with the requirements of the Existing Indenture as they relate to the giving of an Opinion of Counsel. Unless otherwise required by the TIA, the legal counsel may be counsel to the Issuer or the Trustee. The cost of obtaining such Opinion of Counsel shall be borne by the Issuer and shall not be an expense of the Trustee.

“Parent” means Roggio or any successor thereof.

“Permitted Bonding Facility” means (i) the Agreement of Indemnity dated August 22, 1995 between Roggio and American International Companies providing for the issuance of surety bonds, undertakings or instruments of guarantee on behalf of Roggio and/or any present or future subsidiary for up to U.S.$300 million and (ii) any one or more additional agreements between the Issuer, or any Restricted Subsidiary and one or more insurance or surety companies rated at least A by S&P and at least A3 by Moody’s, providing for surety bonds, undertakings or instruments of guarantee on behalf of the Issuer and the Restricted Subsidiaries.

“Permitted Business” means (i) the provision of waste management services in Argentina and other Latin American countries, (ii) the construction and engineering of hydroelectric projects, industrial plants, highways, bridges, roads, airports and residential and commercial buildings in Argentina and other Latin American countries, (iii) the management of highways, bridges, roads and airports in Argentina and other Latin American countries, (iv) the provision of mass transportation management services in Argentina and other Latin American countries, (v) the management, operation and maintenance of toll roads in Argentina and other Latin American countries, and (vi) the provision of services in Argentina and other Latin American countries previously or customarily provided as public services by the national, state, provincial or similar government or an agency or instrumentality thereof.

“Permitted Investments” means Investments (i) in Cash Equivalents; (ii) in obligations of the federal government of the Republic of Argentina due within one year; (iii) in money market or overnight management accounts and certificates of deposits or Eurodollar deposits due within one year with a branch in the United States of America or in the Republic of Argentina of Citibank, N.A., First National Bank of Boston, Chase Manhattan Bank, Morgan Guaranty Trust Company, Banco de Galicia y Buenos Aires S.A., Banco Francés del Río de la Plata, Banco Río de la Plata S.A., Banco Roberts S.A. or BanSud S.A.; (iv) in repurchase obligations with a term of not more than 30 calendar days for underlying securities of the type described in clause (ii) above entered into with a bank described in clause (iii) above; (v) in commercial paper with a maturity date of 180 days or less issued by a corporation (except an Affiliate of the Issuer) organized under the laws of any state of the United States or the District of Columbia and rated at least A-1 by S&P or at least P‑1 by Moody’s; (vi) in debt of any state or political subdivision of the United States of America that is rated A‑1 or better by S&P or P‑1 by Moody’s; (vii) by the Issuer or any Restricted Subsidiary in another Person, if (x) at the time of such Investment no Default or Event of Default has occurred and is continuing, (y) as a result of such Investment (A) such other Person becomes a Restricted Subsidiary or (B) such other Person is merged or consolidated with or into, or transfers or conveys all or substantially all of its assets to, the Issuer or a Restricted Subsidiary and (z) such other Person is substantially engaged in a Permitted Business; (viii) by the Issuer or any Restricted Subsidiary in the Issuer or any Restricted Subsidiary (other than Excluded Subsidiary Funding); (ix) represented by accounts receivable created or acquired in the ordinary course of business; and (x) in the form of advances in the ordinary course of business to employees who are not Affiliates of the Issuer in an aggregate amount not to exceed U.S.$1.0 million at any one time outstanding.

“Permitted Liens” means, with respect to any Person, any Lien arising by reason of (i) judgments, which judgments do not constitute a Default or Event of Default with respect to the Existing Notes or any Exchange Existing Notes; (ii) taxes or assessments and similar charges either (a) not delinquent or (b) being contested in good faith by appropriate proceedings and as to which the Issuer or a Subsidiary of the Issuer shall have set aside on its books such reserves as may be required pursuant to Argentine GAAP; (iii) pledges and deposits in connection with workers’ compensation, unemployment insurance and social security benefits, or securing performance, bids, tenders, leases, contracts (other than for the repayment of borrowed money), statutory obligations, progress payments, surety and appeal bonds and other obligations of a like nature, incurred in the ordinary course of business; (iv) applicable law, such as mechanics’, carriers’, warehousemen’s, materialmen’s and vendors’ liens, incurred in good faith in the ordinary course of business; (v) zoning restrictions, easements, licenses, covenants, reservations, restrictions on the use of real property or minor irregularities of title incident thereto which do not in the aggregate materially detract from the value of the property or assets of the Issuer and its Subsidiaries, taken as a whole, or materially impair the operation of the business of the Issuer and its Subsidiaries, taken as a whole; and (vi) law to secure payment of customs duties in connection with the importation of goods.

“Permitted Receivables Transaction” means any sale, discount, conveyance or other disposition for cash or Cash Equivalents of receivables that (i) is made without representation or warranty (except for representations and warranties normally and customarily given by sellers and servicers in connection with non-recourse cash sales of receivables), (ii) is made pursuant to good faith bona fide transactions with third parties other than Affiliates of the Issuer or any Restricted Subsidiary, (iii) in respect of which the Issuer and the Restricted Subsidiaries neither incur nor accept any obligation other than (x) obligations in respect of representations and warranties as described in clause (i) above and (y) any agreement to service such receivables for and on behalf of the purchaser of such receivables, and (iv) the Issuer in good faith accounts for as, and intends that such transaction will be characterized under Argentine GAAP as, a “true sale” and not a liability or secured financing.

“Permitted Stockholders” means (x) with respect to the Issuer, each of Roggio and the Benito Roggio Foundation and (y) with respect to the Parent, Mr. Aldo Roggio (or his heirs) and one or more of Sergio Oscar Roggio, Alejandro Carlos Roggio or Graciela Amalia Roggio de Lejarza, or their respective heirs.

“Person” means any individual, corporation, partnership, joint venture, trust, unincorporated organization or government or any agency or political subdivision thereof.

“Polledo Transaction” means the several transfers of Capital Stock and other assets set forth in that certain agreement dated January 7, 1997 among Polledo, Caminos and the Issuer, as in effect on the Issue Date; provided, however, that no material provision of such agreement shall be amended, modified or waived in a manner adverse to the Issuer or the holders.

“Preferred Stock” means, with respect to any Person, (i) Disqualified Stock of such Person and (ii) any and all shares, interests, participations or other equivalents (however designated) of such Person’s preferred or preference stock or shares whether now outstanding, or issued after the Issue Date to the extent it carries any preference in respect of the distribution of assets in the event of a liquidation or insolvency of such Person as compared with any other Capital Stock of such Person.

“Pro Rata Credit Support Indebtedness” means Indebtedness of the Issuer or a Guarantor in the form of guarantees, letters of credit, banker’s acceptances or similar credit transactions incurred by the Issuer or such Guarantor (i) with respect to Indebtedness (“Underlying Indebtedness”) of a Minority Investee, (ii) in which the maximum liability of the Issuer or such Guarantor outstanding at any time is in an amount not in excess of a percentage of the Underlying Indebtedness equal to the percentage (the “Issuer’s Ownership Percentage”) of such Minority Investee’s total equity capital directly or indirectly owned by the Issuer at such time and (iii) for which the Underlying Indebtedness is guaranteed by or on behalf of other owners of such Minority Investee to the extent of (x) 100% of such Underlying Indebtedness minus (y) the Issuer’s Ownership Percentage of such Underlying Indebtedness; provided that Pro Rata Credit Support Indebtedness in an aggregate amount at any one time outstanding of U.S.$5.0 million may be incurred without complying with the preceding clause (ii) or (iii).

“Restricted Payment” means any of the following: (i) the declaration or payment of any dividend or any other distribution or payment on or in respect of Capital Stock of the Issuer to the direct or indirect holders (in their capacity as such) of Capital Stock of the Issuer (other than dividends or distributions payable solely in Capital Stock (other than Disqualified Stock) or in options, warrants or other rights to purchase Capital Stock (other than Disqualified Stock), and dividends or distributions payable to a Wholly Owned Restricted Subsidiary of the Issuer), (ii) the purchase, redemption or other acquisition or retirement for value of any Capital Stock of the Issuer or any Restricted Subsidiary (other than any such Capital Stock owned by the Issuer or a Restricted Subsidiary of the Issuer), (iii) the making of any Investment in any Person, other than a Permitted Investment, or (iv) the repayment by the Issuer or any Guarantor of Pro Rata Credit Support Indebtedness.

“Restricted Subsidiary” means any direct or indirect Subsidiary of the Issuer, other than any Unrestricted Subsidiary.

“Revolving Credit Agreement” means (i) the Revolving Credit Facility Agreement to be entered into among the Issuer and certain of the Guarantors, as Borrowers and Citibank, N.A. and Banco de Galicia y Buenos Aires, as Lenders, pursuant to that certain Commitment Letter dated May 2, 1997, (ii) any one or more additional credit agreements (which may include or consist of revolving credits) between the Issuer or any Restricted Subsidiary and one or more banks or other financial institutions providing financing for the business of the Issuer and the Restricted Subsidiaries and (iii) any replacements, renewals or refinancings of the foregoing.

“S&P” means Standard & Poor’s Rating Group, a division of McGraw Hill, Inc., and its successors.

“Self-Liquidating Financings” means extensions of credit made to (i) BRH by Banco de la Provincia de Buenos Aires in an aggregate principal amount totaling Ps.10.6 million to finance the construction of various public projects in such province and (ii) Metrovías S.A. by Banco de la Nación Argentina for U.S.$8.1 million to finance, in part, the purchase of Japanese rail coaches, which, in each case, have been granted concurrently with the creation in favor of the Issuer or its Subsidiaries of a payment obligation by an Argentine federal, provincial or municipal government or agency thereof on terms which are substantially similar to the repayment terms contained in such extensions of credit.

“Specified Non-Recourse Debt” means Indebtedness of Covicentro (i) as to which neither the Issuer nor any of its Restricted Subsidiaries (other than Covicentro and any Restricted Subsidiary of Covicentro) (a) provides direct credit support (including any undertaking, agreement or instrument that would constitute Indebtedness), or (b) is directly or indirectly liable (as a guarantor or otherwise), (ii) as to which the lenders have been notified in writing that they will not have any recourse to the stock or assets of the Issuer or any of the Restricted Subsidiaries (other than Covicentro) and (iii) is incurred for the purpose of financing the Covicentro Expansion Project.

“Subsidiary” means, with respect to any Person, (i) any corporation of which the outstanding Capital Stock having at least a majority of the votes entitled to be cast in the election of directors shall at the time be owned, directly or indirectly, by such Person or (ii) any other Person of which at least a majority of voting interest is at the time, directly or indirectly, owned by such Person; provided, however, that any Person used solely as a special purpose entity to conduct a Permitted Receivables Transaction shall not be, for purposes of the Existing Indenture, a Subsidiary.

“Underlying Indebtedness” has the meaning specified within the definition of “Pro Rata Credit Support Indebtedness.”

“Unrestricted Subsidiary” means any Subsidiary of the Issuer (other than a Guarantor) designated as such pursuant to and in compliance with the covenant described under “— Limitation on Designations of Unrestricted Subsidiaries.” Any such designation may be revoked by a Board Resolution of the Issuer delivered to the Trustee, subject to the provisions of such covenant.

“U.S. Dollar” means such lawful coin or currency of the United States of America as shall at the time of payment be legal tender for the payment of public and private debts.

“U.S. Dollar Equivalent” means, with respect to any monetary amount in a currency other than U.S. Dollars, at any time for the determination thereof, the amount of U.S. Dollars obtained by converting such foreign currency involved in such computation into U.S. Dollars at the spot rate for the purchase of U.S. Dollars with the applicable foreign currency as quoted by Reuters at approximately 11:00 a.m. (New York time) on the date not more than two business days prior to such determination. For purposes of determining whether any Indebtedness can be incurred (including Permitted Indebtedness), any Investment can be made and any Affiliate Transaction can be undertaken (a “Tested Transaction”), the “U.S. Dollar Equivalent” of such Indebtedness, Investment or Affiliate Transaction shall be determined on the date incurred, made or undertaken, and no subsequent change in the U.S. Dollar Equivalent shall cause such Tested Transaction to have been incurred, made or undertaken in violation of the Existing Indenture.

“Voting Stock” is defined to mean, with respect to any Person, Capital Stock of any class or kind ordinarily having the power to vote for the election of board of directors members, managing directors, managers or other voting members of the governing body of such Person.

“Wholly Owned Restricted Subsidiary” means any Restricted Subsidiary, at least 95% of the Capital Stock of which is owned by the Issuer, by a Wholly Owned Restricted Subsidiary or by the Issuer and a Wholly Owned Restricted Subsidiary.

Book-Entry; Delivery and Form

Existing Notes offered and sold in reliance on Regulation S were initially represented by a single, permanent Global Existing Note (as hereinafter defined) in definitive, fully registered book-entry form (the “Regulation S Global Existing Note”) which was registered in the name of a nominee of DTC and deposited on behalf of the purchasers of the Existing Notes represented thereby with the Trustee as custodian for DTC for credit to the respective accounts of the purchasers (or to such other accounts as they may direct) at the Euroclear System (“Euroclear”) or Cedel Bank société anonyme (“Cedel”). Prior to the 40th day after the later of the commencement of the Exchange Offering and the Issue Date, interests in the Regulation S Global Existing Note may only be held through Euroclear or Cedel, unless delivery is made through the Rule 144A Global Existing Note in accordance with the certification requirements described below.

Existing Notes offered and sold to “qualified institutional buyers” in reliance on Rule 144A under the Securities Act were represented by a single, permanent Global Existing Note in definitive, fully registered book‑entry form (the “Rule 144A Global Existing Note”; and together with the Regulation S Global Existing Note, the “Global Existing Notes”) which was registered in the name of a nominee of DTC and deposited on behalf of the purchasers of the Existing Notes represented thereby with the Trustee as custodian for DTC for credit to the respective accounts of the purchasers (or to such other accounts as they may direct) at DTC.

Existing Notes offered and sold to institutional “accredited investors” as defined in Rule 501(a)(1), (2), (3) and (7) under the Securities Act will be delivered in certificated fully registered form only, in minimum denominations of U.S.$250,000 (the “Restricted Certificated Existing Notes”; and together with the Rule 144A Global Existing Note, the “Restricted Existing Notes”).

Transfers of interests in the Restricted Existing Notes will be subject to certain restrictions set forth therein and described under “Important Notice.” In certain circumstances, as described below, transfers may be made as a result of which the transfer restrictions no longer apply. In certain circumstances, owners of beneficial interests in Global Existing Notes will be entitled to receive physical delivery of Certificated Existing Notes in fully registered definitive form. The Existing Notes were not issuable in bearer form. See “— Certificated Existing Notes.”

The Existing Notes will be issued only in fully registered form, in denominations of U.S.$1,000 and integral multiples of U.S.$1,000 in excess thereof. Such denominations are referred to herein as “Authorized Denominations.” No service charge will be made for any registration of transfer or exchange of Existing Notes. The Existing Notes are registered instruments, title to which passes upon registration of the transfer on the books of the Registrar in accordance with the terms of the Existing Indenture.

Global Existing Notes

Upon the issuance of the Global Existing Notes, DTC or its custodian credited, on its internal system, the respective principal amount of the individual beneficial interests represented by such Global Existing Note to the accounts of persons who have accounts with such depositary. Such accounts initially were designated by or on behalf of the Initial Purchaser. Ownership of beneficial interests in a Global Existing Note were limited to persons who were members of, or participants in, DTC (the “Agent Members”) or persons who held interests through Agent Members. Ownership of beneficial interests in the Global Existing Notes were shown on, and the transfer of that ownership was effected only through, records maintained by DTC or its nominee (with respect to interests of Agent Members) and the records of Agent Members (with respect to interests of persons other than Agent Members). QIBs may hold their interests in the Global Existing Notes directly through DTC, if they are Agent Members, or indirectly through organizations that are Agent Members.

So long as DTC, or its nominee, is a registered holder of a Global Existing Note, DTC or such nominee, as the case may be, will be considered the absolute owner or holder of the Existing Notes represented by such Global Existing Note for all purposes under the Existing Indenture and the Existing Notes, and Agent Members, as well as any other persons on whose behalf Agent Members may act (including Euroclear and Cedel and account holders and participants therein), will have no rights under the Existing Indenture or under a Global Existing Note. Owners of beneficial interests in a Global Existing Note will not be considered to be the owners or holders of any Existing Notes under the Existing Indenture or the Existing Notes. In addition, no beneficial owner of an interest in a Global Existing Note will be able to exchange or transfer that interest, except in accordance with the applicable procedures of DTC, Euroclear and Cedel, in each case to the extent applicable (the “Applicable Procedures”).

Investors may hold their interests in the Regulation S Global Existing Note directly through Cedel or Euroclear, if they are participants in such systems, or indirectly through organizations that are participants in such systems. Beginning 40 days after the later of the commencement of the Exchange Offering and the Issue Date (but no earlier), investors may also hold such interests through organizations other than Cedel or Euroclear that are participants in the DTC system. Cedel and Euroclear will hold such interests in the Regulation S Global Existing Note on behalf of their participants through customers’ securities accounts in their respective names on the books of their respective depositaries, which in turn will hold such interests in the Regulation S Global Existing Note in customers’ securities accounts in the depositaries’ names on the books of DTC.

Payments in respect of each Global Existing Note registered in the name of DTC’s nominee will be made to the order of DTC’s nominee as the registered owner of such Global Existing Note. Neither the Trustee nor we will have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial interests in the Global Existing Notes or for maintaining, supervising or reviewing any records relating to such beneficial interests.

We expect that DTC or its nominee, upon receipt of any payment of principal or interest in respect of a Global Existing Note, will immediately credit the accounts of Agent Members with payments in the amounts proportionate to their respective beneficial interest in the principal amount of such Global Existing Note as shown on the records of DTC or its nominee. We also expect that payments by Agent Members to owners of beneficial interest in such Global Existing Note held through such Agent Members will be governed by standing instructions and customary practices, as is now the case with securities held for the accounts of customers registered in the names of nominees for such customers. Such payments will be the responsibility of such Agent Members.

Transfers between participants in DTC will be effected in the ordinary way in accordance with the Applicable Procedures and will be settled in same-day funds. Transfers between participants in Euroclear and Cedel will be effected in the ordinary way in accordance with their respective rules and operating procedures.

DTC has advised us that it will take any action permitted to be taken by a holder of Existing Notes only at the direction of one or more Agent Members to whose account the DTC interests in the Global Existing Notes is credited and only in respect of such portion of the aggregate principal amount of Existing Notes as to which such Agent Member or Agent Members has or have given such direction, including the presentation of Existing Notes in connection with any Registered Exchange Offer. See “— Certain Registration and Exchange Rights.”

We understand that DTC is a limited purpose trust company organized under the laws of the State of New York, a “banking organization” within the meaning of New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the Uniform Commercial Code and a “Clearing Agency” registered pursuant to the provisions of Section 17A of the Exchange Act. DTC was created to hold securities for its participants and facilitate the clearance and settlement of securities transactions between participants through electronic book-entry changes in accounts of its participants, thereby eliminating the need for physical movement of certificates. Participants include securities brokers and dealers, banks, trust companies and clearing corporations and certain other organizations. Indirect access to the DTC system is available to others such as banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship with a participant, either directly or indirectly (“indirect participants”).

Although DTC, Euroclear and Cedel are expected to follow the foregoing procedures in order to facilitate transfers of interests in the Global Existing Notes among participants of DTC, Euroclear and Cedel, they are under no obligation to perform or continue to perform such procedures, and such procedures may be discontinued at any time. Neither the Trustee nor we will have any responsibility for the performance by DTC, Euroclear or Cedel or their respective participants or indirect participants of their respective obligations under the rules and procedures governing their operations.

Certificated Existing Notes

Existing Notes originally purchased by or transferred to institutional “accredited investors” which are not QIBs within the meaning of Rule 144A of the Securities Act will be issued as Certificated Existing Notes. Upon transfer of Certificated Existing Notes to a QIB or in an offshore transaction under Rule 903 or 904 under Regulation S, such Certificated Existing Notes may be transferred to the Rule 144A Global Existing Note or the Regulation S Global Existing Note, as the case may be, upon delivery of appropriate certifications to the Trustee.

In addition, interests in the Regulation S Global Existing Note and the Rule 144A Global Existing Note will be exchangeable or transferable for Certificated Existing Notes if (i) DTC notifies us that it is unwilling or unable to continue as depositary for such Global Existing Notes or DTC ceases to be a “Clearing Agency” registered under the Exchange Act, and a successor depositary is not appointed by us within 90 days, or (ii) an Event of Default has occurred and is continuing with respect to such Existing Notes and Existing holders who hold more than 25% in aggregate principal amount of the Existing Notes at the time outstanding represented by the Global Existing Notes advise the Trustee through DTC in writing that the continuation of a book-entry system through DTC (or a successor thereto) with respect to the Global Existing Notes is no longer required. Upon the occurrence of any of the events described in the preceding sentence, we will cause the appropriate Certificated Existing Notes to be delivered. In the case of Certificated Existing Notes issued in exchange for the Rule 144A Global Existing Notes, such Certificated Existing Notes shall bear the legend set forth under the heading “Important Notice.” Upon the transfer, exchange or replacement of Existing Notes bearing such legend, or upon specific request for removal of such legend, we shall deliver only Existing Notes that bear such legend, or shall refuse to remove such legend, as the case may be, unless there is delivered to the Trustee and us a certificate in the form provided in the Existing Indenture or such satisfactory evidence as may reasonably be required by us, which may include an opinion of United States counsel, that neither the legend nor the restrictions on transfer set forth therein are required to ensure compliance with the provisions of the Securities Act. Certificated Existing Notes will be exchangeable or transferable for interests in other Certificated Existing Notes as described under “— Replacement, Exchange and Transfers” below.

Pursuant to Argentine Law No. 24,587, effective November 22, 1995, Argentine private corporations may only issue registered securities and may not issue bearer-form securities.

Replacement, Exchange and Transfers

If any Existing Note at any time is mutilated, defaced, destroyed, stolen or lost, such Existing Note may be replaced at the office of the Trustee, upon provision of evidence satisfactory to the Trustee and us that such Existing Note was destroyed, stolen or lost, together with such indemnity as we and the Trustee may require. Mutilated or defaced Existing Notes must be surrendered before replacements will be issued.

Before the 40th day after the later of the commencement of the Exchange Offering and the Issue Date, transfers by an owner of a beneficial interest in the Regulation S Global Existing Note to a transferee who takes delivery of such interests through the Rule 144A Global Existing Note will be made only in accordance with the Applicable Procedures and upon receipt by the Trustee of a written certification from the transferor of the beneficial interest in the form provided in the Existing Indenture to the effect that such transfer is being made to a person whom the transferor reasonably believes is a QIB within the meaning of Rule 144A in a transaction meeting the requirements of Rule 144A and in accordance with the applicable securities laws of any state of the United States or any other jurisdiction. After such 40th day, such certification requirement will no longer apply to such transfers.

Transfers by an owner of a beneficial interest in the Rule 144A Global Existing Note to a transferee who takes delivery of such interest through the Regulation S Global Existing Note, whether before, on or after the 40th day after the later of the commencement of the Exchange Offering and the Issue Date, will be made only upon receipt by the Trustee of a certification in the form set forth in the Existing Indenture to the effect that such transfer is being made in accordance with Regulation S. Transfers of Certificated Existing Notes held by institutional “accredited investors” to persons who will hold through the Rule 144A Global Existing Note or the Regulation S Global Existing Note will be subject to certifications provided by the Trustee.

Any beneficial interest in one of the Global Existing Notes that is transferred to a person who takes delivery in the form of an interest in the other Global Existing Note will, upon transfer, cease to be an interest in such Global Existing Note and become an interest in the other Global Existing Note and, accordingly, will thereafter be subject to all transfer restrictions, if any, and other procedures applicable to beneficial interests in such other Global Existing Note for as long as it remains such an interest. Except in the limited circumstances described above under “— Certificated Existing Notes,” owners of beneficial interests in Global Existing Notes will not be entitled to receive physical delivery of Certificated Existing Notes.

