Post-Bankruptcy, TV Filme Pushes Ahead


Rio De Janeiro, Brazil -- Brazilian wireless cable company
TV Filme Inc. intends to resume its expansion after reducing its debt to $35 million from
$140 million as part of a bankruptcy-restructuring agreement.

The company plans to launch operations in six midsized
towns throughout Brazil next year in an effort to build business in the seven franchises
it won in a government auction late last year.

In June, it began operations in one of the franchises, the
northeastern city of Campina Grande. TV Filme is aiming for a 15 percent penetration rate
in the seven operations over the next three years. The markets have a total of 500,000
line-of-sight homes passed.

TV Filme currently has about 75,000 subscribers in its
three original franchises -- the interior cities of Brasília (Brazil's capital), Belém
and Goiânia.

"Now that we reached an agreement with our
bondholders, we can focus our attention once again on the company's growth," TV Filme
chief operating officer Carlos André Albuquerque said, adding that prior to the
debt-restructuring agreement, the company was saddled with annual interest payments of $18

In June, TV Filme defaulted on those interest payments on
$140 million of 10-year Yankee bonds maturing in 2004.

Under an agreement reached last week, bondholders will
receive $25 million in cash, 80 percent of the stock in a reorganized TV Filme and $35
million worth of new 12 percent bonds that mature in 2004 in exchange for their old debt.

Controlling shareholders Warburg Pincus Funds, Tevecap S.A.
-- an arm of Brazil's Abril Group -- and the Albuquerque family will hold 5 percent of TV
Filme. The remaining 15 percent of the company's stock will be distributed among TV Filme
management and key executives.

There will be no significant changes in the company's
management body, which is headed by Carlos André Albuquerque and his brother, Hermano
Albuquerque, president of the company.

The agreement between TV Filme and its bondholders needs
the approval of a U.S. bankruptcy-court judge. Carlos André Albuquerque said he believes
that will come in three to four months.

According to market sources, TV Filme's strength relies on
the expertise of its management, which is responsible for important pioneering efforts in

The company -- which began as a service to provide Cable
News Network to embassies in the isolated capital of Brasília -- was the first pay TV
operator in the country to provide Internet service.

"Link Express," as TV Filme's service is known,
launched in December 1997, and it has some 3,000 subscribers in Brasília.

In June, TV Filme introduced a prepaid pay TV service in
Campina Grande, aiming to attract low-income subscribers.

Under the system -- which will eventually be introduced in
all of the MSO's current and future operations -- subscribers choose among nine service
packages with monthly prices raging from $6 to $37.

However, TV Filme lacked the financial support and assets
to resist Brazil's recession and the devaluation of its currency this year, analysts said,
adding that the bankruptcy filing was its only option.