Tycoons Arrest Order Hastens Change at CEI

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BUENOS AIRES, Argentina -- A recent arrest order for a top
official at one of Latin America's most ambitious media-holding companies, Argentina's CEI
Citicorp Holdings S.A., could accelerate changes in management and ownership there.

Raul Moneta, who currently sits on the board of CEI and is
its former CEO, has been charged with fraud and conspiracy linked to two defunct
provincial banks he controls. The charges came from a Mendoza province judge, who issued
the arrest order. Moneta is still at large.

As a result of the embarrassing episode, media analysts
forecast that U.S. investment firm Hicks, Muse, Tate & Furst Inc. will boost its
controlling stake in CEI. The controversial tycoon's already weakened grip on CEI will
further unravel, they predict.

CEI counts among its holdings a joint venture with United
States-based Liberty Media International in the large Argentine MSO Cablevisión/TCI2.

The judge's order came only weeks after HMT&F partner
Thomas Hicks replaced Moneta as CEI's CEO. The executive shuffle was then followed by an
announcement that Moneta's Grupo República and HMT&F would consolidate their combined
68.8 percent share of CEI under a new holding, to be led by HMT&F and called Argentine
Media Investments.

But Moneta's minority participation in the new holding
company has yet to be determined. This has led some analysts to conclude the still
unaccounted for Moneta could be in the U.S. raising funds to hold on to a stake of CEI,
the crown jewel of his perishing empire.

Both HMT&F and CEI here have refused to comment on
Moneta's arrest, stating only that they were following events closely.

Analysts believe, however, the tycoon's legal and financial
misfortunes came at an opportune moment for the Dallas-based investors.

Moneta's value to CEI as a close political ally of outgoing
President Carlos Menem could turn into a liability if the next government -- as both major
candidates have promised -- adopts tougher antitrust laws and investigates alleged
corruption involving the Menem government and its links to high-profile corporations such
as CEI.

"CEI is less fragile today without Moneta. In order to
build upon what they accomplished with him in the Menem years, they need to
professionalize their lobbying efforts and clean up their public image. I think HMT&F
can be the catalyst for that transition," Ariel Barlaro, editor of local
telecommunications industry newsletter Convergencia said.

Analysts agreed that because of the leadership change,
Moneta's financial contribution to the company was even less important than his strategic
one.

"HMT&F wants to make CEI their own so that they
can tie it together with their other cable assets in the region. Moneta's departure can
only help them in that regard," said Christopher Ecclestone, an equities analyst at
investment boutique Buenos Aires Trust.

However, the difficult task of integrating these holdings
-- which are concentrated in Argentina, Brazil, Chile, Venezuela and Mexico -- with CEI's
more than $4 billion worth of assets is likely to dampen any post-Moneta-era celebrations
that might occur.

"For HMT&F to add enough value to CEI to get even
close to the 35 percent return they're looking for requires a significant long-term
investment," said Zain Manekia, a Warburg Dillon Read Latin American telecom analyst.

Manekia pointed out that the company's most profitable
asset, which has essentially subsidized its well-publicized cable shopping spree of late,
is its 50.2 percent stake in Cointel S.A., the parent company that controls phone company
Telefónica Argentina S.A. Its other assets -- which include a 35.9 percent stake in
CableVisión/TCI2, 20 percent of sports-television programmer Torneos y Competencias and a
26.8 percent investment in media holding company AtCo --are in many cases failing to make
money.

CEI's other major shareholder, Citigroup Inc., must sell
its 23.4 percent of the company before 2003 to comply with U.S. antitrust laws. CEI's
remaining shares are traded publicly in Argentina.

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