Certificated Existing Notes may be exchanged or transferred in whole or in part in the principal amount of Authorized Denominations by surrendering such Certificated Existing Notes at the office of the Trustee or any Transfer Agent with a written instrument of transfer as provided in the Existing Indenture. In addition, if the Certificated Existing Notes being exchanged or transferred contain a legend, additional certifications to the effect that such exchange or transfer is in compliance with the restrictions contained in such legend may be required.

Certain Registration and Exchange Rights

The Issuer and the Guarantors (the “Registrants”) have entered into a registration rights agreement (the “Registration Rights Agreement”) pursuant to which the Registrants have agreed, for the benefit of the holders of the Existing Notes, that they will, at their cost, file a registration statement (the “Exchange Offer Registration Statement”) with respect to an offer to exchange the Existing Notes for debt securities of the Issuer (the “Exchange Existing Notes”) registered under the Securities Act with terms substantially identical to those of the Existing Notes, including the Guarantees of each Guarantor (except that the Exchange Existing Notes will not contain terms with respect to transfer restrictions under the Securities Act) (the “Exchange Offer”), upon the occurrence of any Exchange Offer Triggering Event (as defined below).

If (i) the Registrants fail to file within 30 days after any Exchange Offer Triggering Event, or cause to become effective under the Securities Act within 150 days after any Exchange Offer Triggering Event, the Exchange Offer Registration Statement; (ii) the Registrants fail to consummate the Exchange Offer within 30 days of the date on which the Exchange Offer Registration Statement was declared effective by the SEC; or (iii) the Exchange Offer Registration Statement is declared effective but thereafter ceases to be effective or usable in connection with resales of the Existing Notes (each such event referred to in clauses (i) through (iii) above, a “Registration Default”), then the Issuer will be required to pay to each holder of Transfer Restricted Existing Notes (as defined), with respect to the first 90-day period following such Registration Default, additional interest as liquidated damages in cash on each Interest Payment Date in an amount equal to one-half of one percent (.5%) per annum of the principal amount of Transfer Restricted Existing Notes held by such holder. The amount of such additional interest as liquidated damages will increase by an additional one-half of one percent to a maximum of two percent (2.0%) per annum of the principal amount of Transfer Restricted Existing Notes held by such holder for each subsequent 90-day period until such Registration Default has been cured. Upon the consummation of the Exchange Offer, additional interest as liquidated damages would no longer be payable.

Upon the Exchange Offer Registration Statement being declared effective, the Registrants will offer the Exchange Existing Notes in exchange for surrender of the Existing Notes. The Registrants will keep the Exchange Offer open for not less than 30 calendar days (or longer if required by applicable law) after the date notice of the Exchange Offer is mailed to the holders of the Existing Notes. For each Existing Note surrendered to the Issuer pursuant to the Exchange Offer, the holder of such Existing Note will receive an Exchange Existing Note having a principal amount equal to that of the surrendered Existing Note. Under existing SEC interpretations, the Exchange Existing Notes would in general be freely transferable after the Exchange Offer without further registration under the Securities Act; provided that broker-dealers (“Participating Broker‑Dealers”) receiving Exchange Existing Notes in the Exchange Offer will have a prospectus delivery requirement with respect to resales of such Exchange Existing Notes. The SEC has taken the position that Participating Broker-Dealers may fulfill their prospectus delivery requirements with respect to the Exchange Existing Notes (other than a resale of an unsold allotment from the original sale of the Existing Notes) with the prospectus contained in the Exchange Offer Registration Statement. Under the Registration Rights Agreement, the Registrants are required to allow Participating Broker-Dealers and other Persons, if any, with similar prospectus delivery requirements to use the prospectus contained in the Exchange Offer Registration Statement in connection with the resale of such Exchange Existing Notes for a period of 180 calendar days commencing on the consummation of the Exchange Offer.

Each holder of Existing Notes that wishes to exchange such Existing Notes for Exchange Existing Notes in the Exchange Offer will be required to represent that any Exchange Existing Notes to be received by it will be acquired in the ordinary course of its business and that at the time of the commencement of the Exchange Offer it has no arrangement with any Person to participate in the distribution (within the meaning of the Securities Act) of the Exchange Existing Notes.

In the event that (i) applicable interpretations of the staff of the SEC do not permit the Registrants to effect such an Exchange Offer, (ii) the Exchange Offer is not consummated within 180 calendar days after an Exchange Offer Triggering Event, (iii) under certain circumstances, if the Initial Purchaser shall so request, (iv) holders of 25% of the principal amount of Existing Notes are not eligible to participate in the Exchange Offer other than because of any change after the date of this Offering Memorandum in law or in prevailing interpretations of the staff of the SEC or there occurs any such change and because of such change any holder is not eligible to participate in the Exchange Offer, or (v) any holder does not receive freely tradable Exchange Existing Notes in the Exchange Offer, the Registrants will, at their cost, (a) as promptly as practicable, file a shelf registration statement (the “Shelf Registration Statement”) covering resales of the Existing Notes, (b) cause the Shelf Registration Statement to be declared effective under the Securities Act and (c) keep continuously effective the Shelf Registration Statement until three years after its effective date. The Registrants will, in the event the Shelf Registration Statements is filed, provide to each holder of the Existing Notes copies of the prospectus, which is a part of the Shelf Registration Statement, notify each such holder when the Shelf Registration Statement for the Existing Notes has become effective and take certain other actions as are required to permit unrestricted resales of the Existing Notes. A holder of Existing Notes that sells such Existing Notes pursuant to the Shelf Registration Statement generally would be required to be named as a selling security holder in the related prospectus and to deliver a prospectus to purchasers, will be subject to certain of the civil liability provisions under the Securities Act in connection with such sales and will be bound by the provisions of the Registration Rights Agreement which are applicable to such a holder (including certain indemnification obligations).

For purposes of the foregoing, “Exchange Offer Triggering Event” means the consummation by the Issuer or the Parent of an underwritten public offering of Common Stock (acciones ordinarias) or any other debt or equity securities of the Issuer or the Parent which is conducted pursuant to an effective registration statement under the Act or the availability of Financial Statements with respect to the Issuer which comply as to form with the applicable requirements of the Exchange Act.

The summary herein of certain provisions of the Registration Rights Agreement does not purport to be complete and is subject to, and is qualified in its entirety by reference to, all the provisions of the Registration Rights Agreement, a copy of which will be available upon request to the Issuer.

DESCRIPTION OF THE NEW NOTES

The New Notes will be issued under an indenture to be dated as of the Closing Date, or the New Indenture, among us, as Issuer, and BRH and Caminos, as Guarantors, The Bank of New York, as Trustee, or Trustee, Co‑Registrar and Principal Paying Agent, and Banco Río de la Plata S.A., as Registrar, Transfer Agent, Paying Agent and Representative of the Trustee in Argentina. Each of BRH, Caminos and each other Person who becomes a guarantor of the New Notes under the terms of the New Indenture is referred to as a Guarantor and, together, the Guarantors. The terms of the New Notes include those stated in the New Indenture and those made part of the New Indenture by reference to the Trust Indenture Act of 1939 (the “Trust Indenture Act”) as in effect on the date of the New Indenture. The New Notes are subject to all such terms and Holders of the New Notes are referred to the New Indenture and the Trust Indenture Act for a statement thereof. The following summary of certain provisions of the New Indenture does not purport to be complete and is qualified in its entirety by reference to the New Indenture, including the definitions therein of certain terms used below. Copies of the New Indenture are available for inspection at our offices, at the specified offices of the Trustee, at the offices of Banco Río de la Plata S.A., the Trustee’s representative in Buenos Aires, and at the offices of the Paying Agent.

In the following summary the terms “Issuer” or “Clisa” refer to us, excluding our subsidiaries.

General

The New Notes are senior unsecured obligations of the Issuer limited to U.S.$120 million in aggregate principal amount and will mature on June 1, 2012. The New Notes are guaranteed, on a senior basis, by the Guarantors. The New Notes shall bear interest on the principal amount thereof at an annual rate of 6% until the Maturity Date. Except as set forth in the next sentence, on each June 1 and December 1, interest accrued on the then outstanding New Notes shall be paid in cash to the Holder of record at the close of business on May 15 and November 15, respectively, immediately preceding the applicable Interest Payment Date. At the sole discretion of the Issuer, up to 50% of the interest due in 2003 and 2004 may be made in kind and the Issuer shall issue to each Holder an additional New Note in a principal amount equal to the accrued unpaid interest on such Holder’s then outstanding New Notes and due on such Interest Payment Date, upon notice from the Issuer to the Holders not less than thirty (30) days prior to the applicable Interest Payment Date.

The first interest payment date is June 1, 2003, and interest accrues from the date of original issuance. Interest is computed on the basis of a 360‑day year of twelve 30‑day months. The New Notes will be issued only in global and certificated form, without coupons, in denominations of U.S.$1.00 and multiples thereof.

Principal of, premium, if any, and interest on the New Notes are payable in U.S. Dollars (unless the interest is paid in kind), and the New Notes are transferable at the corporate trust office or agency of the Trustee in New York City. In addition, at the option of the Issuer, interest paid in cash may be paid by wire transfer or check mailed to the Person entitled thereto as shown on the register for the New Notes. No service charge will be made for any registration of transfer or exchange of the New Notes. The Trustee will act as Principal Paying Agent, Transfer Agent and Co‑Registrar and Banco Río de la Plata S.A. will act as Registrar, Transfer Agent, Paying Agent and Representative of the Trustee in Argentina. The Issuer may change Principal Paying Agent, any other Paying Agent, Transfer Agent, Registrar or Co‑Registrar, provided that prior notice is given to the Holders. None of the Issuer, any of its Subsidiaries or any of its Affiliates may act as Principal Paying Agent or Paying Agent. The New Notes are Negotiable Obligations under, and will be issued pursuant to and in compliance with all the requirements of, the Negotiable Obligations Law and other applicable Argentine regulations. The public offering of the New Notes in Argentina requires authorization by the CNV. So long as the New Notes are authorized for their public offering in Argentina and the rules of the CNV or other applicable Argentine law so requires, the Issuer shall maintain a Paying Agent, a Transfer Agent and a Registrar in Argentina.

Amortization

The principal amount of the New Notes will be payable in five consecutive, equal annual installments commencing on June 1, 2008 and continuing on June 1 of each year thereafter until June 1, 2012.

Taxation; Redemption for Taxation Reasons

All payments by the Issuer or any Guarantor in respect of the New Notes or any Guarantee shall be made without withholding or deduction for or on account of any present or future taxes, duties, assessments or other governmental charges of whatsoever nature, including penalties, interest and any other liabilities related thereto, or Taxes, imposed or levied by or on behalf of Argentina or any political subdivision or authority thereof or therein having power to tax, unless the Issuer or such Guarantor is compelled by law to deduct or withhold such Taxes, duties, assessments or other governmental charges. In such event, the Issuer or such Guarantor shall pay such additional amounts, or Additional Amounts, as may be necessary to ensure that the net amounts received by the Holders after such withholding or deduction shall equal the respective amounts of principal and interest that would have been receivable in respect of the New Notes in the absence of such withholding or deduction, except that no such Additional Amounts shall be payable in respect of any New Note (i) presented for payment of principal more than 30 days after the later of (x) the date on which such payment first became due and (y) if the full amount payable has not been received in New York City by the Trustee on or prior to such date, the date on which, the full amount having been so received, notice to that effect shall have been given to the Holders by the Trustee, except to the extent that the Holder would have been entitled to such Additional Amounts on presenting such New Note for payment on the last day of the applicable 30‑day period, (ii) if any tax, assessment or other governmental charge is imposed or withheld by reason of the Holder’s failure to comply with a timely request by the Issuer or such Guarantor addressed to such Holder to provide information, documents or other evidence concerning the nationality, residence, identity or connection with Argentina of such Holder or beneficial owner which is required by a statute, treaty, regulation or administrative practice of Argentina as a precondition to exemption from all or part of such tax, assessment or governmental charge, (iii) held by or on behalf of a Holder who is liable for taxes in respect of such New Note by reason of having some connection with Argentina (or any political subdivision or authority thereof) other than the mere acquisition, holding or disposition of any New Note, or the receipt of principal or interest in respect thereof, or (iv) any combination of (i), (ii) or (iii), nor shall Additional Amounts be paid with respect to any payment of the principal of, or any interest on, any New Note to any Holder who is a fiduciary or partnership or other than the sole beneficial owner of such payment to the extent that a beneficiary or settlor or beneficial owner would not have been entitled to any Additional Amounts had such beneficiary or settlor or beneficial owner been the Holder. The Issuer will also (i) make such withholding or deduction as required by applicable law and (ii) remit the full amount deducted or withheld to the relevant authority in accordance with applicable law. The Issuer will furnish copies of receipts evidencing the payment of any Taxes so deducted or withheld by the Trustee within 60 days after the date of such withholding or deduction. The Trustee will make such evidence available to the Holders upon request.

All references herein and in the New Indenture or the New Notes to the principal of or interest on a New Note shall be deemed to include any Additional Amounts payable in connection therewith.

The Issuer and the Guarantors have agreed to pay any present or future stamp, court or documentary taxes or any other excise or property taxes, charges or similar levies that arise in any jurisdiction from the execution, delivery or registration of the New Notes or any other document or instrument referred to in the New Indenture or New Notes, excluding any such taxes, charges or similar levies imposed by any jurisdiction outside of Argentina.

New Notes may be redeemed, at the option of the Issuer, as a whole, but not in part, at any time, upon giving notice to the Holders not less than 30 days nor more than 60 days prior to the date fixed for redemption (which notice shall be irrevocable and shall be given in the manner described in the next succeeding paragraph), at a redemption price equal to 100% of the principal amount thereof, together with interest accrued to the date fixed for redemption and any Additional Amounts payable with respect thereto, if the Issuer determines and certifies to the Trustee immediately prior to the giving of such notice that (i) it has or will become obligated to pay Additional Amounts in respect of such New Notes as a result of any change in or amendment to the laws (or any regulations or rulings promulgated thereunder) of Argentina or any political subdivision or taxing authority thereof or therein affecting taxation or any change in the official position regarding the application or interpretation of such laws, regulations or rulings (including a holding by a court of competent jurisdiction) which change, amendment, application or interpretation becomes effective on or after the date of issuance of such New Notes and (ii) such obligation cannot be avoided by the Issuer’s taking reasonable measures available to it; provided that no such notice of redemption shall be given earlier than 60 days prior to the earliest date on which the Issuer would be obligated to pay such Additional Amounts if a payment in respect of such New Notes were then due. Prior to the giving of any notice of redemption described in this paragraph, the Issuer shall deliver to the Trustee an Officers’ Certificate (together with a copy of an independent Opinion of Counsel to the effect that the Issuer will become obligated to pay Additional Amounts as a result of a change, amendment, official interpretation or application described above), stating that the Issuer is entitled to effect such redemption in accordance with the terms set forth in the New Indenture and setting forth in reasonable detail a statement of the facts relating thereto.

Waiver of Right to Reimbursement for Personal Assets Taxes

In the event that the Issuer or any Guarantor pays any Personal Assets Tax in respect of outstanding New Notes, the Issuer and each Guarantor have agreed to waive any right they may have to seek reimbursement (whether by way of foreclosing on such New Notes, by deduction from payments of principal or interest on such New Notes or otherwise) from Holders or direct owners of the New Notes of any such amounts paid. See “Argentine Taxation.”

Issuer Redemption

New Notes may be redeemed, at the option of the Issuer, as a whole, but not in part, at any time, upon giving irrevocable notice to the Holders not less than 30 days nor more than 60 days prior to the date fixed for redemption, at a redemption price equal to 100% of the principal amount thereof, together with interest accrued to the date fixed for redemption and any Additional Amounts payable with respect thereto.

Change of Control

In the event of a Change of Control of the Issuer or the Parent (the date of such occurrence being the Change of Control Date), the Issuer will notify the Holders in writing of such occurrence and will make an offer to purchase, or the Change of Control Offer, on a business day not later than 60 calendar days following the Change of Control Date, all New Notes then outstanding at a purchase price equal to 101% of the principal amount thereof plus accrued and unpaid interest, if any, from the Change of Control Payment Date. Notice of a Change of Control Offer shall be mailed by the Issuer to the Holders not less than 30 calendar days nor more than 45 calendar days before the Change of Control Payment Date. The Change of Control Offer will remain open for at least 20 Business Days and until the close of business on the Change of Control Payment Date.

The Issuer will comply, to the extent applicable, with the requirements of section 14(e) under the United States Securities Exchange Act of 1934, as amended, known as the Exchange Act, and all other applicable United States and Argentine securities laws or regulations and the applicable rules of the principal securities exchange, if any, on which the New Notes are listed in connection with the repurchase of any New Notes pursuant to a Change of Control Offer.

Ranking and Guarantees

The Indebtedness of the Issuer evidenced by the New Notes will rank pari passu in right of payment with all existing or future Indebtedness of the Issuer. With respect to any secured obligations of the Issuer, such secured obligations will be senior in right of payment to the New Notes with respect to the assets securing such secured obligations. The Issuer’s obligations under the New Notes will be jointly and severally guaranteed by each of the Guarantors, known as the Guarantees. The Guarantees will rank pari passu in right of payment to all existing or future New Indebtedness of each of the Guarantors. With respect to any secured obligations of a Guarantor, such secured obligations will be senior in right of payment to such Guarantor’s obligations under its Guarantee with respect to the assets securing such secured obligations.

Each Guarantor will guarantee on a senior basis, payment in full to each Holder of the New Notes the due and punctual payment of the principal of, premium, if any, and interest on, and all other amounts owing in respect of such New Notes (including any Additional Amounts payable in respect thereof) and under the New Indenture.

Pursuant to each Guarantee, if the Issuer defaults in payment of any amount owing in respect of any New Notes, the Guarantor will be obligated to duly and punctually pay the same. Pursuant to the terms of the New Indenture, each of the Guarantors has agreed that its obligations under its Guarantee will be unconditional, irrespective of the validity, regularity or enforceability of the New Notes or the Indenture, the absence of any action to enforce the same or any other circumstance which might otherwise constitute a legal or equitable discharge of a guarantor.

Certain Covenants

The Indenture will contain the following covenants applicable so long as the New Notes remain outstanding:

Reports

Pursuant to the New Indenture, so long as the New Notes are outstanding, the Issuer will distribute or cause to be distributed to the Holders (i) within 100 days following the end of each fiscal year, an English translation of the consolidated financial statements for such period and the notes thereto in Argentine GAAP, together with an opinion thereon by an internationally recognized independent public accounting firm and (ii) within 60 days following the end of the first three quarters of each of the fiscal year, an English translation of the interim consolidated financial statements for such period, in Argentine GAAP, together with a review report thereon setting forth the results of a limited review of such consolidated financial statements (conducted in accordance with the procedures specified by the appropriate Argentine professional supervisory body for a review of interim financial statements) by an internationally recognized independent accounting firm.

Notices of Default

The Issuer will promptly notify the Trustee by facsimile (receipt confirmed telephonically and promptly thereafter confirmed by mail in writing) and the CNV of the occurrence of any Event of Default, or any condition or event which with the giving of notice, lapse of time or satisfaction of any other condition or any combination of the foregoing would, unless cured or waived, become an Event of Default. Each notice given pursuant to this paragraph shall be accompanied by a certificate of the chief financial officer of the Issuer setting forth the details of the occurrence referred to therein and stating what action the Issuer proposes to take with respect thereto.

Limitation on Additional Indebtedness

The New Indenture provides that the Issuer shall not, and shall not permit any Restricted Subsidiary to, create, incur, assume or issue, directly or indirectly, guarantee or in any manner become, directly or indirectly, liable for or with respect to the payment of (“incur”), or suffer to exist, any Indebtedness (including any Acquired Indebtedness) except for Permitted Indebtedness; provided that the Issuer or any Restricted Subsidiary will be permitted to incur any Indebtedness (including Acquired Indebtedness), if, after giving pro forma effect to such incurrence and any concurrent financing (including the application of the net proceeds therefrom), the Consolidated EBITDA Coverage Ratio of the Issuer determined on a pro forma basis as if any such Indebtedness had been incurred and the proceeds thereof had been applied at the beginning of the period comprising the most recent fiscal quarter for which consolidated financial statements are available, would be equal to or greater than 2.75 to 1.0.

Notwithstanding the foregoing limitation, the Indebtedness set forth in the following clauses (each of which shall be given independent effect) shall be permitted (“Permitted Indebtedness”):

Indebtedness of the Issuer and the Guarantors under the Existing Notes, the New Notes and their respective Guarantees;

Indebtedness of the Issuer and the Restricted Subsidiaries outstanding on the Issue Date;

Indebtedness of the Issuer and the Restricted Subsidiaries under the Revolving Credit Agreement in an aggregate principal amount at any one time outstanding or available not to exceed (x) U.S.$25.0 million minus (y) any amount of the Revolving Credit Agreement permanently repaid as provided in the penultimate sentence of the second paragraph of the covenant described under “— Limitation on Asset Sales”;

Replacements, renewals, refinancings and extensions of outstanding Indebtedness incurred under the proviso to the first paragraph of this description of this covenant and clauses (a) and (b) of this definition of Permitted Indebtedness; provided that any such replacement, renewal, refinancing or extension (including related expenses) shall not exceed the principal amount (plus accrued interest, adjustments to principal (including any adjustments by the Coeficiente de Estabilización de Referencia, or CER, or any other index that may replace it or may be implemented by applicable law to mandatorily adjust the principal amount of any credit for inflation, devaluation or other factor, and any applicable premium thereto) of the Indebtedness being replaced, renewed, refinanced or extended;

Indebtedness of the Issuer or a Restricted Subsidiary incurred in connection with Hedging Obligations of the Issuer or such Restricted Subsidiary pursuant to (i) Interest Rate Agreements in respect of Indebtedness permitted to be incurred by the Issuer or such Restricted Subsidiary pursuant to the Indenture to the extent the notional principal amount of such Indebtedness does not exceed the principal amount of Indebtedness to which such Interest Rate Agreements relate, and (ii) Currency Agreements in respect of foreign exchange exposures incurred by the Issuer or such Restricted Subsidiary in the ordinary course of business;

Capitalized Lease Obligations of the Issuer and the Restricted Subsidiaries in an aggregate amount not to exceed U.S.$5.0 million at any one time outstanding;

Indebtedness in respect of (x) surety bonds, undertakings or instruments issued under Permitted Bonding Facilities which insure the performance by the Issuer, any of its Subsidiaries or any Minority Investee of its obligations under contracts or bids and (y) letters of credit incurred, in each case, which would not otherwise constitute Indebtedness; provided that any Indebtedness of the Issuer or a Restricted Subsidiary arising from a payment made by the issuer of such a surety bond, undertaking, instrument, or letter of credit, or incurred to fund any reimbursement obligation under such a surety bond, undertaking, instrument, or letter of credit, shall be deemed to have been incurred on the date which is 30 days after any such payment by the issuer thereof;

Indebtedness under Government-Backed Investment Program Commitments;

Indebtedness of Covicentro which is Specified Nonrecourse Debt of Covicentro, in an aggregate principal amount at any one time outstanding not to exceed the greater of (i) U.S.$25.0 million, or (ii) 45% of the amounts committed by either the Argentine federal or the applicable provincial government for the Covicentro Expansion Project; provided, however, that in no event shall such Indebtedness exceed, in the aggregate, U.S.$75.0 million at any one time outstanding;

Indebtedness incurred by the Issuer or any Restricted Subsidiary arising from the granting of a Lien on any Investment made in any Project Financing Investee to the extent that the creditor has no claim whatsoever against the Issuer or a Restricted Subsidiary other than to obtain the asset subject to the lien;

Indebtedness in connection with the Indemnity Agreement;

Indebtedness of the Issuer or any Restricted Subsidiary constituting Pro Rata Credit Support Indebtedness,

Indebtedness of the Issuer or any Restricted Subsidiary for receivable financings that do not qualify as Permitted Receivables Transaction in an aggregate principal amount at any one time outstanding not to exceed the aggregate principal amount of accounts receivable, and bonds or other debt instruments issued by, the Republic of Argentina, any province thereof, any other political subdivision thereof or any other agency or instrumentality of any of them which are not related to Government-Backed Investment Program Commitments; and

Indebtedness of the Issuer and the Restricted Subsidiaries (in addition to Indebtedness permitted by paragraphs (a) through (m) of this covenant) in an aggregate principal amount which does not exceed U.S.$20.0 million at any one time outstanding.

Limitation on Restricted Payments

The Indenture provides that the Issuer will not make, and will not cause or permit any of its Restricted Subsidiaries to make, directly or indirectly, any Restricted Payment, unless:

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no Default or Event of Default shall have occurred and be continuing under the New Indenture at the time of and after giving effect to such Restricted Payment; and

immediately after giving effect to such Restricted Payment, the aggregate amount of all Restricted Payments declared or made after the Issue Date does not exceed the sum of (i) 50% of the Issuer’s aggregate cumulative Consolidated Net Income accrued on a cumulative basis during the period (taken as one accounting period) beginning on the first day of the fiscal quarter immediately following the Issue Date and ending on the last day of the most recent fiscal quarter ending prior to the date of such Restricted Payment for which financial statements are available (or in the event such Consolidated Net Income shall be a deficit, minus 100% of such deficit and (ii) the aggregate Net Proceeds, including the Fair Market Value of property other than cash, received by the Issuer either (x) as capital contributions to the Issuer after the Issue Date or (y) from the issuance or sale of Capital Stock (excluding Disqualified Capital Stock, but including Capital Stock issued upon the conversion of convertible debt and from the exercise of options, warrants or rights to purchase Capital Stock (other than Disqualified Capital Stock)) of the Issuer to any Person (other than to a Subsidiary of the Issuer) after the Issue Date and (iii) 100% of the net reduction in Investments (other than Permitted Investments) resulting from payments of interest on Indebtedness, repayments of loans or advances or other transfers of assets, in each case to the Issuer or any Restricted Subsidiary of the Issuer, from the Person in whom such Investment was made (except to the extent that any such amount is included in the calculation of Consolidated Net Income), which have not been applied to reduce the outstanding amount of Investments made pursuant to clause (iii) of the following paragraph, provided that the amount included in this clause (iii) shall not exceed the amount of Investments previously made by the Issuer and its Restricted Subsidiaries in such Person.

The New Indenture also provides that the provisions of this covenant shall not prohibit (i) the payment of any dividend within 60 calendar days after the date of declaration thereof, if at such date of declaration such payment would comply with the provisions of such New Indenture, (ii) Restricted Payment to any Affiliate of the Issuer up to an aggregate principal amount of U.S.$1.5 million per annum, (iii) any Investment constituting a Restricted Payment by the Issuer or any Restricted Subsidiary in any Person made after the Issue Date in an aggregate amount not to exceed U.S.$10.0 million to all such Persons at any one time outstanding (after giving effect to any return of capital in respect of any such Investments that the Issuer has elected to apply to reduce the outstanding Investments made thereunder); and (iv) any Restricted Payment that may arise from the incurrence of any Indebtedness permitted under clause (k) of the covenant described under “—Limitation on Additional Indebtedness.”

For purposes of determining the amount expended for Restricted Payments, cash distributed or invested shall be valued at the face amount thereof and property other than cash shall be valued at its Fair Market Value.

Limitation on Liens

The New Indenture provides that the Issuer will not, and will not permit, cause or suffer any of its Restricted Subsidiaries to, directly or indirectly, incur or suffer to exist any Lien of any kind upon any of its property or assets owned or acquired by it on or after the Issue Date except for the following (each of which clauses shall be given independent effect):

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Liens existing as of the Issue Date;

Permitted Liens;

Liens on the assets or property of the Issuer or a Subsidiary of the Issuer that (i) existed prior to the time such assets or property were acquired by the Issuer or such Subsidiary, (ii) were not incurred as a result of (or in connection with or in anticipation of) such acquisition, and (iii) do not extend to or cover any property or assets of the Issuer or any of its Restricted Subsidiaries other than the property or assets so acquired;

Liens pursuant to real property leases in the ordinary course securing the landlord’s interest under such real property leases;

Liens securing Indebtedness which are permitted to be incurred under clauses (a), (b), (c), (d), (e), (f), (g), (h), (i), (j), (k), (l) and (n) of the covenant described under “— Limitation on Additional Indebtedness;” provided, however, that (i) in the case of Indebtedness permitted pursuant to paragraphs (f) and (h), such Liens do not extend to or cover any property or assets of the Issuer or any of the Restricted Subsidiaries other than the property or assets the acquisition of which were financed by such Indebtedness and (ii) in the case of Indebtedness, permitted pursuant to paragraph (i), such Liens cover only the assets of Covicentro and do not extend to or cover any property or assets of the Issuer or any of its other Restricted Subsidiaries;

Liens securing Indebtedness which are incurred to refinance Indebtedness which has been secured by a Lien permitted under this covenant and which are permitted to be refinanced under paragraph (d) of the covenant described under “— Limitation on Additional Indebtedness;” provided, however, that such Liens do not extend to or cover any property or assets of the Issuer or any of the Restricted Subsidiaries not previously encumbered to secure the Indebtedness so refinanced prior to such refinancing or any other Indebtedness existing as of the Issue Date;

Liens in favor of the Issuer, a Guarantor, any Subsidiary of the Issuer or any Minority Investee;

Liens on accounts receivable of, or any bonds or other debt instruments issued by, the government of the Republic of Argentina, any province thereof, other political subdivision therein or any political subdivision of any of them, as compensation for any obligations or amounts (whether current or past due) owed to the Issuer, a Subsidiary or a Minority Investee, in each case, to secure Indebtedness permitted to be incurred under clause (m) of the covenant described under “—Limitations on Additional Indebtedness;”

Liens on any Investment made by the Issuer or any Restricted Subsidiary in any Project Finance Investee to secure Indebtedness of such Project Finance Investee; and

Liens not otherwise specified in clauses (a) through (i) above, provided, however, that the aggregate amount of Indebtedness secured by such Liens shall not exceed U.S.$10.0 million in aggregate principal amount at any one time outstanding.

Release of Guarantors

If no Default exists or would exist under the New Indenture, concurrently with any sale or disposition (by merger or otherwise) of any Guarantor (other than a transaction subject to the provisions described under “— Limitation on Consolidations, Mergers and Sales of Assets”) by the Issuer or a Restricted Subsidiary to any person that is not an Affiliate of the Issuer or any of the Restricted Subsidiaries or Guarantors which is in compliance with the terms of the New Indenture, such Guarantor will automatically and unconditionally be released from all obligations under its Guarantee.

Limitation on Asset Sales

The New Indenture provides that the Issuer will not, and will not permit any of its Restricted Subsidiaries to, make any Asset Sale unless such Asset Sale is for Fair Market Value. In the event the Issuer or such Restricted Subsidiary receives any Net Cash Proceeds of any Asset Sale, at its option, it may apply such Net Cash Proceeds to investments in assets of a kind then used or usable in any Permitted Business, or Productive Assets.

Within (i) 180 calendar days following the receipt of any cash for the purchase price by the purchaser in connection with an Asset Sale or, (ii) in the event of an Asset Sale to an Affiliate, promptly following the consummation of an Asset Sale, the Issuer or such Restricted Subsidiary will notify the Trustee in writing of such Asset Sale and whether it has elected to apply all or a portion of the Net Cash Proceeds of such Asset Sale to investments in Productive Assets. If the Issuer or such Subsidiary does not elect to apply all or any portion of the Net Cash Proceeds of such Asset Sale to investments in Productive Assets, or if having notified the Trustee of its election to do so, it fails to so apply such Net Cash Proceeds within 270 calendar days following receipt of such Net Cash Proceeds (or, in the case of an Asset Sale to an Affiliate, following the consummation of such Asset Sale) (the Net Cash Proceeds not so applied are hereinafter referred to as Excess Proceeds), the Issuer shall deposit with the Trustee no later than such 270th day, the Net Cash Proceeds of such Asset Sale to be applied by the Trustee to hold in trust to be applied to the payment of principal due on the next Principal Payment Date. Notwithstanding the foregoing, the Excess Proceeds required to be deposited with the Trustee shall be reduced by the amount of any Net Cash Proceeds used by the Issuer or any Restricted Subsidiary on or prior to such 270th day, to repay, permanently reduce commitments under, and reduce the amounts available for future borrowings of Indebtedness incurred pursuant to clauses (b), (c), (e) and (f) of the covenant described under “—Limitation of Indebtedness.” Pending the application of Net Cash Proceeds as provided in this covenant, the Issuer or such Restricted Subsidiary may invest such Net Cash Proceeds on a temporary basis in Permitted Investments of the types specified in clauses (i) through (vi) of the definition of Permitted Investments, or may temporarily repay amounts under the Revolving Credit Agreement.

The New Indenture further provides that the Issuer shall not cause or permit any direct or indirect sale, transfer or redemption of Capital Stock of Metrovías which results in either (x) Metrovías no longer being effectively controlled by the Issuer or (y) Metrovías no longer being a consolidated subsidiary of the Issuer under Argentine GAAP; provided, however, that the foregoing shall not prohibit the Issuer from effecting a sale of all (but not less than all) of the Capital Stock of Metrovías in compliance with all of the provisions of this covenant.

Limitation on Transactions with Affiliates

The New Indenture will provide that the Issuer will not, and will not permit or cause any of its Subsidiaries to, enter into any transaction or series of transactions with or for the benefit of any of their respective Affiliates (each, an “Affiliate Transaction”), except in good faith and on terms that are no less favorable to the Issuer or such Subsidiary, as the case may be, than those that could have been obtained in a comparable transaction on an arm’s-length basis from a Person that is not an Affiliate of the Issuer or such Subsidiary. Notwithstanding the preceding sentence, all Affiliate Transactions (and each series of related Affiliate Transactions which are similar or part of a common plan) involving aggregate payments in excess of U.S.$2.5 million shall be approved by the Board of Directors of the Issuer, such approval to be evidenced by a Board Resolution (and if required pursuant to the definition of Fair Market Value, an opinion of an Independent Financial Advisor) stating that such Board of Directors has determined that such transaction has been made at Fair Market Value. Notwithstanding the foregoing, the restrictions set forth in this covenant shall not apply to (i) transactions with or among Subsidiaries of the Issuer; provided that, in any such case, no officer, director or beneficial holder of 10% or more of any class of Capital Stock of the Issuer shall beneficially own any Capital Stock of any such Subsidiary (otherwise than by such officer’s, director’s or beneficial holder’s interest in the Issuer); (ii) customary directors’ fees, including, without limitation, any management or other fees payable to the Issuer by Metrovías or BRH, indemnification and similar arrangements, consulting fees, employee salaries or benefits, bonuses or legal fees; and (iii) Investments permitted to be made under the covenant “Limitation on Restricted Payments.”

Limitation on Certain Remuneration

The New Indenture provides that the Issuer shall not pay (or permit any of its Subsidiaries to pay) aggregate annual remuneration to the directors (including Managing Directors) and executive officers of the Issuer in any given fiscal year which is in excess of the greatest of (i) U.S.$2.0 million (as adjusted for changes in the “Consumer Price Index — All Items” of the United States since the Issue Date), (ii) Ps.2.0 million (as adjusted for changes in the “Consumer Price Index” of Argentina since the Issue Date) and (iii) Ps.2.0 million plus 8.0% of the Issuer’s Consolidated EBITDA in excess of Ps.50.0 million for such fiscal year; provided, however, that compensation attributable to the value of options to purchase our Common Stock shall be excluded from the calculation of such aggregate remuneration.

Special Covenants of the Guarantors

The New Indenture provides that each Guarantor of the New Notes will comply with each covenant of the Issuer contained in such New Indenture, to the extent applicable.

Limitation on Consolidations, Mergers and Sales of Assets

The Issuer will not consolidate with or merge with or into any other person or sell, assign, convey, lease or transfer all or substantially all of its properties and assets in a single transaction or through a series of transactions, and the Issuer will not permit any of its Restricted Subsidiaries to enter into any such transaction or series of transactions, if such transaction or series of transactions would result in a sale, conveyance, lease, transfer or other disposition of all or substantially all of the properties and assets of the Issuer and its Restricted Subsidiaries taken as a whole, unless (i) the resulting, surviving or transferee person (the “surviving entity”) is (x) the Issuer, (y) a sociedad anónima organized under the laws of the Republic of Argentina or (z) a corporation organized and existing under the laws of the United States or any state thereof or the District of Columbia; (ii) the surviving entity shall have expressly assumed, by a supplemental indenture executed and delivered to the Trustee, in form and substance reasonably satisfactory to the Trustee, all of the obligations of the Issuer under the New Indenture and the New Notes; (iii) immediately after giving effect to such transaction or series of transactions on a pro forma basis (including, without limitation, giving effect to any Indebtedness incurred or anticipated to be incurred in connection with or in respect of such transaction or series of transactions), no Default or Event of Default shall have occurred and be continuing under the New Indenture; (iv) the surviving entity shall, immediately after giving effect to such transaction or series of transactions on a pro forma basis (including, without limitation, giving effect to any Indebtedness incurred or anticipated to be incurred in connection with or in respect of the transaction or series of transactions), have a Consolidated Net Worth equal to or greater than the Consolidated Net Worth of the Issuer or of the relevant Restricted Subsidiary, as the case may be, immediately prior to such transaction or series of transactions; (v) except in the case of a transaction or series of transactions involving only the Issuer and one or more of its Restricted Subsidiaries, immediately after giving effect to such transaction or series of transactions on a pro forma basis, the surviving entity would be able to incur at least U.S.$1.00 of additional Indebtedness under the covenant described under “— Limitation on Additional Indebtedness”; (vi) the surviving entity shall have delivered to the Trustee under the New Indenture an Officer’s Certificate and an Opinion of Counsel, each stating that such consolidation, merger, conveyance, transfer or lease and, if a supplemental indenture is required in connection with such transaction or series of transactions, such supplemental indenture complies with this covenant and that all conditions precedent in the New Indenture relating to the transaction or series of transactions have been satisfied; and (vii) each Guarantor under the New Indenture shall have confirmed, by supplemental indenture, that its Guarantee shall apply to the surviving entity’s obligations under the New Indenture, as modified by such supplemental indenture and the New Notes, and shall have confirmed the due and punctual performance of such Guarantee and every covenant in the New Indenture on the part of such Guarantor to be performed or observed.

Events of Default

Each of the following is an Event of Default (“Event of Default”) under the New Indenture:

(i) default in the payment of any interest on the New Notes when it becomes due and payable, and continuance of any such default for a period of 30 calendar days;

(ii) default in the payment of the principal of, or premium, if any, on the New Notes, when due, at maturity, upon redemption, pursuant to an offer to purchase required under the New Indenture (including the failure to make any required repurchase in the event of a Change of Control), by acceleration or otherwise;

(iii) default in the performance, or breach, of any covenant of the Issuer or any Guarantor contained in the New Notes, any Guarantees of the New Notes or the New Indenture (other than defaults specified in clauses (i) or (ii) above), and continuance of such default or breach for a period of 30 calendar days after written notice to the Issuer by the Trustee or to the Issuer and the Trustee by the Holders of at least 25% in aggregate principal amount of the outstanding New Notes;

(iv) failure by the Issuer, any Restricted Subsidiary or any Guarantor (a) to make any payment when due (including, with respect to any interest payment only, the giving effect to any applicable grace period) with respect to any Indebtedness (other than the Existing Notes) in an aggregate principal amount of U.S.$10.0 million or more under one or more classes or issues of Indebtedness (other than the Existing Notes); or (b) to perform any term, covenant, condition, or provision of one or more classes or issues of other Indebtedness (other than the Existing Notes) in an aggregate principal amount of U.S.$10.0 million or more, which failure, in the case of this clause (b), results in an acceleration of the maturity thereof;

(v) one or more judgments, orders or decrees for the payment of money (other than orders or judgments for the payment of any amounts due and payable under the Existing Notes) in excess of U.S.$10.0 million (to the extent not covered by insurance), either individually or in an aggregate amount, shall be entered against the Issuer, any Restricted Subsidiary or any Guarantor or any of their respective properties and shall not be discharged or fully bonded and there shall have been a period of 60 calendar days during which a stay of enforcement of such judgment or order, by reason of pending appeal or otherwise, shall not be in effect;

(vi) the Issuer or any of its Material Restricted Subsidiaries or any Guarantor shall (a) apply for or consent to the appointment of a receiver, trustee, liquidator or the like for itself or for its property, (b) be unable or admit in writing its inability to pay its debts as they mature, (c) make a general assignment for the benefit of its creditors, (d) be adjudicated bankrupt or insolvent, (e) file a voluntary petition in bankruptcy or a petition or an answer seeking reorganization or an arrangement with creditors or a judicial or extrajudicial “concurso preventivo de acreedores” or seeking to take advantage of any applicable insolvency law, (f) file any answer admitting the material allegation of a petition filed against it in any bankruptcy, reorganization or insolvency proceeding, or (g) take any corporate action for the purpose of effecting any of the foregoing or the equivalent thereof under the laws of Argentina;

(vii) without its application, approval or consent, a proceeding shall be instituted in any court of competent jurisdiction seeking in respect of the Issuer or any of its Material Restricted Subsidiaries or any Guarantor: adjudication in bankruptcy, reorganization, dissolution, winding-up, liquidation, a composition or arrangement with creditors, a re-adjustment of debt, the appointment of a trustee, receiver, liquidator or the like of the Issuer or any of its Material Restricted Subsidiaries or any Guarantor or of all or any of the assets thereof or other like relief in respect of the Issuer or any of its Material Restricted Subsidiaries or any Guarantor under any applicable bankruptcy or insolvency law; and either (a) such proceeding shall not be actively contested by the Issuer or such Material Restricted Subsidiaries or any Guarantor in good faith, or (b) such proceeding shall continue undismissed for any period of 60 consecutive calendar days, or (c) any order, judgment or decree shall be entered by any court of competent jurisdiction to effect any of the foregoing;

(viii) the authorization of the CNV pursuant to Law No. 17,811, as amended, and the rules and regulations of the CNV thereunder shall cease to be in full force and effect;

(ix) any authorization, consent, approval, license, filing or registration now or hereafter necessary to enable the Issuer or any Guarantor to perform its obligations under the New Indenture, or any law, rule or regulation necessary for a Holder to enforce the Issuer’s or any Guarantor’s obligations under the New Indenture in accordance with the terms of the New Indenture, shall be revoked, withdrawn, withheld or modified or shall cease to remain in full force and effect, or it shall become unlawful for the Issuer or any Guarantor to perform its obligations thereunder or any governmental agency shall contest the legality or validity of any of the New Notes in a formal administrative, legislative or judicial proceeding;

(x) any condemnation, seizure, compulsory purchase or expropriation by any governmental authority or agency of assets of the Issuer or any Restricted Subsidiary or Guarantor which, in the aggregate, would be reasonably likely to have a material adverse effect upon the business and results of operations of the Issuer or such Guarantor, as the case may be;

(xi) a general moratorium shall be agreed or declared in respect of the payment or performance of the obligations of the Issuer or any of its Restricted Subsidiaries; and

(xii) any Guarantee shall be held in any judicial proceeding to be unenforceable or invalid or shall cease for any reason to be in full force and effect or any Guarantor, or any Person acting on behalf of any Guarantor, shall deny or disaffirm its obligations under its Guarantee.

If an Event of Default (other than an Event of Default specified in clauses (vi) or (vii) with respect to the Issuer or (viii) or (xi) above) occurs and is continuing, then the Holders of at least 50% in aggregate principal amount of the outstanding New Notes may, by written notice, and the Trustee upon the request of the Holders of not less than 50% in aggregate principal amount of the outstanding New Notes shall, declare the principal of, premium, if any, accrued interest and any other amounts (including Additional Amounts, if any), on all the New Notes to be immediately due and payable. Upon any such declaration, such amounts shall become due and payable immediately. If an Event of Default specified in clauses (vi) or (vii) with respect to the Issuer or (viii) or (xi) above occurs and is continuing, then the principal of, premium, if any, accrued interest and any other amounts (including Additional Amounts, if any) on all the New Notes shall ipso facto become and be immediately due and payable without any declaration or other act on the part of the Trustee or any Holder.

Past defaults under the New Indenture (except a default in the payment of the principal of, premium, if any, or interest on any New Note issued thereunder or in respect of a covenant or a provision which cannot be modified or amended without the consent of all Holders of such New Notes) may be waived by the Holders of a majority in aggregate principal amount of the outstanding New Notes.

No Holder of any New Note has any right to institute any proceeding with respect to the New Indenture or any remedy thereunder, unless the Holders of at least 50% in aggregate principal amount of the outstanding New Notes have made written request, and offered reasonable indemnity, to the Trustee to institute such proceeding as Trustee, the Trustee has failed to institute such proceeding within 15 calendar days after receipt of such notice and the Trustee has not within such 15-day period received directions inconsistent with such written request by Holders of a majority in aggregate principal amount of the outstanding New Notes. Such limitations do not apply, however, to a suit instituted by a Holder of a New Note for the enforcement of payment of the principal of, premium, if any, accrued interest and any other amounts (including Additional Amounts, if any) on such New Note on or after the respective due dates expressed in such New Note or to institute suit (including any “acción ejecutiva individual” pursuant to Article 29 of the Negotiable Obligations Law of Argentina) for the enforcement of any such payment on or after such respective dates, shall not be impaired or affected without the prior consent of such Holder.

During the existence of an Event of Default under the New Indenture, the Trustee is required to exercise such rights and powers vested in it under the New Indenture and use the same degree of care and skill in its exercise thereof as a prudent Person would exercise under the circumstances in the conduct of such Person’s own affairs. Subject to the provisions of the New Indenture relating to the duties of the Trustee, in case an Event of Default shall occur and be continuing under the New Indenture, the Trustee is not under any obligation to exercise any of its rights or powers under the New Indenture at the request or direction of any of the Holders of the New Notes, unless such Holders shall have offered to the Trustee reasonable security or indemnity. Subject to certain provisions of the New Indenture concerning the rights of the Trustee, the Holders of a majority in aggregate principal amount of the outstanding New Notes have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee under the New Indenture, or exercising any trust or power conferred on the Trustee.

Defeasance

The Issuer may at any time terminate all of its obligations with respect to the New Notes (“defeasance”), except for certain obligations, including those regarding any trust established for a defeasance and obligations to register the transfer or exchange of the New Notes, to replace mutilated, destroyed, lost or stolen New Notes, and to maintain agencies in respect of the New Notes. The Issuer may at any time terminate its obligations under certain covenants set forth in the New Indenture, some of which are described under “— Certain Covenants” above, and, from and after such time, any omission to comply with such obligations shall not constitute a Default or an Event of Default with respect to the New Notes (“covenant defeasance”). In order to exercise either defeasance or covenant defeasance, the Issuer must irrevocably deposit in trust, for the benefit of the Holders of the New Notes with the Trustee, money or U.S. government obligations, or a combination thereof, in such amounts as will be sufficient to pay the principal of, premium, if any, and interest on the New Notes to redemption or maturity and comply with certain other conditions, including the delivery of an opinion as to certain tax matters.

Satisfaction and Discharge

The New Indenture will be discharged and will cease to be of further effect (except as to surviving rights or registration of transfer or exchange of New Notes) as to all outstanding New Notes issued thereunder, when either (a) all such New Notes theretofore authenticated and delivered (except lost, stolen or destroyed New Notes which have been replaced or paid) have been delivered to the Trustee for cancellation or (b) (i) all such New Notes not theretofore delivered to such Trustee for cancellation have become due and payable and the Issuer has irrevocably deposited or caused to be deposited with such Trustee as trust funds in trust for the purpose an amount of money sufficient to pay and discharge the entire indebtedness on such New Notes not theretofore delivered to such Trustee for cancellation, for principal, premium, if any, and accrued interest to the date of maturity or redemption, and (ii) the Issuer has delivered irrevocable instructions to the Trustee to apply the deposited money toward the payment of such New Notes at maturity or the redemption date, as the case may be. In addition, the Issuer must deliver an Officer’s Certificate and an Opinion of Counsel to the Trustee stating that all conditions precedent to satisfaction and discharge have been complied with.

Consents and Waivers

From time to time, the Issuer and the Guarantors, when authorized by resolutions of their respective Boards of Directors, and the Trustee may, without the consent of the Holders of the New Notes, amend, waive or supplement the New Indenture or the New Notes for certain specified purposes, including, among other things, curing ambiguities, defects or inconsistencies, maintaining the qualification of the New Indenture under the Trust Indenture Act, or making any change that does not adversely affect the rights of any Holder of the New Notes issued thereunder; provided, however, that the Issuer and the Guarantors shall have delivered to the Trustee an Opinion of Counsel stating that such change does not adversely affect the rights of any such Holder. Other amendments and modifications of the New Indenture or the New Notes may be made by the Issuer, the Guarantors and the Trustee with the consent of the Holders of not less than a majority of the outstanding aggregate principal amount of the New Notes; provided, however, that no such modification or amendment may, without the consent of the Holder of each outstanding New Note affected thereby, (i) reduce the principal amount of, extend the fixed maturity of, or alter the redemption provisions of the New Notes, (ii) change the currency in which the New Notes or any premium or the interest thereon is payable, (iii) reduce the percentage in outstanding principal amount of the New Notes which must consent to an amendment, supplement or waiver or consent to take any action under the New Notes, the Guarantees or the New Indenture, (iv) impair the right to institute suit for the enforcement of any payment on or with respect to the New Notes or the Guarantees, (v) alter the Issuer’s obligation upon the occurrence of a Change of Control or an Asset Sale to purchase such New Notes in accordance with the New Indenture or waive any default in the performance thereof, (vi) waive a default in payment with respect to the New Notes, (vii) reduce or change the rate or time for payment of interest, Additional Amounts or Additional Interest on the New Notes, (viii) affect the ranking of the New Notes or (ix) except in strict compliance with the terms of the New Indenture, release any Guarantor from any of its obligations under its Guarantee of such New Notes or the New Indenture.

Promptly after the execution by the Issuer and the Trustee of any supplemental indenture, the Issuer or the Trustee is required to give notice thereof as specified in the New Indenture (as described below under “— Notices”), and shall additionally give notice thereof to the CNV, setting forth in general terms the substance of such amendment or modification. Any failure of the Issuer or the Trustee to give such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such supplemental indenture.

Meetings of Holders

The New Indenture contains provisions permitting the Issuer or the Trustee at any time to call meetings of the Holders for the purpose of entering into a supplemental indenture as provided above or approving a modification or amendment to, or obtaining a waiver of, any provision of the New Indenture or the New Notes (an “extraordinary meeting”). In addition, the Issuer or the Trustee shall, upon the request of the Holders of at least 5% in aggregate principal amount of New Notes at the time outstanding, call such a meeting and such meeting shall be convened within 40 days from the date such request is received by the Issuer or the Trustee.

Holders must notify the Trustee of their intention to attend the meeting at least three days prior to the date of such meeting. The Holders, whether present or represented by proxy, entitled to vote 60% in aggregate principal amount of the New Notes at the time outstanding will be required for a quorum at any meeting to adopt a resolution. In the absence of a quorum at any such meeting, the meeting may be adjourned for a period of not less than ten days nor more than 30 days, as determined by the chairman of the meeting. At such adjourned meeting, Holders entitled to vote 30% in aggregate principal amount of the New Notes at the time outstanding shall be required to be present, either in person or by proxy, to constitute a quorum.

At an extraordinary meeting at which the proper quorum is present, (i) any resolution to modify or amend, or to waive compliance with, any of the provisions of the New Notes shall be effectively passed and decided (except for those matters set forth above requiring the consent of the Holder of each outstanding New Note affected thereby) if approved by the persons entitled to vote in excess of a majority in aggregate principal amount of New Notes outstanding and (ii) any resolution to modify or amend, or to waive compliance with, any of the provisions of the New Notes set forth above requiring the consent of the Holder of each outstanding New Note affected thereby shall be effectively passed and decided only if all Holders of the New Notes are present or represented by proxy at such meeting and the unanimous vote of all Holders is obtained with respect to such matter.

The New Indenture also sets forth certain additional requirements as to the credentials necessary for attendance at a meeting of Holders in person or by proxy and as to the procedures to be observed at any such meeting.

Notices

Notices shall be mailed to the Holders of the New Notes at their registered addresses. Notice sent by first-class mail, postage prepaid at a U.S. post office, shall be deemed to have been given, made or served on the date of receipt of such notice by the Holder of the New Notes to whom such notice is addressed.

In addition, the Issuer shall cause all such other publications of such notices as may be required from time to time by applicable Argentine law, including, without limitation, those required under the regulations issued by the CNV, including the event of redemption of the New Notes as contemplated in those terms and conditions.

Issuance of New Notes for Payment of Interest Due

In connection with the payment of interest under the New Notes, in lieu of cash, without the consent of the holders, Clisa may issue additional New Notes with the same terms and conditions as the New Notes (or the same except for the payment of interest scheduled on them and paid prior to the time of their issue). The New Notes will be consolidated, and form a single series with, the outstanding New Notes.

Regarding the Trustee

The Bank of New York, with offices at 101 Barclay Street, Floor 21 West, New York, New York 10286, serves as Trustee under the New Indenture. Banco Río de la Plata S.A., with offices at Bartolomé Mitre, 480, 1036 Buenos Aires, Argentina, serves as representative of the Trustee in Argentina.

The recitals contained in the New Indenture and in the New Notes, except the Trustee’s certificates of authentication, shall be taken as the statements of the Issuer, and the Trustee assumes no responsibility for the correctness of the same, it being understood, however, that pursuant to the obligations imposed on the Trustee by paragraph (c) of Section 13 of the Negotiable Obligations Law, the Trustee has confirmed through the Issuer, the Issuer’s attorneys and accountants and its own attorneys, the accuracy of the information required to be confirmed as set forth in the New Indenture. The Trustee makes no representation as to the validity or sufficiency of the New Indenture or of the New Notes. The Trustee shall not be accountable for the use or application by the Issuer of any of the New Notes or of the proceeds thereof.

Governing Law; Service of Process

The New Indenture, the New Notes and the Guarantees shall be construed in accordance with and governed by the laws of the State of New York without regard to principles of conflict of laws; provided, however, that all matters relating to the due authorization, execution, issuance and delivery of the New Notes and the Guarantees, the capacity of the Issuer or any Guarantor and matters relating to the legal requirements necessary in order for the New Notes to qualify as Negotiable Obligations under Argentine law shall be governed by the Negotiable Obligations Law and other applicable Argentine laws and regulations.

Any suit, action or proceeding against the Issuer or any Guarantor or any of their respective properties, assets or revenues with respect to the New Indenture, the New Notes or any Guarantee, or a Related Proceeding, may be brought in the Supreme Court of the State of New York, County of New York, in the United States District Court for the Southern District of New York, in the courts of Argentina that sit in Buenos Aires, or in the courts of any other jurisdiction as provided by the terms of the New Notes. The Issuer and each Guarantor has consented to the non‑exclusive jurisdiction of each such court for the purposes of any Related Proceeding, and has irrevocably waived, to the fullest extent it may effectively do so, any objection to the laying of venue of any Related Proceeding in any such court and the defense of an inconvenient forum to the maintenance of any Related Proceeding in any such court.

The Issuer and each Guarantor has agreed that service of all writs, process and summonses in any Related Proceeding brought against it in the State of New York may be made upon CT Corporation System in New York City, presently located at 111 Eighth Avenue, New York, New York 10011, the Process Agent, and the Issuer has irrevocably appointed the Process Agent as its agent and true and lawful attorney-in-fact in its name, place and stead to accept such service of any and all such writs, claims, process and summonses, and has agreed that the failure of the Process Agent to give any notice to it of any such service of process shall not impair or affect the validity of such service or of any judgment based thereon. The Issuer and each Guarantor has agreed to maintain at all times an agent reasonably acceptable to the Trustee with an office in New York City to act as Process Agent as aforesaid. Nothing in the New Indenture shall in any way be deemed to limit the ability to serve any such writs, process and summonses in any other manner permitted by applicable law.

Waiver of Immunities

To the extent that the Issuer or any Guarantor or any of their respective revenues, assets or properties shall be entitled, with respect to any Related Proceeding at any time brought against the Issuer or any Guarantor or any of their respective revenues, assets or properties in the courts identified above, to any immunity from suit, from attachment prior to judgment, from attachment in aid of execution of judgment, or from any other legal or judicial process or remedy, and to the extent that in any such jurisdiction there shall be attributed such an immunity, the Issuer and each Guarantor has irrevocably agreed not to claim and has irrevocably waived such immunity to the extent permitted by law (including, without limitation, the Foreign Sovereign Immunities Act of 1976 of the United States) in respect of its obligations under the New Indenture and any New Note. The Issuer and each Guarantor have agreed that final judgment in any such suit, action or proceeding brought in such a court shall be conclusive and binding on them and may be enforced in any court to the jurisdiction of which the Issuer or any Guarantor is subject by a suit upon such judgment, provided that service of process is effected upon the Issuer or such Guarantor in the manner specified above or as otherwise permitted by law.

Judgment Currency

If for the purpose of obtaining judgment in any court it is necessary to convert a sum due under the New Indenture or under the New Notes or the Guarantees from one currency into another currency, the Issuer and each Guarantor have agreed and each Holder agrees, to the fullest extent that they may effectively do so, that the rate of exchange used shall be that at which in accordance with normal banking procedures such Holder could purchase the first currency with such other currency in the city that is the principal financial center of the country of issue of the first currency on the day two Business Days preceding the day on which final judgment is given.

The obligation of the Issuer or any Guarantor in respect of any sum payable by it to the Holders of the New Notes or the Guarantees shall, notwithstanding any judgment in a currency, or the Judgment Currency, other than that in which such sum is denominated in accordance with the applicable provisions of the New Indenture or such New Note or Guarantee, or the Security Currency, be discharged only to the extent that on the Business Day following receipt by such Holder of such New Note or Guarantee of any sum adjudged to be so due in the Judgment Currency, such Holder may in accordance with normal banking procedures purchase the Security Currency with the Judgment Currency; if the amount of the Security Currency so purchased is less than the sum originally due to the Holder of such New Note or Guarantee in the Security Currency (determined in the manner set forth above), the Issuer and each Guarantor has agreed, as a separate obligation and notwithstanding any such judgment, to indemnify the Holder of such New Note or Guarantee against such loss, and if the amount of the Security Currency so purchased exceeds the sum originally due to such Holder, such Holder agrees to remit to the Issuer or the applicable Guarantor such excess, provided that such Holder shall have no obligation to remit any such excess as long as the Issuer or any Guarantor shall have failed to pay such Holder any obligation due and payable under the New Indenture or any New Note or Guarantee, in which case any such excess may be applied to such obligations of the Issuer and the Guarantors under the New Indenture, the New Notes or the Guarantees.

Foreign Exchange Restrictions

Under the terms and conditions of the New Notes and the Guarantees, in the event of any foreign exchange restriction or prohibition in Argentina, any and all payments in respect of the New Notes and the Guarantees will be made in U.S. Dollars through (i) the sale of Floating Rate Bonds due 2005 issued by the Republic of Argentina, or of any other public or private bond issued in U.S. Dollars in Argentina, or (ii) any other legal mechanism for the acquisition of U.S. Dollars in any exchange market. All costs, including any taxes, relative to such operations to obtain U.S. Dollars will be borne by the Issuer and the Guarantors.

Transfer and Exchange

A Holder may transfer or exchange the New Notes in accordance with the New Indenture. The Registrar may require a Holder, among other things, to furnish appropriate endorsements and transfer documents, and to pay any taxes and fees required by law or permitted by the New Indenture. The Registrar is not required to transfer or exchange any New Notes selected for redemption. Also, the Registrar is not required to transfer or exchange any New Notes selected for a period of 15 days before a selection of the New Notes is to be redeemed.

Certain Definitions

Set forth below is a summary of certain defined terms used in the New Indenture. Reference is made to the New Indenture for the full definition of all such terms, as well as any other capitalized terms used herein for which no definition is provided.

“Acquired Indebtedness” means Indebtedness of a Person existing at the time such Person becomes a Restricted Subsidiary of the Issuer or assumed in connection with an Asset Acquisition of such Person, including, without limitation, Indebtedness incurred in connection with, or in anticipation of, (i) such Person’s becoming a Restricted Subsidiary of the Issuer or (ii) such Asset Acquisition.

“Act” means the Securities Act of 1933, as amended.

“Affiliate” means, with respect to any specified Person, any other Person which, directly or indirectly, controls, is controlled by or is under direct or indirect common control with, such specified Person. For the purposes of this definition, “control,” when used with respect to any Person, means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise, and the terms “controlling” and “controlled” have meanings correlative to the foregoing.

“Argentine GAAP” means generally accepted accounting principles in Argentina.

“Argentine Personal Assets Tax” means the personal assets tax (“impuesto a los bienes personales”) set forth under Argentine Law 23,966, as amended from time to time.

“Asset Acquisition” means (i) any capital contribution (by means of transfers of cash or other property to others or payments for property or services for the account or use of others, or otherwise) by the Issuer or any of its Restricted Subsidiaries in any other Person, or purchase or acquisition of Capital Stock, by the Issuer or any of its Restricted Subsidiaries of any other Person, in either case pursuant to which such other Person shall become a Restricted Subsidiary of the Issuer or any of its Restricted Subsidiaries or shall be merged with or into the Issuer or any of its Restricted Subsidiaries or (ii) any acquisition by the Issuer or any of its Restricted Subsidiaries of assets of any Person which constitute substantially all of an operating unit or business of such Person.

“Asset Sale” means any direct or indirect sale, conveyance, transfer, lease or other disposition by the Issuer or a Restricted Subsidiary to any Person (other than the Issuer or any Restricted Subsidiary) in one transaction or a series of related transactions (including by way of sale and leaseback), of (i) any Capital Stock of any Restricted Subsidiary or (ii) any other property or asset of the Issuer or any Restricted Subsidiary of the Issuer, in each case, other than isolated transactions which do not exceed U.S.$1.0 million individually. For the purposes of this definition, the term “Asset Sale” shall not include (a) any disposition of properties and assets of the Issuer or any Restricted Subsidiary that is governed under and complies with the requirements set forth in the covenant described under “— Limitation on Consolidations, Mergers and Sales of Assets” above, (b) any sale by the Issuer of its Capital Stock (other than Disqualified Stock), (c) any sale by a Restricted Subsidiary of its Capital Stock (other than Disqualified Stock) to the extent the Net Proceeds will not have been distributed to the Issuer, (d) sales or other dispositions of equipment that has become obsolete or no longer useful in the business of the Issuer or its Restricted Subsidiaries, or inventory of the Issuer or any Restricted Subsidiaries sold or disposed of in the ordinary course of its business and not in the form of a bulk sale or liquidation of such inventory, (e) sales of property and equipment to SBASE, FEMESA or any other federal governmental entity or agency on the dates and in the manner set forth in the Metrovías Concession Contract, (f) any sale, discount, conveyance or other disposition of receivables pursuant to a Permitted Receivables Transaction, nor (g) any sale, discount, conveyance or other disposition of obligations of the federal government of the Republic of Argentina, a province or other political subdivision therein.

“Authorized Officer,” with respect to any Person, means the President of its Board of Directors, any other member of its Board of Directors, its Chief Financial Officer or any other officer appointed as an “Authorized Officer” by the Board of Directors of the Issuer, as certified to the Trustee in a Board Resolution.

“Board Resolution” means a copy of a resolution signed by the President or any Director who is a full time employee of the Issuer, any Wholly Owned Restricted Subsidiary or the Parent of the Board of Directors of the Issuer or a Guarantor, as appropriate, and certified as having been duly adopted by the Board of Directors of the Issuer or a Guarantor, as appropriate, and to be in full force and effect on the date of such certification, and delivered to the Trustee.

“Capital Stock” means, with respect to any Person, any and all shares, partnership interests, participations, rights in, or other equivalents (however designated and whether voting or non-voting) of any Person, whether outstanding on the Issue Date or issued after the Issue Date, and any and all rights, warrants or options exchangeable for or convertible into any of the foregoing.

“Capitalized Lease Obligation” means any obligation to pay rent or other amounts under a lease of (or other agreement conveying the right to use) any property (whether real, personal or mixed) that is required to be classified and accounted for as a capital lease obligation under Argentine GAAP, and, for the purpose of the New Indenture, the amount of such obligation at any date shall be the capitalized amount thereof at such date, determined in accordance with Argentine GAAP.

“Cash Equivalents” means, at any time, (i) any evidence of Indebtedness with a maturity of 180 calendar days or less issued or directly and fully guaranteed or insured by the United States of America or any agency or instrumentality thereof (provided that the full faith and credit of the United States of America is pledged in support thereof); (ii) certificates of deposit or banker’s acceptances with a maturity of 180 calendar days or less of any financial institution that is a member of the Federal Reserve System having combined capital and surplus and undivided profits of not less than U.S.$500.0 million; (iii) commercial paper with a maturity of 180 calendar days or less issued by a corporation (except an Affiliate of the Issuer) organized under the laws of any state of the United States or the District of Columbia and rated at least A-1 by S&P or at least P-l by Moody’s; and (iv) repurchase agreements and reverse repurchase agreements relating to marketable direct obligations issued or unconditionally guaranteed by the United States of America or issued by any agency thereof and backed by the full faith and credit of the United States of America, in each case maturing within one year from the date of acquisition, provided that the terms of such agreements comply with the guidelines set forth in the Federal Financial Agreements of Depository Institutions with Securities Dealers and Others, as adopted by the Comptroller of the Currency of the United States.

“Change of Control” of the Issuer or the Parent, as the case may be, means the occurrence of any of the following events: (a) any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act), other than one or more Permitted Stockholders, is or becomes the “beneficial owner” (as defined in Rules 13d‑3 and 13d‑5 under the Exchange Act, except that a person shall be deemed to have “beneficial ownership” of all securities that such person has the right to acquire, whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of more than 50% of the outstanding Voting Stock of the Issuer or the Parent, as the case may be; or (b) the Issuer or the Parent, as the case may be, consolidates with, or merges with or into, another Person or sells, assigns, conveys, transfers, leases or otherwise disposes of all or substantially all of its assets to any Person, or any Person consolidates with, or merges with or into, the Issuer or the Parent, as the case may be, in any such case, pursuant to a transaction in which the outstanding Voting Stock of the Issuer or the Parent, as the case may be, is converted into or exchanged for cash, securities or other property, other than any such transaction (i) in which the outstanding Voting Stock of the Issuer or the Parent, as the case may be, is converted into or exchanged for (l) Voting Stock (other than Disqualified Stock) of the surviving or transferee corporation and/or (2) cash, securities and other property in an amount which could be paid by the Issuer or the Parent, as the case may be, as a Restricted Payment under the New Indenture and (ii) as a result of which no “person” or “group” (excluding Permitted Stockholders) owns more than 50% of the outstanding Voting Stock of the Issuer or the Parent, as the case may be; or (c) during any consecutive two-year period, individuals who at the beginning of such period constituted the Board of Directors of the Issuer or the Parent, as the case may be (together with any new directors whose election by the Board of Directors of the Issuer or the Parent, as the case may be, or whose nomination for election by the stockholders of the Issuer or the Parent, as the case may be, was approved by a vote of a majority of the directors then still in office who were either directors at the beginning of such period or whose election or nomination for election was previously so approved), cease for any reason (other than by action of the Permitted Stockholders) to constitute a majority of the Board of Directors of the Issuer or the Parent, as the case may be, then in office.

“Commission” means the United States Securities and Exchange Commission.

“Common Stock” with respect to any person organized under the laws of Argentina means acciones ordinarias of such Person and with respect to any other Person, means such class of shares, quotas or other equity interests as constitute the common equity capital of such Person, regardless of how such claims may be denominated.

“Consolidated EBITDA” means, with respect to any period, the Consolidated Net Income of the Issuer and the Restricted Subsidiaries for such period, (A) increased (to the extent deducted in calculating Consolidated Net Income) by the sum of: (i) all income taxes of the Issuer and the Restricted Subsidiaries paid or accrued in accordance with Argentine GAAP for such period (other than income taxes attributable to extraordinary, unusual or nonrecurring gains or losses); (ii) all financial results of the Issuer and the Restricted Subsidiaries paid or accrued for such period (including amortization of original issue discount and interest with respect to Capitalized Lease Obligations), if negative; (iii) all depreciation expense of the Issuer and the Restricted Subsidiaries; (iv) amortization expense of the Issuer and the Restricted Subsidiaries, including, without limitation, amortization of capitalized debt issuance costs; (v) deferred toll revenue of the Issuer and the Restricted Subsidiaries; (vi) adjustments to Consolidated Net Income for interests of minority shareholders in Restricted Subsidiaries; (vii) any other extraordinary noncash charges of the Issuer and the Restricted Subsidiaries, to the extent deducted in determining the Consolidated Net Income of the Issuer; and (viii) other income, net (if negative), and (B) reduced (without duplication) by the sum of (i) the aggregate amount of dividends or other distributions actually paid to minority shareholders of Restricted Subsidiaries; (ii) financial results of the Issuer and the Restricted Subsidiaries, if positive; (iii) charges for the reversal of the revaluation reserve of the Issuer and the Restricted Subsidiaries; (iv) amortization of negative goodwill, and (v) other income, net (if positive), all determined on a consolidated basis in accordance with Argentine GAAP.

“Consolidated EBITDA Coverage Ratio” means the ratio of (i) Consolidated EBITDA for the four full fiscal quarter periods (the “Reference Period”) for which financial statements are available that immediately precedes the date (the “Transaction Date”) of the transaction or other circumstances giving rise to the need to calculate the Consolidated EBITDA Coverage Ratio, to (ii) the sum of (a) Interest Expense of the Issuer and its Restricted Subsidiaries paid or accrued (including amortization of original issue discount and interest with respect to Capitalized Lease Obligations) and (b) the aggregate amount of cash dividends and other cash distributions declared or paid on Capital Stock (other than Common Stock) of the Issuer and the Restricted Subsidiaries, other than any dividends paid by the Issuer and the Restricted Subsidiaries to the Issuer or any Wholly Owned Restricted Subsidiary, in each case, for such Reference Period. For purposes of this definition, if the Transaction Date occurs prior to the date on which the Issuer’s consolidated financial statements for the four full fiscal quarter periods immediately subsequent to the Issue Date are first available, “Consolidated EBITDA” and the items referred to in the preceding clause (ii) shall be calculated after giving effect on a pro forma basis to the New Notes outstanding on the Transaction Date as if they were issued on the first day of such four full fiscal quarter period. In addition to and without limitation of the foregoing, for purposes of this definition, “Consolidated EBITDA” and the items referred to in the preceding clause (ii) shall be calculated after giving effect on a pro forma basis for the period of such calculation to the occurrence of the Recapitalization at any time during the Reference Period, as if such Recapitalization occurred on the first day of the Reference Period.

“Consolidated Net Income” means, with respect to any period, the consolidated net income (or loss) of the Issuer and the Restricted Subsidiaries for such period as determined in accordance with Argentine GAAP, adjusted by (A) excluding, without duplication (to the extent included in calculating such consolidated net income): (i) all extraordinary gains or losses, (ii) any Net Income or loss of any Person if such Person is not a Restricted Subsidiary, (iii) net income of any Person combined with such Person or one of its Restricted Subsidiaries on a “pooling of interests” basis attributable to any period prior to the date of combination, (iv) any gain or loss realized upon the termination of any employee pension benefit plan (on an after-tax basis), and (v) gains or losses in respect of any Asset Sales by the Issuer or any of the Restricted Subsidiaries and (B) including (without duplication) the aggregate amount of cash actually distributed to the Issuer or any Restricted Subsidiary by any Person that is not a Restricted Subsidiary as a dividend or other distribution.

“Consolidated Net Worth” means, with respect to any Person at any date of determination, the consolidated equity represented by the shares of such Person’s Capital Stock (other than Disqualified Stock) at such date, as determined on a consolidated basis in accordance with Argentine GAAP.

“Covicentro Expansion Project” means any project for the expansion of the existing highway system operated by Covicentro between Rosario and Córdoba.

“Currency Agreement” in respect of a Person means any foreign exchange contract, currency swap agreement, currency option or other similar financial agreement or arrangement to which such Person is a party or a beneficiary.

“Default” means any event that is, or after notice or passage of time or both would be, an Event of Default.

“Disqualified Stock” means, with respect to any Person, any Capital Stock of such Person which, by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable), or upon the happening of any event, matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or is exchangeable for Indebtedness, or is redeemable at the option of the holder thereof, in whole or in part, on or prior to the date which is 180 days after the final Maturity Date of the New Notes.

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“Fair Market Value” means, with respect to any asset, property or services provided, the price that could be negotiated in an arm’s-length free market transaction, for cash, between a willing seller and a willing buyer, neither of whom is under undue pressure or compulsion to complete the transaction. Fair Market Value shall be determined by a majority of the members of the Board of Directors acting in good faith and shall be evidenced by a Board Resolution delivered to the Trustee and, in the case of an asset or other property, may be greater than or less than the book value thereof, provided that, in the case of any transaction or series of related transactions with respect to assets, property or services which involve aggregate consideration of U.S.$5.0 million or more, Fair Market Value shall also be determined by an Independent Financial Advisor, provided further that, in the case of any transaction or series of related transactions with respect to construction services to be rendered by the Issuer or a Restricted Subsidiary to an Affiliate of the Issuer or any Restricted Subsidiary, Fair Market Value shall be determined in the case of any such transaction or series of related transactions which involve aggregate consideration of (x) less than U.S.$5.0 million, by the good faith judgment of an appropriate executive officer of the Issuer without any requirement of a Board Resolution, (y) more than U.S.$5.0 million and less than U.S.$10.0 million, by the Board of Directors acting in good faith and evidenced by a Board Resolution delivered to the Trustee, and (z) in excess of U.S.$10.0 million, by the Board of Directors acting in good faith and evidenced by a Board Resolution delivered to the Trustee, and shall also be determined by an Independent Financial Advisor.

“Government-Backed Investment Program Commitments” means any long-term lease, installment sale, construction contract or other agreement between a Restricted Subsidiary holding a concession for any Permitted Business and any vendor or supplier of equipment, or provider of services (or any financial institution providing financing to facilitate a sale by a vendor of equipment or provider of services) which provides for the provision of such services as part of the investment plan related to such concession and/or the use of such equipment by, or provision of services to, such Restricted Subsidiary during the term of the applicable concession contract if and to the extent that such restricted Subsidiary has (i) a contractual commitment from the federal government of the Republic of Argentina (or other municipality or other political subdivision thereof as granting such concession) to pay upon certification of completion all amounts owing under such agreement (whether on account of interest, principal, required capital reduction or otherwise) to be made on or prior to any due date thereof, or (ii) agreed with the federal government (or other municipality or other applicable political subdivision thereof) that all such amounts shall be paid by or from a trust or account constituted of funds arising from passenger fares, ticket revenues, dedicated tax revenues or any other public resources.

“Guarantee” means the guarantee of the New Notes made by each Guarantor.

“Guarantor” means (i) each of BRH and Caminos, and (ii) each of the Issuer’s Subsidiaries that executes a supplemental indenture in which such Subsidiary agrees to be bound by the terms of the Guarantee.

“Hedging Obligations” of any Person means the obligations of such Person pursuant to any Interest Rate Agreement or Currency Agreement.

“Holder” means the Person in whose name a New Note is registered on the Registrar’s books.

“Incur” means, with respect to any Indebtedness, to directly or indirectly create, incur, assume, guarantee or in any manner become liable (whether by contract, by operation of law or otherwise) for such Indebtedness, whether contingently or otherwise.

“Indebtedness” means, with respect to any Person, without duplication, (i) all obligations for borrowed money, (ii) all obligations evidenced by bonds, debentures or notes, (iii) all Capitalized Lease Obligations, (iv) all obligations issued or assumed as the deferred purchase price of property, all conditional sale obligations and all obligations under any title retention agreement (but excluding trade accounts payable arising in the ordinary course of business and financing for the purchase by such Person, the Issuer or any of its Subsidiaries of property or equipment that is not accounted for as property, plant and equipment of such Person or the Issuer and its consolidated subsidiaries pursuant to Argentine GAAP), (v) all obligations issued or contracted for as payment in consideration of the purchase by such Person of the stock or substantially all the assets of another Person or a merger or consolidation, (vi) all obligations for the reimbursement of any obligor on any letter of credit, banker’s acceptance or similar credit transactions entered into in the ordinary course of business (other than any letter of credit, banker’s acceptance or similar credit transaction entered into as credit support for the purchase by such Person, the Issuer or any of its Subsidiaries of property or equipment that is not accounted for as property, plant and equipment of such Person, the Issuer and its consolidated subsidiaries pursuant to Argentine GAAP), (vii) all obligations of the type referred to in clauses (i) through (vi) of other Persons and all dividends of other Persons for the payment of which, in either case, such Person is directly or indirectly responsible or liable as obligor, guarantor or otherwise, but only to the extent that such Person is liable as obligor, guarantor or otherwise, and (viii) all obligations of the type referred to in clauses (i) through (vii) of other Persons which are secured by any non-recourse Lien on any property or asset of such Person, the amount of such obligation being deemed to be the lesser of the Fair Market Value of such property or asset or the amount of the obligation so secured; provided that this definition shall not include any and all obligations of the type referred to in clauses (i) through (viii) in favor of the Issuer, an Affiliate of the Issuer, or a Minority Investee.

“Indemnity Agreement” means the agreement entered into among AIG, American International Companies, American Home Assurance Company, or any of their affiliates and Roggio, dated September 24, 2001, providing for the issuance of surety bonds, undertakings or instruments of guarantee on behalf of Roggio and/or any present or future subsidiary thereof, as it may be amended from time to time or replaced, and any other agreements entered in connection thereto.

“Independent Financial Advisor” means, as appropriate, (i) an investment or merchant banking firm or public accounting firm of international standing or (ii) an internationally recognized construction engineering consulting firm, in either case, (x) which does not, and whose directors and executive officers and Affiliates do not, have a material investment in the Issuer or any of its Affiliates and (y) which, in the judgment of the Board of Directors of the Issuer, is otherwise independent with respect to the Issuer and its Affiliates and qualified to perform the task for which it is to be engaged. A trustee or nominee for the true parties in interest shall not be excluded from the definition of “Independent Financial Advisor” solely as a result of such trustee or nominee status.

“Interest Expense of the Issuer and its Restricted Subsidiaries” means interest expense of the Issuer and its Restricted Subsidiaries as determined in the consolidated financial statements of the Issuer, in accordance with Argentine GAAP consistently applied by the Issuer in accordance with past practices; provided that, in any fiscal period during which inflationary accounting shall be in effect in accordance with Argentine GAAP, the aggregate effects of inflation included in interest expense shall be excluded.

“Interest Rate Agreement” means with respect to any Person any interest rate swap agreement, interest rate cap agreement, interest rate collar agreement or other financial agreement or arrangement designed to protect such Person or its Subsidiaries (or in the case of the Issuer, the Issuer and its Restricted Subsidiaries) against fluctuations in interest rates with respect to Indebtedness of such Person.

“Investment” by any Person means any capital contributions, advances or loans to (including any guarantees of loans to), or investments or purchases of Capital Stock in, any other Person.

“Issue Date” means the date that the New Notes are originally issued.

“Latin American country” means any of the United Mexican States and any country located in South America, Central America or the Caribbean basin.

“Lien” means any mortgage, lien (statutory or other), pledge, security interest, encumbrance, claim, hypothecation, assignment for security, deposit arrangement or preference or other security agreement of any kind or nature whatsoever. For purposes of the New Indenture, a Person shall be deemed to own subject to a Lien any property which it has acquired or holds subject to the interest of a vendor or lessor under any conditional sale agreement, capital lease or other title retention agreement relating to Indebtedness of such Person and shall not be deemed to own subject to a Lien any receivables sold, discounted, conveyed or otherwise disposed of for cash or Cash Equivalents pursuant to a Permitted Receivables Transaction.

“Material Restricted Subsidiary” means any Restricted Subsidiary of the Issuer which, at any time of determination, would have been a “Significant Subsidiary” under the definition of such term in Rule 1-02 of Regulation S‑X issued under the Securities Act, as in effect on the Issue Date.

“Maturity Date,” when used with respect to any New Note, means the date specified in such New Note as the fixed date on which the principal of such New Note is due and payable.

“Metrovías Concession Contract” means the Contrato de Concesión dated November 25, 1993 between Metrovías and the Ministry of Economy and Public Works and Services of the Republic of Argentina, as amended from time to time.

“Minority Investee” means any Person, other than a Subsidiary, in which the Issuer or any Subsidiary holds an equity participation.

“Minority Investee Guarantee Payments” means Restricted Payments made to, or on behalf of, a Minority Investee in respect of obligations of the Issuer or a Guarantor under Pro Rata Credit Support Indebtedness; provided that simultaneously with such Restricted Payment, payments on the Underlying Indebtedness are made by or on behalf of other owners of the equity capital of such Minority Investee in an aggregate percentage of such Underlying Indebtedness equal to or greater than (x) 100% minus (y) the Issuer’s Ownership Percentage in such Minority Investee.

“Moody’s” means Moody’s Investors Service, Inc. and its successors.

“Net Cash Proceeds” means, with respect to any Asset Sale, the proceeds thereof in the form of cash or Cash Equivalents, including payments in respect of deferred payment obligations when received in the form of cash or Cash Equivalents, net of (i) brokerage commissions and other reasonable fees and expenses (including reasonable fees and expenses of counsel and investment bankers) related to such Asset Sale; (ii) provisions for all taxes payable as a result of such Asset Sale; (iii) payments made to retire Indebtedness secured by the assets subject to such Asset Sale to the extent required pursuant to the terms of such Indebtedness; and (iv) appropriate amounts to be provided by the Issuer or any of its Subsidiaries, as the case may be, as a reserve, in accordance with Argentine GAAP, against any liabilities associated with such Asset Sale and retained by the Issuer or such Subsidiary, as the case may be, after such Asset Sale, including, without limitation, pension and other post-employment benefit liabilities, liabilities related to environmental matters and liabilities under any indemnification obligations associated with such Asset Sale.

“Net Income” means, with respect to any Person for any period, the net income (loss) of such Person for such period determined in accordance with Argentine GAAP.

“Net Proceeds” means (i) in the case of any sale of Capital Stock (other than Disqualified Stock) by the Issuer, the aggregate net proceeds received by the Issuer, after payment of expenses, commissions and the like incurred in connection therewith, whether such proceeds are in cash or in property (valued at the Fair Market Value thereof as of the time of receipt), and (ii) in the case of the issuance of Capital Stock upon the conversion of convertible debt or the exercise of options, warrants or rights, the net cash proceeds received by the Issuer upon the issuance of such convertible debt, options, warrants or rights plus any incremental amount of cash received by the Issuer upon the conversion or exercise thereof.

“Officers’ Certificate” means, with respect to any Person, a certificate signed by an Authorized Officer of such Person.

“Opinion of Counsel” means a written opinion from legal counsel which and who are reasonably acceptable to the Trustee, complying with the requirements of the New Indenture as they relate to the giving of an Opinion of Counsel. Unless otherwise required by the TIA, the legal counsel may be counsel to the Issuer or the Trustee. The cost of obtaining such Opinion of Counsel shall be borne by the Issuer and shall not be an expense of the Trustee.

“Parent” means Roggio or any successor thereof.

“Permitted Bonding Facility” means (i) the Indemnity Agreement and (ii) any one or more additional agreements between the Issuer, or any Restricted Subsidiary and one or more insurance or surety companies providing for surety bonds, letters of credit, undertakings or instruments of guarantee on behalf of the Issuer, any Subsidiary of the Issuer or any Minority Investee.

“Permitted Business” means (i) the provision of waste management services in Argentina and other Latin American countries, (ii) the construction and engineering of hydroelectric projects, industrial plants, highways, bridges, roads, airports and residential and commercial buildings in Argentina and other Latin American countries, (iii) the management of highways, bridges, roads and airports in Argentina and other Latin American countries, (iv) the provision of mass transportation management services in Argentina and other Latin American countries, (v) the management, operation and maintenance of toll roads in Argentina and other Latin American countries, (vi) the provision of electric or water services in Argentina or any other Latin American countries, (vii) the provision of services in Argentina and other Latin American countries previously or customarily provided as public services by the national, state, provincial or similar government or an agency or instrumentality thereof, and (viii) leasing, renting and providing other management services for any of the properties controlled or operated in connection with any of the businesses specified in clauses (i) through (vii) above.

“Permitted Investments” means Investments (i) in Cash Equivalents; (ii) in obligations of the government of the Republic of Argentina due within one year; (iii) in money market or overnight management accounts and certificates of deposits or Eurodollar deposits due within one year with a branch in the United States of America or in the Republic of Argentina of Citibank, N.A., Fleet Bank, N.A., J.P. Morgan Chase Bank, Banco de Galicia y Buenos Aires S.A., BBVA Banco Francés, Banco Río de la Plata S.A., HSBC Bank Argentina S.A. or Bank of America S.A.; (iv) in repurchase obligations with a term of not more than 30 calendar days for underlying securities of the type described in clause (ii) above entered into with a bank described in clause (iii) above; (v) in commercial paper with a maturity date of 180 days or less issued by a corporation (except an Affiliate of the Issuer) organized under the laws of any state of the United States or the District of Columbia and rated at least A-1 by S&P or at least P‑1 by Moody’s; (vi) in debt of any state or political subdivision of the United States of America that is rated A‑1 or better by S&P or P‑1 by Moody’s; (vii) by the Issuer or any Restricted Subsidiary in another Person, if (x) at the time of such Investment no Default or Event of Default has occurred and is continuing, (y) as a result of such Investment (A) such other Person becomes a Subsidiary of the Issuer or a Minority Investee or (B) such other Person is merged or consolidated with or into, or transfers or conveys all or substantially all of its assets to, the Issuer, a Subsidiary of the Issuer or a Minority Investee and (z) such other Person is substantially engaged in a Permitted Business; (viii) by the Issuer or any Restricted Subsidiary in the Issuer, any Subsidiary of the Issuer or any Minority Investee; (ix) represented by accounts receivable created or acquired in the ordinary course of business, and by obligations of the government of the Republic of Argentina, a province or other political subdivision therein, received as payment for those receivables; (x) in the form of advances in the ordinary course of business to employees who are not Affiliates of the Issuer in an aggregate amount not to exceed U.S.$1.0 million at any one time outstanding; and (xi) in other shareholders of a Restricted Subsidiary in connection with pro rata payments to the Issuer or any Restricted Subsidiary.

“Permitted Liens” means, with respect to any Person, any Lien arising by reason of (i) judgments, which judgments do not constitute a Default or Event of Default with respect to the New Notes; (ii) taxes or assessments and similar charges either (a) not delinquent or (b) being contested in good faith by appropriate proceedings and as to which the Issuer or a Subsidiary of the Issuer shall have set aside on its books such reserves as may be required pursuant to Argentine GAAP; (iii) pledges and deposits in connection with workers’ compensation, unemployment insurance and social security benefits, or securing performance, bids, tenders, leases, contracts (other than for the repayment of borrowed money), statutory obligations, progress payments, surety and appeal bonds and other obligations of a like nature, incurred in the ordinary course of business; (iv) applicable law, such as mechanics’, carriers’, warehousemen’s, materialmen’s and vendors’ liens, incurred in good faith in the ordinary course of business; (v) zoning restrictions, easements, licenses, covenants, reservations, restrictions on the use of real property or minor irregularities of title incident thereto which do not in the aggregate materially detract from the value of the property or assets of the Issuer and its Subsidiaries, taken as a whole, or materially impair the operation of the business of the Issuer and its Subsidiaries, taken as a whole; and (vi) law to secure payment of customs duties in connection with the importation of goods.

“Permitted Receivables Transaction” means any sale, discount, conveyance or other disposition for cash or Cash Equivalents of receivables that (i) is made without representation or warranty (except for representations and warranties normally and customarily given by sellers and servicers in connection with non-recourse cash sales of receivables); (ii) is made pursuant to good faith bona fide transactions with third parties other than Affiliates of the Issuer or any Restricted Subsidiary; (iii) in respect of which the Issuer and the Restricted Subsidiaries neither incur nor accept any obligation other than (x) obligations in respect of representations and warranties as described in clause (i) above and (y) any agreement to service such receivables for and on behalf of the purchaser of such receivables, and (iv) the Issuer in good faith accounts for as, and intends that such transaction will be characterized under Argentine GAAP as, a “true sale” and not a liability or secured financing.

“Permitted Stockholders” means (x) with respect to the Issuer, each of Roggio and the Benito Roggio Foundation and (y) with respect to the Parent, Mr. Aldo Roggio (or his heirs) and one or more of Sergio Oscar Roggio, Alejandro Carlos Roggio or Graciela Amalia Roggio de Lejarza, or their respective heirs.

“Person” means any individual, corporation, partnership, joint venture, trust, unincorporated organization or government or any agency or political subdivision thereof.

“Polledo Transaction” means the several transfers of Capital Stock and other assets set forth in that certain agreement dated January 7, 1997 among Polledo, Caminos and the Issuer, as in effect on the Issue Date; provided, however, that no material provision of such agreement shall be amended, modified or waived in a manner adverse to the Issuer or the Holders.

“Preferred Stock” means, with respect to any Person, (i) Disqualified Stock of such Person and (ii) any and all shares, interests, participations or other equivalents (however designated) of such Person’s preferred or preference stock or shares whether now outstanding, or issued after the Issue Date to the extent it carries any preference in respect of the distribution of assets in the event of a liquidation or insolvency of such Person as compared with any other Capital Stock of such Person.

“Project Finance Investee” means any Subsidiary or Minority Investee of the Issuer (other than a Guarantor) designated as such by the Issuer at any time, by written notice to the Trustee (each, a “Designation”); provided that no Default shall have occurred and be continuing at the time of, or after giving effect to, such Designation. The Issuer may revoke any Designation of a Project Finance Investee (a “Revocation”) if (i) no Default shall have occurred and be continuing at the time of, and after giving effect to, such Revocation; and (ii) in the case of a Subsidiary, all Liens and Indebtedness of such Project Finance Investee outstanding immediately following such Revocation would, if incurred or issued, as the case may be, at such time, have been permitted to be incurred under the New Indenture. This hidden Level is here to restart lower levels

All Designations and Revocations shall be evidenced by a duly adopted Board Resolution of the Issuer delivered to the Trustee in writing certifying compliance with the requirements for such designation.

“Pro Rata Credit Support Indebtedness” means Indebtedness of the Issuer or a Restricted Subsidiary in the form of guarantees, letters of credit, banker’s acceptances or similar credit transactions incurred by the Issuer or such Restricted Subsidiary (i) with respect to Indebtedness (“Underlying Indebtedness”) of a Minority Investee, (ii) in which the maximum liability of the Issuer or such Guarantor outstanding at any time is in an amount not in excess of a percentage of the Underlying Indebtedness equal to the percentage (the “Issuer’s Ownership Percentage”) of such Minority Investee’s total equity capital directly or indirectly owned by the Issuer at such time and (iii) for which the Underlying Indebtedness is guaranteed by or on behalf of other owners of such Minority Investee to the extent of (x) 100% of such Underlying Indebtedness minus (y) the Issuer’s Ownership Percentage of such Underlying Indebtedness; provided that Pro Rata Credit Support Indebtedness in an aggregate amount at any one time outstanding of U.S.$5.0 million may be incurred without complying with the preceding clause (ii) or (iii).

“Recapitalization” means the contribution by Roggio of any New Notes or Existing Notes held by it to the Issuer in exchange for the cancellation of an outstanding intercompany loan between the Issuer and Roggio in the amount of Ps.96,000,000.

“Restricted Payment” means any of the following: (i) the declaration or payment of any dividend or any other distribution or payment on or in respect of Capital Stock of the Issuer to the direct or indirect holders (in their capacity as such) of Capital Stock of the Issuer (other than dividends or distributions payable solely in Capital Stock (other than Disqualified Stock) or in options, warrants or other rights to purchase Capital Stock (other than Disqualified Stock), and dividends or distributions payable to a Wholly Owned Restricted Subsidiary of the Issuer), (ii) the purchase, redemption or other acquisition or retirement for value of any Capital Stock of the Issuer (other than any such Capital Stock owned by a Restricted Subsidiary of the Issuer), or (iii) the making of any Investment in any Person, other than a Permitted Investment.

“Restricted Subsidiary” means any direct or indirect Subsidiary of the Issuer, other than any Project Finance Investee.

“Revolving Credit Agreement” means (i) any one or more additional credit agreements, working capital facilities or other financing arrangements (which may include or consist of revolving credits, arrangements and/or the repayment and reborrowing of the funds thereunder) between the Issuer or any Restricted Subsidiary and one or more banks or other financial institutions providing financing for the business of the Issuer and the Restricted Subsidiaries and (ii) any replacements, renewals or refinancings of the foregoing.

“S&P” means Standard & Poor’s Rating Group, a division of McGraw Hill, Inc., and its successors.

“Self-Liquidating Financings” means extensions of credit made to (i) BRH by Banco de la Provincia de Buenos Aires in an aggregate principal amount totaling Ps.10.6 million to finance the construction of various public works in such province and (ii) Metrovías by Banco de la Nación Argentina for U.S.$8.1 million to finance, in part, the purchase of Japanese rail coaches, which, in each case, have been granted concurrently with the creation in favor of the Issuer or its Subsidiaries of a payment obligation by an Argentine federal, provincial or municipal government or agency thereof on terms which are substantially similar to the repayment terms contained in such extensions of credit.

“Specified Non-Recourse Debt” means Indebtedness of Covicentro (i) as to which neither the Issuer nor any of its Restricted Subsidiaries (other than Covicentro and any Restricted Subsidiary of Covicentro) (a) provides direct credit support (including any undertaking, agreement or instrument that would constitute Indebtedness), or (b) is directly or indirectly liable (as a guarantor or otherwise), (ii) as to which the lenders have been notified in writing that they will not have any recourse to the stock or assets of the Issuer or any of the Restricted Subsidiaries (other than Covicentro) and (iii) which is incurred for the purpose of financing the Covicentro Expansion Project.

“Subsidiary” means, with respect to any Person, (i) any corporation of which the outstanding Capital Stock having at least a majority of the votes entitled to be cast in the election of directors shall at the time be owned, directly or indirectly, by such Person or (ii) any other Person of which at least a majority of voting interest is at the time, directly or indirectly, owned by such Person; provided, however, that any Person used solely as a special purpose entity to conduct a Permitted Receivables Transaction shall not be, for purposes of the New Indenture, a Subsidiary.

“Underlying Indebtedness” has the meaning specified within the definition of “Pro Rata Credit Support Indebtedness.”

“U.S. Dollar” means such lawful coin or currency of the United States of America as shall at the time of payment be legal tender for the payment of public and private debts.

“U.S. Dollar Equivalent” means, with respect to any monetary amount in a currency other than U.S. Dollars, at any time for the determination thereof, the amount of U.S. Dollars obtained by converting such foreign currency involved in such computation into U.S. Dollars at the spot rate for the purchase of U.S. Dollars with the applicable foreign currency as quoted by Reuters at approximately 11:00 a.m. (New York time) on the date not more than two business days prior to such determination. For purposes of determining whether any Indebtedness can be incurred (including Permitted Indebtedness), any Investment can be made and any Affiliate Transaction can be undertaken (a “Tested Transaction”), the “U.S. Dollar Equivalent” of such Indebtedness, Investment or Affiliate Transaction shall be determined on the date incurred, made or undertaken and no subsequent change in the U.S. Dollar Equivalent shall cause such Tested Transaction to have been incurred, made or undertaken in violation of the New Indenture.

“Voting Stock” is defined to mean, with respect to any Person, Capital Stock of any class or kind ordinarily having the power to vote for the election of board of directors members, managing directors, managers or other voting members of the governing body of such Person.

“Wholly Owned Restricted Subsidiary” means any Restricted Subsidiary, at least 95% of the Capital Stock of which is owned by the Issuer, by a Wholly Owned Restricted Subsidiary or by the Issuer and a Wholly Owned Restricted Subsidiary.

Book-Entry; Delivery and Form

New Notes offered and sold in reliance on Regulation S will initially be represented by a single, permanent Global New Note (as hereinafter defined) in definitive, fully registered book-entry form (the “Regulation S Global New Note”) which will be registered in the name of a nominee of DTC and deposited on behalf of the purchasers of the New Notes represented thereby with the Trustee as custodian for DTC for credit to the respective accounts of the purchasers (or to such other accounts as they may direct) at the Euroclear System (“Euroclear”) or Clearstream, société anonyme (“Clearstream”). Prior to the 40th day after the later of the commencement of the Exchange Offer and the Issue Date, interests in the Regulation S Global New Note may only be held through Euroclear or Clearstream, unless delivery is made through the Rule 144A Global New Note in accordance with the certification requirements described below.

New Notes offered and sold to “qualified institutional buyers” in reliance on Rule 144A under the Securities Act will be represented by a single, permanent Global New Note in definitive, fully registered book‑entry form (the “Rule 144A Global New Note,” and together with the Regulation S Global New Note, the “Global New Notes”) which will be registered in the name of a nominee of DTC and deposited on behalf of the purchasers of the New Notes represented thereby with the Trustee as custodian for DTC for credit to the respective accounts of the purchasers (or to such other accounts as they may direct) at DTC.

New Notes offered and sold to “accredited investors” as defined in Rule 501(a)(5) and (6) under the Securities Act will be delivered in certificated fully registered form only, in minimum denominations of U.S.$1.00 (the “Certificated New Notes,” and together with the Rule 144A Global New Note and the Regulation S Global New Note, the “Restricted New Notes”).

Transfers of interests in the Restricted New Notes will be subject to certain restrictions set forth therein and described under “Important Notice.” In certain circumstances, as described below, transfers may be made as a result of which the transfer restrictions no longer apply. In certain circumstances, owners of beneficial interests in Global New Notes will be entitled to receive physical delivery of Certificated New Notes in fully registered definitive form. The New Notes are not issuable in bearer form. See “— Certificated New Notes.”

The New Notes will be issued only in fully registered form, in denominations of U.S.$1.00 and multiples thereof. Such denominations are referred to herein as “Authorized Denominations.” No service charge will be made for any registration of transfer or exchange of New Notes. The New Notes are registered instruments, title to which passes upon registration of the transfer on the books of the Registrar in accordance with the terms of the New Indenture.

Global New Notes

Upon the issuance of the Global New Notes, DTC or its custodian will credit, on its internal system, the respective principal amount of the individual beneficial interests represented by such Global New Note to the accounts of persons who have accounts with such depositary. Ownership of beneficial interests in a Global New Note will be limited to persons who are members of, or participants in, DTC (the “Agent Members”) or persons who hold interests through Agent Members. Ownership of beneficial interests in the Global New Notes will be shown on, and the transfer of that ownership will be effected only through, records maintained by DTC or its nominee (with respect to interests of Agent Members) and the records of Agent Members (with respect to interests of persons other than Agent Members). QIBs may hold their interests in the Global New Notes directly through DTC if they are Agent Members, or indirectly through organizations that are Agent Members.

So long as DTC, or its nominee, is a registered holder of a Global New Note, DTC or such nominee, as the case may be, will be considered the absolute owner or holder of the New Notes represented by such Global New Note for all purposes under the New Indenture and the New Notes, and Agent Members, as well as any other persons on whose behalf Agent Members may act (including Euroclear and Clearstream and account holders and participants therein), will have no rights under the New Indenture or under a Global New Note. Owners of beneficial interests in a Global New Note will not be considered to be the owners or holders of any New Notes under the New Indenture or the New Notes. In addition, no beneficial owner of an interest in a Global New Note will be able to exchange or transfer that interest, except in accordance with the applicable procedures of DTC, Euroclear and Clearstream, in each case to the extent applicable (the “Applicable Procedures”).

Investors may hold their interests in the Regulation S Global New Note directly through Clearstream or Euroclear, if they are participants in such systems, or indirectly through organizations that are participants in such systems. Beginning 40 days after the later of the commencement of the Exchange Offer and the Issue Date (but no earlier), investors may also hold such interests through organizations other than Clearstream or Euroclear that are participants in the DTC system. Clearstream and Euroclear will hold such interests in the Regulation S Global New Note on behalf of their participants through customers’ securities accounts in their respective names on the books of their respective depositaries, which in turn will hold such interests in the Regulation S Global New Note in customers’ securities accounts in the depositaries’ names on the books of DTC.

Payments in respect of each Global New Note registered in the name of DTC’s nominee will be made to the order of DTC’s nominee as the registered owner of such Global New Note. Neither the Trustee nor we will have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial interests in the Global New Notes or for maintaining, supervising or reviewing any records relating to such beneficial interests.

We expect that DTC or its nominee, upon receipt of any payment of principal or interest in respect of a Global New Note, will immediately credit the accounts of Agent Members with payments in the amounts proportionate to their respective beneficial interest in the principal amount of such Global New Note as shown on the records of DTC or its nominee. We also expect that payments by Agent Members to owners of beneficial interest in such Global New Note held through such Agent Members will be governed by standing instructions and customary practices, as is now the case with securities held for the accounts of customers registered in the names of nominees for such customers. Such payments will be the responsibility of such Agent Members.

Transfers between participants in DTC will be effected in the ordinary way in accordance with the Applicable Procedures and will be settled in same-day funds. Transfers between participants in Euroclear and Clearstream will be effected in the ordinary way in accordance with their respective rules and operating procedures.

DTC has advised us that it will take any action permitted to be taken by a holder of New Notes only at the direction of one or more Agent Members to whose account the DTC interests in the Global New Notes is credited and only in respect of such portion of the aggregate principal amount of New Notes as to which such Agent Member or Agent Members has or have given such direction.

We understand that DTC is a limited purpose trust company organized under the laws of the State of New York, a “banking organization” within the meaning of New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the Uniform Commercial Code and a “Clearing Agency” registered pursuant to the provisions of Section 17A of the Exchange Act. DTC was created to hold securities for its participants and facilitate the clearance and settlement of securities transactions between participants through electronic book-entry changes in accounts of its participants, thereby eliminating the need for physical movement of certificates. Participants include securities brokers and dealers, banks, trust companies and clearing corporations and certain other organizations. Indirect access to the DTC system is available to others such as banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship with a participant, either directly or indirectly (“indirect participants”).

Although DTC, Euroclear and Clearstream are expected to follow the foregoing procedures in order to facilitate transfers of interests in the Global New Notes among participants of DTC, Euroclear and Clearstream, they are under no obligation to perform or continue to perform such procedures, and such procedures may be discontinued at any time. Neither the Trustee nor we will have any responsibility for the performance by DTC, Euroclear or Clearstream or their respective participants or indirect participants of their respective obligations under the rules and procedures governing their operations.

Certificated New Notes

New Notes originally purchased by or transferred to “accredited investors” (other than qualified institutional buyers) in transactions which are exempt from the registration requirements of the Securities Act will be issued as Certificated New Notes. Each Certificated New Note will initially be issued in denominations U.S.$1.00 and multiples thereof. Upon transfer of Certificated New Notes to a QIB or in an offshore transaction under Rule 903 or 904 under Regulation S, such Certificated New Notes may be transferred to the Rule 144A Global New Note or the Regulation S Global New Note, as the case may be, upon delivery of appropriate certifications to the Trustee.

In addition, interests in the Regulation S Global New Note and the Rule 144A Global New Note will be exchangeable or transferable for Certificated New Notes if (i) DTC notifies us that it is unwilling or unable to continue as depositary for such Global New Notes or DTC ceases to be a “Clearing Agency” registered under the Exchange Act, and a successor depositary is not appointed by us within 90 days, or (ii) an Event of Default has occurred and is continuing with respect to such New Notes and New holders who hold more than 25% in aggregate principal amount of the New Notes at the time outstanding represented by the Global New Notes advise the Trustee through DTC in writing that the continuation of a book-entry system through DTC (or a successor thereto) with respect to the Global New Notes is no longer required. Upon the occurrence of any of the events described in the preceding sentence, we will cause the appropriate Certificated New Notes to be delivered. In the case of Certificated New Notes issued in exchange for the Rule 144A Global New Notes, such Certificated New Notes shall bear the legend set forth under the heading “Important Notice.” Upon the transfer, exchange or replacement of New Notes bearing such legend, or upon specific request for removal of such legend, we shall deliver only New Notes that bear such legend, or shall refuse to remove such legend, as the case may be, unless there is delivered to us and the Trustee a certificate in the form provided in the New Indenture or such satisfactory evidence as may reasonably be required by us, which may include an opinion of United States counsel, that neither the legend nor the restrictions on transfer set forth therein are required to ensure compliance with the provisions of the Securities Act. Certificated New Notes will be exchangeable or transferable for interests in other Certificated New Notes as described under “— Replacement, Exchange and Transfers” below.

Pursuant to Argentine Law No. 24,587, effective November 22, 1995, Argentine private corporations may only issue registered securities and may not issue bearer-form securities.

Replacement, Exchange and Transfers

If any New Note at any time is mutilated, defaced, destroyed, stolen or lost, such New Note may be replaced at the office of the Trustee, upon provision of evidence satisfactory to the Trustee and us that such New Note was destroyed, stolen or lost, together with such indemnity as we and the Trustee may require. Mutilated or defaced New Notes must be surrendered before replacements will be issued.

Before the 40th day after the later of the commencement of the Exchange Offer and the Issue Date, transfers by an owner of a beneficial interest in the Regulation S Global New Note to a transferee who takes delivery of such interests through the Rule 144A Global New Note will be made only in accordance with the Applicable Procedures and upon receipt by the Trustee of a written certification from the transferor of the beneficial interest in the form provided in the New Indenture to the effect that such transfer is being made to a person whom the transferor reasonably believes is a QIB within the meaning of Rule 144A in a transaction meeting the requirements of Rule 144A and in accordance with the applicable securities laws of any state of the United States or any other jurisdiction. After such 40th day, such certification requirement will no longer apply to such transfers.

Transfers by an owner of a beneficial interest in the Rule 144A Global New Note to a transferee who takes delivery of such interest through the Regulation S Global New Note whether before, on or after the 40th day after the later of the commencement of the Exchange Offer and the Issue Date, will be made only upon receipt by the Trustee of a certification in the form set forth in the New Indenture to the effect that such transfer is being made in accordance with Regulation S. Transfers of Certificated New Notes held by “accredited investors” to persons who will hold through the Rule 144A Global New Note or the Regulation S Global New Note will be subject to certifications provided by the Trustee.

Any beneficial interest in one of the Global New Notes that is transferred to a person who takes delivery in the form of an interest in the other Global New Note will, upon transfer, cease to be an interest in such Global New Note and become an interest in the other Global New Note and, accordingly, will thereafter be subject to all transfer restrictions, if any, and other procedures applicable to beneficial interests in such other Global New Note for as long as it remains such an interest. Except in the limited circumstances described above under “— Certificated New Notes,” owners of beneficial interests in Global New Notes will not be entitled to receive physical delivery of Certificated New Notes.

Certificated New Notes may be exchanged or transferred in whole or in part in the principal amount of Authorized Denominations by surrendering such Certificated New Notes at the office of the Trustee or any Transfer Agent with a written instrument of transfer as provided in the New Indenture. In addition, if the Certificated New Notes being exchanged or transferred contain a legend, additional certifications to the effect that such exchange or transfer is in compliance with the restrictions contained in such legend may be required.

TRANSFER RESTRICTIONS

The following information relates to the form and transfer of the New Notes. Because of the following restrictions, holders in the United States are advised to consult legal counsel prior to making any offer, resale, pledge or transfer of the Existing Notes.

The New Notes have not been registered under the Securities Act and may not be offered or sold in the United States or to, or for the account or benefit of, U.S. persons except in accordance with an applicable exemption from the registration requirements thereof. Accordingly, we are offering the New Notes only (1) to QIBs in compliance with Rule 144A, (2) outside the United States to non-U.S. persons in reliance upon Regulation S and (3) to accredited investors.

Each beneficial owner or representative acting on behalf of a beneficial owner of Existing Notes who submits a Letter of Transmittal, or agrees to the terms of a Letter of Transmittal pursuant to an Agent’s Message, will be deemed to represent, warrant and agree as follows:

1. It understands and acknowledges that the New Notes have not been registered under the Securities Act or any other applicable securities law, are being offered for sale in transactions not requiring registration under the Securities Act or to any other securities laws, including sales pursuant to Rule 144A under the Securities Act, and, unless so registered, may not be offered, sold or otherwise transferred except in compliance with the registration requirements of the Securities Act, or any other applicable securities law, pursuant to an exemption therefrom or in a transaction not subject thereto and in each case in compliance with the conditions for transfer set forth in paragraph (4) below.
2. It is not an “affiliate” (as defined in Rule 144 under the Securities Act) of Clisa or acting on behalf of Clisa and it is either:
3. a QIB and is aware that any sale of the New Notes to it will be made in reliance on Rule 144A. Such acquisition will be for its own account or for the account of another QIB; or
4. a person who, at the time the buy order for the notes was originated, was outside the United States within the meaning of Regulation S under the Securities Act; or
5. an “accredited investor” as defined in Rule 501 under the Securities Act.
6. It acknowledges that neither we, the Information Agent nor the Exclusive Dealer Manager nor any person representing either of us has made any representation to it with respect to us or the offering or sale of the New Notes, other than the information contained or incorporated by reference in this Offering Memorandum, which has been delivered to it and upon which it is relying in making its investment decision with respect to the New Notes. It acknowledges that no representation or warranty is made by us, the Information Agent or the Exclusive Dealer Manager or any person representing either of us as to the accuracy or completeness of such materials. It has had access to such financial and other information concerning the New Notes and us as it has deemed necessary in connection with its decision to acquire the New Notes, including an opportunity to ask questions of and request information from the Exclusive Dealer Manager, the Information Agent or us.
7. It is acquiring the New Notes for its own account, or for one or more investor accounts for which it is acting as a fiduciary or agent, in each case for investment, and not with a view to, or for offer or sale in connection with, any distribution thereof in violation of the Securities Act, subject to any requirements of law that the disposition of its property or the property of such investor account or accounts be at all times within its or their control and subject to its or their ability to resell such New Notes pursuant to an effective registration statement under the Securities Act, Rule 144A, Regulation S or any exemption from registration available under the Securities Act. It agrees on its own behalf and on behalf of any investor account for which it is acquiring the New Notes and each subsequent holder of the New Notes by its acceptance thereof will agree (I) to offer, resell, pledge or otherwise transfer such New Notes only in accordance with the Securities Act and any applicable securities law of any state of the United States and, prior to the expiration of the holding period applicable to sales of the notes under Rule 144(k) under the Securities Act (or any successor provision) (the “resale restriction termination date”) only (a) to Clisa, (b) pursuant to a registration statement which has been declared effective under the Securities Act, (c) for so long as the New Notes are eligible for resale pursuant to Rule 144A to a person it reasonably believes is a QIB that purchases for its own account or for the account of a QIB to whom notice is given that the transfer is being made in reliance on Rule 144A, (d) pursuant to offers and sales that occur outside the United States within the meaning of Regulation S or (e) pursuant to another available exemption from the registration requirements of the Securities Act; (II) in connection with any transfer of any New Notes in certificated form, to complete the certification provided on the reverse thereof relating to the manner of such transfer and surrender such New Note to the Trustee; (III) if any proposed transfer is being made in accordance with (I)(e) above prior to the resale restriction termination date, to acknowledge that Clisa reserves the right, prior to such transfer, to require the delivery of such certifications, legal opinions or other information satisfactory to Clisa to confirm that the proposed transfer is being made pursuant to an exemption, or in a transaction not subject to, the registration requirements of the Securities Act; (IV) to acknowledge that the Trustee will not be required to accept for registration of transfer any New Notes, except upon presentation of evidence satisfactory to Clisa and the Trustee that the foregoing restrictions on transfer have been complied with; and (V) to agree to provide to any person acquiring any of the New Notes from it a notice advising such person that resales of the New Notes are restricted as stated herein and that certificates representing the New Notes may bear a legend to that effect.
8. Each acquiror of New Notes evidenced by the Rule 144A Global New Note or a Certificated Note acknowledges that such Global New Note will contain a legend substantially to the following effect:

THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR THE SECURITIES LAWS OF ANY STATE OR ANY OTHER JURISDICTION (EXCEPT ARGENTINA). NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, SUCH REGISTRATION.

THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE (THE “RESALE RESTRICTION TERMINATION DATE”) WHICH IS TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE ISSUER OR ANY AFFILIATE OF THE ISSUER WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF SUCH SECURITY), ONLY (A) TO THE ISSUER, (B) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT (“RULE 144A”), TO A PERSON IT REASONABLY BELIEVES IS A “QUALIFIED INSTITUTIONAL BUYER” AS DEFINED IN RULE 144A, THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER, TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT, OR (E) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT UPON PROVISION OF AN ACCEPTABLE LEGAL OPINION. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE.

1. Each acquiror of New Notes evidenced by the Regulation S Global New Note acknowledges that such Global New Note will contain a legend substantially to the following effect:

THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR THE SECURITIES LAWS OF ANY STATE OR ANY OTHER JURISDICTION (EXCEPT ARGENTINA). NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, SUCH REGISTRATION.

THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF (1) REPRESENTS THAT IT IS ACQUIRING THIS SECURITY OUTSIDE THE UNITED STATES, (2) BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE (THE “RESALE RESTRICTION TERMINATION DATE”) WHICH IS TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE ISSUER OR ANY AFFILIATE OF THE ISSUER WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF SUCH SECURITY), ONLY (A) TO THE ISSUER, (B) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT (“RULE 144A”), TO A PERSON IT REASONABLY BELIEVES IS A “QUALIFIED INSTITUTIONAL BUYER” AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT, THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT, OR (E) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT UPON PROVISION OF AN ACCEPTABLE LEGAL OPINION. THIS LEGEND WILL BE REMOVED AFTER 40 CONSECUTIVE DAYS BEGINNING ON AND INCLUDING THE LATER OF (A) THE DAY ON WHICH THE SECURITIES ARE OFFERED TO PERSONS OTHER THAN DISTRIBUTORS (AS DEFINED IN REGULATION S) AND (B) THE DATE OF THE CLOSING OF THE ORIGINAL OFFERING. AS USED HEREIN, THE TERMS “OUTSIDE THE UNITED STATES,” AND “UNITED STATES” HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT.

1. If it acquired New Notes outside the United States within the meaning of Regulation S under the Securities Act, it agrees that until the expiration of the 40-day Distribution Compliance Period, no offer or sale of the New Notes will be made by it to a U.S. person or for the account or benefit of a U.S. person within the meaning of Rule 902(k) of the Securities Act except to a QIB and in compliance with the applicable restrictions set forth in paragraph (4) above.
2. It acknowledges that we will rely upon the truth and accuracy of the foregoing acknowledgements, representations and agreements and agrees that, if any of the acknowledgements, representations or warranties deemed to have been made by its purchase of New Notes are no longer accurate, it shall promptly notify us. If it is acquiring any New Notes as a fiduciary or agent for one or more investor accounts, it represents that it has sole investment discretion with respect to each such account and that it has full power to make the foregoing acknowledgements, representations and agreements on behalf of each such account.
3. With respect to the purchase and holding of any New Notes, either (a) the purchaser and holder is not and for so long as New Notes are held will not be (i) an “employee benefit plan” (as defined in Section 3(3) of ERISA) that is subject to Title I of ERISA, (ii) a “plan” described in Section 4975 of the Code, (iii) an entity whose underlying assets include “plan assets” (for purposes of ERISA or Section 4975 of the Code) or (iv) a governmental or other employee benefit plan which is the subject of any federal, state, local or foreign law that is substantially similar to the provisions of Section 406 of ERISA or Section 4975 of the Code; or (b) its purchase and holding of any New Note or New Notes will not result in a prohibited transaction under Section 406 of ERISA or Section 4975 of the Code (or, in the case of such a governmental or other employee benefit plan, any substantially similar federal, state, local or foreign law) for which an exemption is not available.

U.S. FEDERAL INCOME TAXATION

This discussion is a summary of certain U.S. federal income tax consequences of the Exchange Offer to holders of the Existing Notes that hold the Existing Notes, and that, if applicable, will hold the New Notes, as capital assets (generally, property held for investment). The summary is based on the Internal Revenue Code of 1986, as amended (the “Code”), existing and proposed Treasury regulations, administrative pronouncements of the Internal Revenue Service (“IRS”) and court decisions, all as in effect on the date hereof, and all of which are subject to change (possibly on a retroactive basis) and to different interpretations. The summary is intended for general information only, and does not describe all of the U.S. federal income tax considerations that may be relevant to the particular circumstances of holders of the Existing Notes or the New Notes, or to holders of the Existing Notes or the New Notes that may be subject to special U.S. federal income tax rules (including, for example, dealers in securities or currencies, banks and other financial institutions, pass-through entities, tax-exempt organizations, insurance companies, persons holding the Existing Notes and/or the New Notes as part of a hedging, integrated, conversion or constructive sale transaction or as a position in a straddle, traders in securities that elect to use a mark-to-market method of accounting and U.S. Holders, as defined below, having a functional currency other than the U.S. Dollar). The summary also does not address the potential implications of state, local or non-U.S. tax laws, or any aspect of U.S. federal tax law other than income taxation.

For purposes of this discussion, we assume that both the Existing Notes and the New Notes constitute indebtedness for U.S. federal income tax purposes. However, the determination of whether the Existing Notes and the New Notes should be characterized as indebtedness or equity under U.S. federal income tax law depends on an analysis of the facts and circumstances relating to the Existing Notes, the New Notes and us. If the Existing Notes and/or the New Notes were determined to represent equity interests in us for U.S. federal income tax purposes, then holders of Existing Notes could have U.S. federal income tax consequences that are different than those described below with respect to the Exchange Offer.

HOLDERS OF EXISTING NOTES SHOULD CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO THE U.S. FEDERAL, STATE, LOCAL AND NON-U.S. TAX CONSEQUENCES OF THE EXCHANGE OFFER, AS WELL AS OF THE ACQUISITION, OWNERSHIP AND DISPOSITION OF NEW NOTES.

For purposes of this discussion, a “U.S. Holder” is a beneficial owner of an Existing Note or a New Note that, for U.S. federal income tax purposes, is (i) an individual who is a citizen or resident alien of the United States, (ii) a corporation (including an entity taxable as a corporation) created under the laws of the United States or of any political subdivision thereof, (iii) an estate the income of which is subject to U.S. federal income tax regardless of its source or (iv) a trust if (a) a court within the United States is able to exercise primary supervision over the administration of the trust and one or more U.S. persons have the authority to control all substantial decisions of the trust or (b) the trust has a valid election in effect under applicable Treasury regulations to be treated as a U.S. person. Correspondingly, a “Non-U.S. Holder” is a beneficial owner of an Existing Note or a New Note that is not a U.S. Holder. If a partnership holds an Existing Note or a New Note, the U.S. federal income tax treatment of a partner generally will depend upon the status of the partner and the activities of the partnership. If you are a partner of a partnership holding an Existing Note or a New Note, you should consult your tax advisor.

U.S. Federal Income Tax Treatment of Exchange Offer

Under general principles of U.S. federal income tax law, a modification to the terms of a debt instrument, whether or not evidenced by a physical surrender of the debt instrument for a newly-issued debt instrument, can be treated as an exchange in which gain or loss is realized if the modified debt instrument differs materially either in kind or in extent from the original debt instrument. In this regard, governing Treasury regulations (the “Modification Regulations”) provide that, as a general rule, an exchange occurs when, based on all the facts and circumstances, and taking into account all changes in the terms of the debt instrument collectively (except for certain modifications that are subject to specific rules under the Modification Regulations), the legal rights or obligations that are altered, and the degree to which they are altered, are economically significant (a “significant modification”). Under the Modification Regulations, a change in the yield of a debt instrument is a significant modification if the yield of the modified debt instrument varies from the yield on the unmodified instrument (determined as of the date of the modification) by more than the greater of (i) 25 basis points or (ii) 5 percent of the annual yield on the unmodified instrument. Additionally, an extension of the maturity of a debt instrument is a significant modification under the Modification Regulations if the extension represents a material deferral of scheduled payments on the debt instrument. For this purpose, a deferral of scheduled payments generally will not be considered material if it does not exceed the lesser of 5 years or 50% of the original term of the debt instrument.

We believe that the exchange of Existing Notes for New Notes pursuant to the Exchange Offer will constitute a significant modification to the terms of the Existing Notes under the Modification Regulations. Accordingly, for U.S. federal income tax purposes, we intend to treat holders participating in the Exchange Offer as having exchanged their Existing Notes for the New Notes for U.S. federal income tax purposes.

U.S. Federal Income Tax Consequences to U.S. Holders

Exchange of Existing Notes for New Notes

For U.S. Holders that exchange the Existing Notes for the New Notes pursuant to the Exchange Offer, the resulting U.S. federal income tax consequences will depend on whether or not such exchange qualifies as a “recapitalization” under the Code. In general, the Code requirements for recapitalization treatment will be met so long as both the Existing Notes and the New Notes are considered securities for U.S. federal income tax purposes. In this regard, the term “securities” is not clearly defined under current U.S. federal income tax law; instead, the status of a debt instrument as a security typically is determined based upon an overall evaluation of the nature of the debt instrument, the term to maturity of the debt instrument, the extent of the investor’s proprietary interest in the issuer of the debt instrument and certain other factors. While the matter is not free from doubt, we believe that both the Existing Notes and the New Notes will be considered securities for U.S. federal income tax purposes and, thus, that the exchange of the Existing Notes for the New Notes pursuant to the Exchange Offer will qualify as a recapitalization under the Code.

Based upon such recapitalization treatment, except for the amounts attributable to accrued but unpaid qualified stated interest (taxation of which is described below), a U.S. Holder would not recognize taxable gain or loss in respect of the exchange of Existing Notes for New Notes, except that gain (generally measured by the amount by which the initial issue price of the New Notes, determined in the manner described below, and any cash received by the U.S. Holder exceed the U.S. Holder’s adjusted tax basis of the Existing Notes) would be recognized by the U.S. Holder to the extent of the fair market value of the excess of the principal amount of the New Notes over the principal amount of the Existing Notes (the “excess principal amount”) and any cash received by the U.S. Holder pursuant to the Exchange Offer. The calculation of the excess principal amount is not entirely clear under current U.S. federal income tax law, and such calculation might be based upon the difference, if any, between the initial issue price of the New Notes and the adjusted issue price of the Existing Notes (i.e., the issue price of the Existing Notes, increased by any “original issue discount” (“OID”) previously accrued in respect of the Existing Notes and decreased by any principal payments previously made on the Existing Notes) at the time of the exchange. U.S. Holders should consult their own tax advisors regarding alternative interpretations of the excess principal amount and the U.S. federal income tax consequences thereof.

Notwithstanding the foregoing, amounts received by a U.S. Holder that are attributable to accrued but unpaid qualified stated interest on the Existing Notes will be treated as interest for U.S. federal income tax purposes, and will be taxable as interest income to the extent such interest has not previously been included in the gross income of a U.S. Holder.

A gain, if any, recognized by a U.S. Holder in respect of the exchange of the Existing Notes for the New Notes generally would be treated as capital gain, except to the extent attributable to accrued market discount on the Existing Notes that has not been previously included in gross income by the U.S. Holder (which amount would be taxable as ordinary income), and would be treated as a long-term capital gain if the Existing Notes had been held for more than one year at the time of the exchange. Certain U.S. Holders (including individuals) are eligible for preferential rates of U.S. federal income taxation in respect of long-term capital gains. The holding period for the New Notes should include the period of time during which the exchanging U.S. Holder held the Existing Notes, except that (i) for any excess principal amount of the New Notes, the holding period will begin on the day following the exchange and (ii) for any New Notes issued in lieu of accrued but unpaid interest on the Existing Notes, the holding period will begin on the day of the receipt of such New Notes. The initial tax basis of the New Notes received in the exchange should equal the adjusted tax basis of the Existing Notes immediately prior to the exchange, increased by the amount of gain, if any, recognized by the exchanging U.S. Holder in respect of the exchange. The initial tax basis of the New Notes received in lieu of accrued but unpaid interest on the Existing notes should equal the fair market value of the New Notes on the day of the receipt.

In the unlikely event that the exchange of the Existing Notes for the New Notes pursuant to the Exchange Offer failed to qualify as a recapitalization under the Code, an exchanging U.S. Holder would recognize taxable gain or loss in an amount equal to the difference between (i) the initial issue price of the New Notes received in the exchange (determined in the manner described above) and (ii) the U.S. Holder’s adjusted tax basis in the Existing Notes surrendered in the exchange. Such gain or loss generally would be capital gain or loss, except to the extent attributable to accrued market discount on the Existing Notes that has not previously been included in gross income by the U.S. Holder (which amount would be taxable as ordinary income), and would be long-term capital gain or loss if the Existing Notes had been held for more than one year at the time of the exchange. Certain U.S. Holders (including individuals) are eligible for preferential rates of U.S. federal income taxation in respect of long-term capital gains. The ability of a U.S. Holder to deduct a capital loss could be subject to limitations under the Code.

The initial issue price of the New Notes should be equal to the fair market value of the New Notes at the time of the exchange if the New Notes are “traded on an established market” (generally meaning that the new notes are listed on a major securities exchange, appear on a quotation medium of general circulation or otherwise are readily quotable by dealers, brokers or traders) during the 60-day period ending 30 days after the date of the exchange of Existing Notes for New Notes (“publicly traded”). If the New Notes are not publicly traded, but the Existing Notes are publicly traded, the initial issue price of the New Notes generally should be equal to the fair market value of the Existing Notes at the time of the exchange. If neither the New Notes nor the Existing Notes are publicly traded, the initial issue price of the New Notes should be equal to the New Notes’ stated redemption price at maturity, determined in the manner described below under “Interest/Original Issue Discount/Premium/Market Discount on New Notes.” We believe that the Existing Notes should be considered publicly traded but cannot predict whether the New Notes will be publicly traded following their issuance.

Interest/Original Issue Discount/Premium/Market Discount on New Notes

For U.S. federal income tax purposes, the New Notes will be treated as issued with OID equal to the excess of the “stated redemption price at maturity” over the “issue price” of the New Notes. The “stated redemption price at maturity” of the New Notes is the sum of all payments to be made on the New Notes other than “qualified stated interest.” The term “qualified stated interest” means, generally, stated interest that is unconditionally payable at least annually at a single fixed or variable rate. Because up to 50 percent of the interest may be paid in kind at the option of the Issuer, only 50 percent of the interest to be paid on the New Notes (i.e., interest that is unconditionally payable in cash) will be qualified stated interest. Accordingly, the other 50 percent of interest and all principal payments on the New Notes will be treated as part of the New Notes’ stated redemption price at maturity.

The right to issue a New Note in lieu of cash payment of interest is treated as an issuer’s option to defer the interest payment until maturity. For purposes of computing the amount of OID and the yield to maturity of the New Notes, we will be deemed to exercise or not exercise such payment option in a manner that minimizes the yield to maturity of the New Notes.

A U.S. Holder will be required to include qualified stated interest on a New Note in gross income when received or accrued depending on the U.S. Holder’s regular method of tax accounting. In general, a U.S. Holder will be required to accrue OID in respect of the New Notes into gross income on a constant-yield basis over the term of the New Notes. However, a U.S. Holder will be treated as having “acquisition premium” on the New Notes if the adjusted tax basis of the U.S. Holder’s New Notes (determined in the manner described above) is greater than their issue price immediately after the exchange of Existing Notes for New Notes, but such adjusted tax basis is less than or equal to the stated principal amount of the New Notes. In that case, the amount of OID includible in the U.S. Holder’s gross income in any taxable year would be reduced by an allocable portion of the acquisition premium (generally determined by multiplying the annual OID accrual by a fraction, the numerator of which is the acquisition premium, and the denominator of which is the total OID on the New Notes).

To the extent that immediately after the exchange of the Existing Notes for the New Notes, a U.S. Holder has an adjusted tax basis in the New Notes in excess of their stated principal amount, the New Notes will be treated for U.S. federal income tax purposes as issued with bond premium, and no OID would be required to be included in the gross income of the U.S. Holders in respect of the New Notes. U.S. Holders should consult their own tax advisors regarding the availability of an election to amortize bond premium for U.S. federal income tax purposes.

To the extent that immediately after the exchange of the Existing Notes for the New Notes, a U.S. Holder has an adjusted tax basis in the New Notes that is less than the issue price of the New Notes, the New Notes will be treated for U.S. federal income tax purposes as issued with market discount, subject to a de minimis exception. Assuming that the exchange of the Existing Notes for the New Notes qualifies as a recapitalization under the Code, any accrued market discount on the Existing Notes, to the extent not previously included in gross income, will be treated as accrued market discount on the New Notes if the New Notes have market discount or as ordinary income upon the subsequent disposition of the New Notes if the New Notes do not have market discount. In general, gain recognized upon the sale or other disposition of the New Notes having market discount would be treated as ordinary income to the extent of the market discount that accrued during a U.S. Holder’s holding period for the New Notes, unless the U.S. Holder elects to annually include market discount in gross income over time as the market discount accrues. A U.S. Holder that holds the New Notes with market discount, and that does not elect to accrue market discount into gross income over time, may be required to defer the deduction of interest expense incurred or continued to purchase or carry the New Notes.

Payment in Kind

The amount of OID accruing with respect to any New Note for any taxable year will be the sum of the “daily portions” of OID with respect to such New Note for each day during the taxable year in which a U.S. Holder owns the New Note. The daily portion is determined by allocating to each day in any “accrual period” a pro rata portion of the OID allocable to that accrual period. An accrual period may be of any length and may vary in length over the term of a PIK note, provided that each accrual period is no longer than one year and each scheduled payment of principal or interest occurs either on the final day or on the first day of an accrual period.

The amount of OID allocable to any full accrual period with respect to a New Note will be equal to: (i) the “adjusted issue price” of such New Note at the beginning of that accrual period, multiplied by (ii) the yield to maturity of such New Note. The yield to maturity is the discount rate which, when used in computing the present value of all principal and interest payments to be made under a New Note, produces an amount equal to the New Note’s issue price. The adjusted issue price of a New Note at the beginning of its first accrual period will be equal to its initial issue price. The adjusted issue price at the beginning of any subsequent accrual period will be equal to (i) the adjusted issue price at the beginning of the preceding accrual period, plus (ii) the amount of OID accrued during the preceding accrual period, minus (iii) payments made on the New Note during the preceding accrual period, other than payments of qualified stated interest.

OID allocable to a final accrual period is the difference between the amount payable at maturity and the adjusted issue price at the beginning of the final accrual period. If all accrual periods are of equal length, except for an initial short accrual period, the amount of OID allocable to the initial short accrual period may be computed under any reasonable method.

If an additional New Note (the “Payment-in-Kind Note”) is issued in lieu of cash interest payment on a New Note, such Payment-in-Kind Note will be aggregated with the New Note and treated as part of the same debt instrument. Accordingly, the adjusted issue price of the combined New Note and Payment-in-Kind Note will not be reduced upon the issuance of the Payment-in-Kind Note, and the stated redemption price at maturity of the combined New Note and Payment-in-Kind Note will not change upon the issuance of the Payment-in-Kind Note and will include the interest payable under the Payment-in-Kind Note.

Sale, Retirement or Other Taxable Disposition of New Notes

Upon the sale, retirement or other taxable disposition of a New Note, a U.S. Holder will recognize gain or loss equal to the difference between the amount realized upon the sale, retirement or other taxable disposition (less amounts relating to accrued but unpaid qualified stated interest, which will be taxable as ordinary interest income) and the U.S. Holder’s adjusted tax basis in the New Note. In general, a U.S. Holder’s adjusted tax basis in a New Note will equal the U.S. Holder’s initial tax basis in the New Note, determined in a manner described above, increased by any OID and any market discount previously included in the U.S. Holder’s income on the New Note prior to the disposition of the New Note and reduced by any payments (other than payments in the form of Payment-in-Kind Notes, defined below) received on the New Note. Upon a disposition of a New Note or a Payment-in-Kind Note issued in respect thereof, unless the New Note and the Payment-in-Kind Note are disposed of together, the adjusted tax basis and adjusted issue price of the combined New Note and Payment-in-Kind Note most likely will be allocated between such New Note and the Payment-in-Kind Note based on their respective principal amounts.

Gain or loss generally will be capital gain or loss, except to the extent attributable to accrued market discount that has not previously been included in gross income by the U.S. Holder (which amount would be taxable as ordinary income), and will be long-term capital gain or loss if the holding period for the New Notes exceeded one year at the time of the disposition. Certain U.S. Holders (including individuals) are eligible for preferential rates of U.S. federal income taxation in respect of long-term capital gains. The ability of a U.S. Holder to deduct a capital loss could be subject to limitations under the Code.

Change of Control Redemption

We intend to take the position that the likelihood of payment of a redemption premium upon the occurrence of certain events described above under “Description of the New Notes — Change of Control” is remote within the meaning of the applicable Treasury regulations and that, therefore, any payment of the redemption premium, if made, would be taxable to a U.S. Holder as ordinary interest income in accordance with the U.S. Holder’s regular method of income tax accounting. The IRS may take a different position, however, which could affect the timing of a U.S. Holder’s income with respect to the redemption premium upon the occurrence of any of the designated events.

U.S. Federal Income Tax Consequences to Non-U.S. Holders

A Non-U.S. Holder will not be subject to U.S. federal income tax in respect of gain, if any, recognized upon the exchange of the Existing Notes for the New Notes pursuant to the Exchange Offer, or upon a subsequent sale, retirement or other taxable disposition of the New Notes (or Payment-in-Kind Note), unless: (i) the gain is effectively connected with the conduct by the Non-U.S. Holder of a trade or business within the United States, or (ii) the Non-U.S. Holder is an individual who is present in the United States for 183 or more days in the taxable year in which the disposition occurs and certain other conditions are met. Moreover, the receipt by a Non-U.S. Holder of a payment in respect of accrued interest on the Existing Notes, or in respect of interest or OID on the New Notes (or Payment-in-Kind Notes), will not be subject to U.S. federal income or withholding tax so long as the Existing Notes or New Notes, as the case may be, are not held by the Non-U.S. Holder in connection with the conduct of a trade or business within the United States.

Backup Withholding

Payments of principal and interest on a New Note and the proceeds of a sale or redemption of a New Note by a U.S. Holder may be subject to backup withholding, currently at the rate of 30%, unless (i) the U.S. Holder is a corporation or other exempt recipient and, if required, demonstrates such exemption from backup withholding, or (ii) the U.S. Holder provides a correct taxpayer identification number (“TIN”), certifies that such U.S. Holder is not currently subject to backup withholding and otherwise complies with the backup withholding requirements. Backup withholding also may apply to a Non-U.S. Holder that fails to certify as to its non-U.S. status by submitting a properly completed IRS Form W-8BEN (or other applicable form) to us.

Backup withholding is not an additional tax. Rather, the amount of any backup withholding would be allowed as a credit against a holder’s U.S. federal income tax liability. If backup withholding results in an overpayment of U.S. federal income taxes, the holder may obtain a refund provided that the required information is furnished to the IRS. A holder that does not provide a correct TIN may be subject to penalties imposed by the IRS.

THE FOREGOING SUMMARY OF CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE EXCHANGE OFFER IS INTENDED ONLY FOR GENERAL INFORMATION. ACCORDINGLY, HOLDERS OF THE EXISTING NOTES ARE URGED TO CONSULT WITH THEIR OWN TAX ADVISORS AS TO THE SPECIFIC CONSEQUENCES TO THEM OF THE EXCHANGE OF THE EXISTING NOTES FOR THE NEW NOTES UNDER U.S. FEDERAL INCOME TAX LAW, AS WELL AS UNDER APPLICABLE STATE, LOCAL AND NON-U.S. TAX LAWS.

ARGENTINE TAXATION

The following discussion is a summary of certain Argentine tax considerations associated with an investment in the New Notes. The discussion is for general information only and is based on current Argentine laws and regulations in force as of the date of this Offering Memorandum. Moreover, this discussion does not reflect all potential tax consequences arising from an investment in the New Notes. While this description is considered to be a correct interpretation of the existing laws and regulations in force as of the date of this Offering Memorandum, no assurance can be given that the courts or fiscal authorities responsible for the administration of such laws will agree with this interpretation or that changes in such laws or the interpretation thereof by such courts or authorities will not occur.

PROSPECTIVE HOLDERS OF THE NEW NOTES ARE URGED TO CONSULT THEIR OWN ADVISORS REGARDING THE TAX CONSEQUENCES APPLICABLE TO THEIR PARTICULAR CIRCUMSTANCES DERIVING FROM THE PURCHASE AND SALE, HOLDING, EXCHANGE, OFFSET OR ANY OTHER KIND OF DISPOSITION OF THE EXCHANGE NOTES AND THE PAYMENT OF INTEREST THEREON.

Income Tax

Resident individuals, including undivided estates and legal entities resident in Argentina, are subject to Argentine tax on their profits obtained both in Argentina and abroad. Non-resident individuals and entities are taxed only on their profits derived from Argentine sources.

The gains derived from the purchase and sale, barter, exchange, conversion or disposition of the negotiable obligations, as well as restatements or adjustments of principal or interest thereon, are exempt from Argentine income tax, regardless of the residence of the holder, as long as the negotiable obligations are placed by means of a public offering authorized by the CNV and the funds obtained are invested in fixed assets located in Argentina, working capital used in Argentina or the refinancing of liabilities, or they are used to pay in capital in corporations controlled by, or related to, the issuer, which uses the funds for one of the above-mentioned purposes (the “Requirements”). In the opinion of the Issuer the Existing Notes meet the Requirements; hence, the tendering Noteholders will have no realization event for income tax purposes.

If the Issuer does not comply with the Requirements, the above-mentioned exemption will not apply, and the Issuer will be responsible for the payment of Argentine taxes on interest income with respect to the Existing Notes and to the New Notes, which would have otherwise corresponded to the holders of such negotiable obligations.

The exemption is not applicable to Argentine residents who are required to make adjustments for inflation for tax purposes under Title VI of the Argentine Income Tax Law (including, but not limited to, corporations, limited liability companies, civil associations and some trusts and investment funds). Therefore, the tendering of the Existing Notes will be considered a realization event for said entities. The difference between the fair market value of the New Notes received and the tax basis of the Existing Notes, if positive, shall be a capital gain, taxable at 35%; if negative, it shall be a capital loss.

Presumptive Minimum Income Tax

The Presumptive Minimum Income Tax (the “PMIT”) is levied on the holding of certain income‑generating assets. Corporations domiciled in Argentina, among others, are subject to the tax at the rate of 1% (0.20% in the case of local financial entities) applicable over the total value of assets, including the Existing and/or the New Notes, above an aggregate amount of Ps.200,000. This tax will only be owed if the income tax determined for any fiscal year does not equal or exceed the amount owed under the PMIT. In such case, only the difference between the PMIT and the income tax, both determined for same fiscal year, shall be paid. Any PMIT paid will be applied as a credit toward income tax owed in the immediately following ten fiscal years.

Individuals and undivided estates and non-residents without a permanent establishment in Argentina are out of the scope of the PMIT.

Personal Assets Tax

Existing Notes and/or New Notes held by individuals and undivided estates resident in Argentina on December 31 of each year are included in the tax basis of the Personal Assets Tax. The value will be the market value of the Existing Notes and/or New Notes, as the case may be, at the closing of the last business day of each year. There is a non-taxable minimum of Ps.102,300. If the tax basis is Ps.302,300 or less, there is a 0.5% tax on the excess of Ps.102,300. If the tax basis is more than Ps.302,300 there is a 0.75% tax on the excess of Ps.102,300.

With regard to individuals or undivided estates resident outside Argentina, personal assets are subject to a 0.75% tax on their value on December 31 of each year. The minimum tax liability is Ps.255.75. The Personal Assets Tax liability is paid by the individual or legal entity domiciled in Argentina that has the custody of or keeps in deposits, holds, manages, maintains, or has the joint ownership or the right of possession, use, enjoyment or disposal of the assets owned by the non-resident individuals or undivided estates (“Substitute Taxpayer”). No other procedure for the collection of the tax has been established with respect to the negotiable obligations if such individuals or undivided estates do not have a Substitute Taxpayer in Argentina.

The Substitute Taxpayer may recover any amount paid with respect to the Personal Assets Tax on behalf of the non-resident owner by withholding an amount equivalent to the interest paid on the negotiable obligations or by selling negotiable obligations on which the Personal Assets Tax is levied.

Although the tax is levied only on those securities held by individuals domiciled or undivided estates located in Argentina or abroad, the Personal Assets Tax Law establishes a legal presumption, which does not allow proof of any kind to the contrary, that any securities issued by Argentina private issuers and which are directly owned (“titularidad directa”) by a foreign legal entity that (i) is domiciled in a jurisdiction which does not require shares or private securities to be held in registered form, and (ii) (a) pursuant to its by-laws or the applicable regulatory regime of such foreign entity, may only carry out investment activities outside the jurisdiction of its incorporation or (b) cannot carry out certain transactions authorized by its by-laws or the applicable regulatory regime in its jurisdiction of incorporation are deemed to be owned by individuals domiciled, or undivided estates located, in Argentina and, therefore, subject to the Personal Assets Tax.

In such cases, the law imposes the obligation to pay the Personal Assets Tax at an aggregate rate of 1.5% on us (the “Substitute Obligor”). The Personal Asset Tax Law also authorizes the Substitute Obligor to seek recovery of the amount so paid, without limitation, by way of withholding or by foreclosing on the assets that gave rise to such payment.

The above legal presumption shall not apply to the following foreign legal entities that directly own securities, such as the negotiable obligations: (i) insurance companies, (ii) open-end investment funds, (iii) pension funds and (iv) banks or financial entities whose head office is incorporated in a country whose central bank or equivalent authority has adopted the international standards of supervision established by the Basle Committee.

Furthermore, Decree No. 812/96, dated July 24, 1996, establishes that the legal presumption discussed above shall not apply to shares and debt-related private securities, whose public offering has been authorized by the CNV and which are tradable on the stock exchanges located in Argentina or abroad. In order to ensure that this legal presumption will not apply and, correspondingly, that we will not be liable as a Substitute Obligor in respect of the Existing Notes and/or the New Notes, we shall keep in its records a duly certified copy of the CNV resolution authorizing the public offering of the shares or debt-related private securities and evidence verifying that such certificate or authorization was effective as of December 31 of the year in which the tax liability occurred, as required by Resolution No. 4,203 of the Dirección General Impositiva.

Value-Added Tax

Financial transactions and obligations related to the issuance, subscription, placing, transfer, amortization, interest and cancellation of Existing Notes and/or New Notes are exempt from Value-Added Tax as long as the negotiable obligations meet the Requirements. In the opinion of the Issuer, the Existing Notes meet the Requirements, hence the tendering holders will have no realization event for Value-Added Tax purposes.

Tax on Credits and Debits on Bank Accounts

To the extent that local checking bank accounts are used to receive payments under the Exchange Offer, the Existing Notes and/or the New Notes, debits and credits arising from deposits of cash on local checking bank accounts owned by the tendering holders related to the Exchange Offer, will be subject to Tax on Credits and Debits on Bank Accounts at an applicable rate of 0.6% (applicable to each debit or credit), or at the rate of 1.2% on other transactions that are used as a substitute for the use of such Argentine checking bank account. The tax is withheld by the banking institution.

Turnover Taxes

The turnover tax is a local sales tax levied by the Argentine provinces and the City of Buenos Aires. The tax basis is the amount of gross receipts received from any business activity within the jurisdiction. They may have differences from province to province. The average tax rate in those provinces that do not exempt negotiable obligations is about 4%.

All income from transactions related to negotiable obligations issued according to Law No. 23,576, such as the Existing Notes and the New Notes, is exempt from the turnover tax in the City of Buenos Aires. Gross receipts from the Existing Notes and the New Notes are exempt in the province of Buenos Aires, as long as they are also exempt for income tax purposes.

Stamp Taxes

No Argentine stamp taxes shall be payable by holders of the negotiable obligations.

Court Duties

In the event it becomes necessary to initiate court proceedings to enforce any of the terms and conditions of the New Notes, a court duty will be imposed, equivalent to 3% of the amount claimed before any Argentine court sitting in the City of Buenos Aires.

INDEPENDENT ACCOUNTANTS

The financial statements as of and for the fiscal years ended June 30, 2002, 2001 and 2000 are derived from our Consolidated Financial Statements prepared in accordance with Argentine GAAP, which have been issued with a qualified opinion, in accordance with generally accepted auditing standards in Argentina, by PricewaterhouseCoopers, independent accountants, as stated in their report appearing elsewhere herein, which contains explanatory paragraphs relating to our ability to continue as a going concern and certain departures from Argentine GAAP. The financial statements for the three-month periods ended September 30, 2002 and 2001 are derived from our Interim Financial Statements prepared in accordance with Argentine GAAP. With respect to the Interim Financial Statements for the three-month periods ended September 30, 2002 and 2001 included in this Offering Memorandum, PricewaterhouseCoopers, independent accountants, reported that they have applied limited procedures in accordance with the procedures established by Technical Resolution No. 7 of the Federation of Professional Councils in Economic Sciences for a limited review of Interim Financial Statements. Their report dated November 14, 2002 appearing herein states that they did not audit and they do not express an opinion on the Interim Financial Statements. Accordingly, the degree of reliance on their report on such information should be restricted in light of the limited nature of the review procedures applied.

LEGAL MATTERS

Certain legal matters with respect to United States law will be passed upon for us by Shearman & Sterling, New York, New York. Certain legal matters with respect to Argentine law will be passed upon for us by Estudio Carri Perez, Ferla & Muzi, Córdoba, Argentina. Certain legal matters with respect to Argentine law will be passed upon for the Exclusive Dealer Manager by Bruchou, Fernandez Madero, Lombardi & Mitrani, Buenos Aires, Argentina.

WHERE YOU CAN FIND MORE INFORMATION

You have been furnished with a copy of this Offering Memorandum. By receiving this Offering Memorandum you acknowledged that (a) you have been afforded an opportunity to request from us and have received all additional information considered by you to be necessary to verify the accuracy and completeness of the information included or incorporated by reference herein, (b) you have not relied on the Trustee, the Exclusive Dealer Manager, the Exchange Agent, the Information Agent or any person affiliated with such persons in connection with your investigation of the accuracy of this additional information or your investment decision and (c) except as provided pursuant to (a) above, no person has been authorized to give any information or to make any representation concerning the New Notes, other than those contained in this Offering Memorandum. If given or made, any other information or representation should not be relied upon as having been authorized by us, the Trustee, the Exclusive Dealer Manager, the Exchange Agent or the Information Agent.

This Offering Memorandum contains summaries of the terms of certain agreements that we believe to be accurate in all material respects. However, we refer you to the actual agreements for complete information relating to those agreements. All summaries are qualified in their entirety by this reference. We will make copies of those documents available to you upon your request to us, to the Trustee or to the Trustee’s representative in Buenos Aires.

We are currently exempt from the reporting requirements of the Securities Exchange Act of 1934, as amended, or the Exchange Act, pursuant to Rule 12g3‑2(b) under the Exchange Act. To the extent that any New Notes are “restricted securities” (as such term is defined in Rule 144(a)(3) under the Securities Act), during any period in which we are neither exempt from such requirements pursuant to Rule 12g3‑2(b) nor a reporting company under Section 13 or 15(d) of the Exchange Act, we have agreed to make available to each holder and each prospective purchaser of the New Notes designated by a holder, upon request, the information required to be provided pursuant to Rule 144A under the Securities Act.

We will also make available copies of the English language version or summaries of such reports or notices as may be filed or submitted by (and promptly after filing or submission by) us to the CNV or the SEC, in each case to the extent that any such report or notice is generally available to our security holders or the public in Argentina, or is filed or submitted pursuant to Rule 12g3‑2(b). We will furnish the Trustee copies in English of our audited annual financial statements in accordance with Argentine GAAP and our unaudited quarterly financial statements in accordance with Argentine GAAP for each of the first three quarters of our fiscal year. See “Description of the New Notes — Certain Covenants.” Upon receipt thereof, the Trustee will promptly mail copies of such statements to all holders of New Notes.

SERVICE OF PROCESS AND ENFORCEMENT OF CIVIL LIABILITIES

We are a sociedad anónima organized under the laws of Argentina. All of the directors, members of the Supervisory Committee and officers named herein reside outside the United States. All or a substantial portion of our assets and the assets of such directors, members of the Supervisory Committee and officers are located outside the United States. As a result, it may not be possible for investors to effect service of process outside Argentina upon us or such persons, or to enforce judgments against us or such persons obtained in courts outside Argentina predicated upon our civil liabilities or such directors, members of the Supervisory Committee and officers under the laws of jurisdictions other than Argentina, including any judgment predicated upon United States federal securities laws. We have been advised by Estudio Carri Perez, Ferla & Muzi, our Argentine legal counsel, that there is doubt as to the enforceability in Argentina, in original actions or in actions for enforcement of judgments of United States courts, of civil liabilities predicated solely upon the federal securities laws of the United States.

ANNEX A

PRINCIPAL DIFFERENCES BETWEEN

ARGENTINE GAAP AND U.S. GAAP

The principal differences between Argentine GAAP and U.S. GAAP relevant to the financial information of the Company are described below. Only differences with a significant potential impact on the statements of operations and shareholders’ equity were considered.

Restatement of Financial Statements in Constant Argentine Pesos

In accordance with Argentine GAAP, effective September 1, 1995, we began accounting for our financial transactions on a historical cost basis, without considering the effects of inflation. Prior to September 1, 1995 the financial statements had been prepared on the basis of general price level accounting, which reflects changes in the purchasing power of the Argentine Peso in the historical financial statements. The August 31, 1995 balances, adjusted to the general purchasing power of the Argentine Peso at that date, became the historical cost basis for subsequent accounting and reporting. As from that date, in line with professional accounting standards and the requirements of the control bodies, we discontinued the restatement of our financial statements until December 31, 2001. As established by Resolution No. 3/2002 of the Professional Council in Economic Sciences of the Autonomous City of Buenos Aires and Resolution No. 415 of the National Securities Commission, since January 1, 2002 we resumed the recognition of the effects of inflation in our financial statements. To this end, we followed the restatement method established by Technical Pronouncement No. 6 of the Federation of Professional Councils in Economic Sciences (FACPCE), as amended by Technical Pronouncement No. 19, considering that the accounting measurements restated due to the change in the purchasing power of the currency up to August 31, 1995, as well as those which have been originated between that date and December 31, 2001, are stated in the currency value as of the latter date.

Under U.S. GAAP, no inflation adjustment is permitted unless the company is operating in a highly inflationary environment.

Government Subsidy and Fee Payments

Under Argentine GAAP, we recognize the subsidy and fee related to the Metrovías subway concession in the periods when they become due from or payable to the federal government as they are considered revenue or expense adjustment mechanisms built into the concession contract. Throughout the term of the concession contract, tariff rates are established by the government and are not designed to recover the cost of the capital improvements being made and therefore the subsidies represent supplementary revenues during the initial years when the capital improvements are minimal. Conversely, the fees paid to the government in subsequent years represent the theoretical excess revenues above those to which the concessionaire is entitled, resulting from the increased ridership levels correlated with the scheduled capital improvements.

Under U.S. GAAP, we would recognize the aforementioned subsidies and fees utilizing a systematic allocation method over the term of the concession contract based on the relative value of the subway system as affected by capital expenditures funded by the government to expand subway capacity. To the extent that the value is deemed to be negative, subsidies would be recognized as income. Fees to the government would be recognized in the statement of operations as an expense in proportion to the capital improvements being made to the subway, which may not coincide with when they are currently payable. There is no current authoritative U.S. accounting literature governing the accounting for concession subsidies, and management believes that its present accounting treatment is appropriate. However, should the Company decide to offer securities in a public offering in the United States, it is possible that the Securities and Exchange Commission would require the Company to utilize a different method of accounting for such concession.

Income Taxes

U.S. GAAP would require the Company to account for income taxes in accordance with Statement of Financial Accounting Standards No. 109, Accounting for Income Taxes (“SFAS 109”), which is a comprehensive liability method of accounting for income taxes. Under the comprehensive liability method, deferred income taxes are recognized for the tax consequences of temporary differences between the financial statement carrying amounts and the tax bases of existing assets and liabilities. A deferred tax asset is recognized for temporary differences that will result in deductible amounts in future years and for net operating loss carry forwards. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized.

Under Argentine GAAP, income taxes are recognized on the basis of amounts currently due in accordance with Argentine tax regulations, and deferred taxes, including net operating loss carry forwards, are not recognized. However, new accounting pronouncements issued by the FACPCE, and adopted by the CNV as from January 1, 2003, require the recognition of deferred income taxes for the temporary differences between the financial statement carrying amounts and the tax bases of assets and liabilities.

Pre-operating Expenses

Argentine GAAP permits, but does not require, that pre-operating costs be capitalized. Accordingly, we capitalized as intangible assets certain pre-operating costs associated with the mass transportation concession. Such costs are being amortized on a straight-line basis over the expected benefit periods, not exceeding twenty years. Under U.S. GAAP, these costs would be recognized as expense in the period in which they are incurred.

Equity Method Investees

Permanent investments in companies are accounted for under Argentine GAAP using the equity method of accounting when ownership is a permanent investment of less than 50% and the investor exerts influence. Under Argentine GAAP, the equity method would be applied even in the case of an investment in which the holder owns less than 20%, for as long as it proves to exert significant influence over the investee’s business decisions. Under U.S. GAAP, the equity method of accounting is used for investments, based on U.S. GAAP underlying financial statements, in which a company has a 20% to 50% ownership interest and significant influence over the operations of the investee and in joint ventures in which neither party has control. Investments under 20% are usually carried at cost. For those entities that would be recorded at cost under U.S. GAAP, the dividends received would be recorded as income with no reduction to the investment account.

Investments in Debt and Equity Securities

Under Argentine GAAP, investments in debt and equity securities can be classified as trading or held-to-maturity. Trading securities are carried at their quoted value at year-end, net of estimated selling expenses, with unrealized holding gains and losses recognized in earnings. Held-to-maturity securities are valued at amortized cost.

Under U.S. GAAP, in accordance with SFAS 115 “Accounting for Certain Investments in Debt and Equity Securities,” for enterprises in industries not having specialized accounting practices, the accounting and reporting for investments in equity securities that have readily determinable fair values and for all investments in debt securities is as follows:

(i) debt securities that the enterprise has the positive intent and ability to hold to maturity are classified as held-to-maturity securities and are reported at amortized cost;

(ii) debt and equity securities that are bought and held principally for the purpose of selling them in the near term are classified as trading securities and reported at fair value, with unrealized gains and losses included in earnings; and

(iii) debt and equity securities not classified as either held to maturity or trading securities are classified as available for sale securities and reported at fair value, with unrealized gains and losses excluded from earnings and reported in other comprehensive income.

Capitalized Interest

Argentine GAAP allows, but does not require, companies to capitalize interest on self‑constructed assets or third party construction projects. Therefore, for Argentine GAAP purposes, we did not capitalize any interest for qualifying assets such as the highway concession contract. However, new accounting pronouncements issued by the FACPCE, and adopted by the CNV as from January 1, 2003, provide for mandatory capitalization of interests incurred in connection with the construction of assets which have a period of time to get them ready for their intended use.

Under U.S. GAAP, interest cost incurred during the period that assets are under construction must be included in the cost of such assets, though the basis of calculation differs from Argentine GAAP. Capitalization of financial costs in inventories is only permitted in specific instances. SFAS No. 34 “Capitalization of Interest Cost” states that interest cost should be included as a component of the historical cost of (1) facilities for a company’s own use and (2) assets intended for sale or lease that are constructed as separate projects and discrete projects. Capitalized interest should be amortized over the life of the facilities or included in cost of sales when the asset is sold.

Capitalization of Exchange Losses

As established by Resolution 3/2002 issued by the Professional Council in Economic Sciences of the Autonomous City of Buenos Aires and Resolution No. 398 of the National Securities Commission, exchange differences arising out of the devaluation of the Argentine Peso as from January 6, 2002, as well as other effects derived from the devaluation on liabilities denominated in foreign currency that existed at that date can be capitalized as part of the cost of the assets acquired or constructed through such financing if a direct relationship exists. As an alternative criterion, it is possible to opt to give similar treatment to the exchange differences generated by indirect financing.

We have applied these rules, and accordingly, under Argentine GAAP, we capitalized certain exchange differences within Investments and Property, plant and equipment, as a consequence of direct financing.

Under U.S. GAAP, SFAS No. 34 “Capitalization of Interest Cost” states that foreign exchange losses and loss on monetary position are not subject to capitalization.

Revaluation of Property, Plant and Equipment

Under Argentine GAAP, companies were permitted to value their fixed assets at restated appraised values resulting from an appraisal revaluation performed by an independent expert. Under U.S. GAAP, property, plant and equipment are reported at their historical cost less accumulated depreciation, subject to an impairment evaluation. There is no difference in depreciation expense under Argentine GAAP and U.S. GAAP as, under Argentine GAAP, the depreciation on revalued assets that is charged to the statement of operations is then transferred to, and offset against, the revaluation reserve account in shareholders’ equity.

Pro Rata Consolidation of UTEs

Under Argentine GAAP, we consolidate our investments in joint ventures (“UTEs”) if we exercise “control” (as defined in Technical Resolution No. 14) of the UTE and reflect minority interests held by others therein. If we do not exercise “control” of the UTE, we account for our participation under the equity method. However, if we exercise “joint control” (as defined in Technical Resolution No. 14) of the UTE, we proportionally consolidate our portion of the UTE’s statement of operations and balance sheet accounts. Generally under U.S. GAAP, proportional consolidation is not permitted and interests in joint ventures or arrangements similar to an UTE would be accounted for by the equity method or would be fully consolidated with a minority interest being reflected.

Capital Contributions

Under Argentine GAAP, capital subscriptions receivable are recorded as an asset and as an increase to shareholders’ equity. Such capital subscriptions are classified as capital contributions within shareholders’ equity. Additionally, shareholders contributions for which shares have not been issued are included within shareholders’ equity when there is a contractual agreement to issue shares and it is probable that the share issuance will occur.

Under U.S. GAAP, subscriptions would be treated as a capital subscription receivable, but as a contra account within shareholders’ equity. Additionally, for public companies, the SEC requires classification outside of the shareholders’ equity section for accounts considered to represent mandatorily redeemable securities. Such treatment is also required for transactions such as shareholders’ contributions that are not considered permanent capital.

Business Combinations and Purchase Accounting

Under Argentine GAAP, certain business combinations are not specifically addressed by accounting pronouncements. Application of the purchase accounting method is based on fair values. Goodwill or negative goodwill recorded on the acquisition of a company is computed by the difference between the acquisition cost and the fair value of assets acquired and liabilities assumed. Goodwill is amortized over time and negative goodwill may be recognized as a gain.

Under U.S. GAAP, in accordance with APB No. 16 “Business Combinations,” business combinations are accounted for as either purchases or pooling of interests. However, these two methods are not alternatives for the same transaction and distinctive conditions must be met to require pooling of interests. All other business combinations should be treated as the acquisition of one company by another and accounted for by the purchase method. The combination of entities under common control is accounted for as a pooling of interest. Under this method, the recorded assets and liabilities of the separate enterprises generally become the recorded assets and liabilities of the combined enterprise. Additionally, the combined enterprise records as capital the capital stock and capital in excess of par or stated value of outstanding stock of the separate enterprises. Similarly, retained earnings or deficits of the separate enterprises are combined and recognized as retained earnings or deficits of the combined enterprise. Any assets or liabilities exchanged to effect the transfer are accounted for as a capital dividend to, or capital contribution by, the transferor. Under the pooling of interest method, the financial statements of the combined enterprise for periods prior to the combination are restated to present the previously separate enterprises as if they had always been combined.

The purchase method is applicable for a business combination in which one company acquires an unrelated company. The assets acquired less liabilities assumed are recorded on the basis of their fair values at the date of acquisition. Additionally, EITF 95-3 requires that, in certain circumstances, a liability should also be recorded for the costs of a plan to exit an activity and terminate/relocate employees of an acquired business. If, after the assets and liabilities of the acquired companies have been adjusted to their fair values at the acquisition date, the purchase price exceeds the amount of such fair value, the excess is recorded as goodwill and is amortized over the period of benefit, not to exceed forty years. The amount of goodwill is evaluated periodically, and in the case of impairment its value is adjusted accordingly. Excess of fair value of net assets acquired over the purchase price, referred to as negative goodwill, must be applied to reduce the non‑current assets until they are reduced to zero, and if any balance remains it is considered as a deferred credit and amortized over the estimated period to be benefited, not to exceed forty years. Under the purchase method, the financial statements of the acquiring company for periods prior to the acquisition are not restated. APB 16 requires the presentation of pro forma results of operations for business combinations accounted for as purchases.

In July 2001, the FASB issued Statement No. 141 “Business Combinations,” and Statement No. 142 “Goodwill and Other Intangible Assets” (“FAS 141” and “FAS 142,” respectively). FAS 141 supersedes APB 16 to require that the purchase method of accounting be used for all business combinations initiated after June 30, 2001, as well as all purchase method business combinations completed after June 30, 2001. Under FAS 141, if the sum of the amounts assigned to assets acquired and liabilities assumed exceeds the cost of the acquired entity, that excess shall be allocated as a pro rata reduction of the amounts that otherwise would have been assigned to certain acquired assets. If any excess remains after reducing to zero the amounts that otherwise would have been assigned to those assets, that remaining excess shall be recognized as an extraordinary gain. FAS 142 requires that goodwill and intangible assets with indefinite useful lives no longer be amortized, but instead tested for impairment at least annually in accordance with the provisions of FAS 142. FAS 142 also requires that intangible assets with definite useful lives be amortized over their respective estimated useful lives to their estimated residual values, and reviewed for impairment in accordance with FAS No. 121 “Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of.”

Foreign Currency Translation

Under Argentine GAAP, the financial statements of foreign subsidiaries have been translated to Argentine Pesos at the exchange rate prevailing at the end of each period on the basis of inflation-adjusted financial statements expressed in the local currency of each country, with translation gains and losses included in the statement of operations. However, new accounting pronouncements issued by the FACPCE, and adopted by the CNV as from January 1, 2003, change the accounting method for the translation of financial statements of foreign subsidiaries, by requiring the application of different translation methods depending on whether the foreign subsidiary qualifies as a “self-sustained business” or not, as defined by such pronouncement.

Under U.S. GAAP, the financial statements of such foreign subsidiaries would be translated into Argentine Pesos following the guidelines established in SFAS No. 52 “Foreign Currency Translation.” Financial statements of foreign operations where the local currency is the functional currency would be translated using period-end exchange rates for assets and liabilities, and weighted average exchange rates during the period for the results of operations. Adjustments resulting from these translations would be accumulated and reported as a component of accumulated other comprehensive income in shareholders’ equity. Assets and liabilities of foreign operations where the Argentine Peso is the functional currency would be translated using the exchange rate at the balance sheet date except for non-monetary assets and liabilities and shareholders’ equity accounts, which would be translated at historical rates. Revenues and expenses would be translated at average rates during the period, except for depreciation and amortization, which would be translated at historical rates. Accordingly, translation gains and losses would be included in the statement of operations.

Amortization of Investments in the Concession of Grupo Concesionario del Oeste, or GCO

Under Argentine GAAP amortization recorded by GCO equals the sum of the costs incurred and costs estimated to be incurred over the remaining term of the concession contract multiplied by the ratio of traffic during the period valued at the toll rate to the total estimated traffic over the term of the concession contract, multiplied by the toll rates expected to be in effect during the term of the concession contract.

Under U.S. GAAP, amortization of the total investment in works made by the concessionaire should be calculated using the straight-line method over the term of the concession contract.

Leasing Transactions

Under Argentine GAAP, there were no specific regulations regarding leasing transactions. The accepted practice was that all leases were to be treated as operating leases and the related expense recorded over the life of the lease. However, Technical Pronouncement No. 18 issued by the FACPCE, and adopted by the CNV as from January 1, 2003, requires the classification of certain lease agreements as capital leases when substantially all the benefits and risks of ownership of the leased property are transferred to the lessee. In such cases, an asset would be recorded for the present value of future minimum payments to be made under the corresponding agreement.

Under U.S. GAAP, the treatment of leases is governed by SFAS 13 “Accounting for Leases,” and subsequent pronouncements and amendments, and lease capitalization is required if certain conditions are met.

Employee Termination Costs in Restructuring Plan

Under Argentine GAAP, a provision is made for estimated employee termination costs arising from the decision to restructure industrial and administrative operations.

Under U.S. GAAP, EITF 94-3 specifies that a liability should be recorded for involuntary terminations only when several conditions are met, including: (i) the benefits arrangements have been communicated to the employees and (ii) the planned termination is to be completed within one year from the date of approval of the plan of termination by management. In the event of voluntary terminations, a liability is not recorded until the employee accepts the offer of termination.

Accounting Changes

Under Argentine GAAP, the cumulative effect of changes in accounting principles is generally applied as an adjustment to the current year’s opening equity balance and prior period retained earnings are restated for comparative purposes.

Under U.S. GAAP, the cumulative effect of changes in accounting principles is generally disclosed as an adjustment to earnings in the year of the change, along with pro forma disclosure of the effects of such change on prior years’ financial statements.

Balance Sheet Classification Differences

At certain times throughout the years and as of June 30, 2002, 2001 and 2000, we were not in compliance with certain financial covenants under the Indenture governing the Existing Notes. This situation remained unchanged during the three-month period ended September 30, 2002. As stipulated in the Indenture governing the Existing Notes, this circumstance enables the Trustee and/or the holders of Existing Notes, to demand the early settlement of those Notes. Furthermore, the Indenture governing the Existing Notes provides for quarterly measurements of compliance. At the date of issuance of this Offering Memorandum, nor the Trustee neither the holders of the Existing Notes demanded the early settlement of the Existing Notes. Nevertheless, under current conditions, it is probable that we will not be in compliance with the related covenants at the subsequent compliance date. Additionally, no assurance can be given that the Trustee and the holders of the Existing Notes will not demand the early settlement of such Notes in the future.

Under Argentine GAAP, we reflected the entire debt related to the Existing Notes within Non-Current liabilities. Under U.S. GAAP, Statement of Financial Accounting Standards (“SFAS”) No.78 “Classification of Obligations That Are Callable by the Creditor” clarifies how obligations that are callable by the creditor should be presented by the debtor in a classified balance sheet. Specifically, it addresses whether an obligation should be classified as a current liability if the debtor is in violation of a provision of a long-term debt agreement at the balance-sheet date and (a) the violation makes the obligation callable at the balance-sheet date or (b) the violation, if not cured within a specified grace period, will make the obligation callable within one year from the balance-sheet date. Pursuant to this guidance and given that we have not obtained a permanent waiver and there is no assurance that an acceleration will not take place within a one year period, for U.S. GAAP purposes the entire outstanding balance would have been classified as a current-liability.

Statement of operations classification differences

Under Argentine GAAP, certain income and expense items included in our consolidated financial statements were disclosed under “Other expenses, net” caption in the statement of operations. Under U.S. GAAP, these results would be included in the determination of operating (loss) income.