London, April 27 -- Brazilian Liquidity Transaction Co (the `Company'), a new Cayman Islands company formed for the purpose of conducting this transaction, announced today that it has commenced an Invitation on the terms and conditions described in an Offering Circular dated April 26, 1999 (the `Offering Circular') and the related Letter of Transmittal (together, the `Invitation')

THE INVITATION Qualified owners of debt securities listed in Annex A to the Offering Circular (`Old Bonds') issued by certain Brazilian entities (`Old Bond Issuers') are being invited to submit, in a modified Dutch auction, offers to exchange Old Bonds f or U.S. Dollar-Denominated Bonds due June 1, 2009 (`New Bonds') of the Company. The aggregate principal amonnt of Old Bonds eligible for exchange is approximately $22.5 billion. The Invitation will expire on May 21, 1999 (the `Expiration Date'),. Settlement is expected to take place on June 3, 1999 (`the Settlement Date')

NEW BOND TERMS The U.S. Dollar-Denominated Bonds due June 1, 2009 will be issued in a principal amount of at least U.S. $1 billion and mature on June 1, 2009, subject to earlier amortization or redemption as discussed below.

The New Bond Coupon will be equal to the highest increment of 1% that will result in a New Bond Price of U.S.$1,000 or less. Interest will be payable quarterly, commencing September 1, l999. Banco Nacional de Desenvolvimento Economico e Social (`BNDES') has agreed to advance cash to the Company, to the extent necessary to fund debt service requirements or other expenses, in a maximum amount equal to (a) two years of interest on the aggregate principal amount of New Bonds issued on the Settlement Date in exchange for Old Bonds other than those issued by BNDES plus (b) one year of interest on the aggregate principal amount of New Bonds issued on the Settlement Date in exchange for Old Bonds issued by BNDES. Substantially all of the Company's assets will be pledged as security for the New Bonds.

Subject to certain conditions set forth in the Offering Circular, the Company has agreed to re-lend Old Bond principal payments to Old Bond Issuers (other than certain Old Bond Issuers that are considered quasi-governmental).

The Company may defer the payment of interest to the extent it does not have sufficient funds to pay interest when due, but any payments so deferred will accrue additional interest at the New Bond Coupon. If the Company defers interest due on the New Bonds on any interest payment date and then fails to pay all of such deferred interest (plus interest thereon) by the next interest payment date, then holders of 30% of the then-outstanding aggregate principal amount of New Bonds may require the Company to liquidate assets to the extent necessary to become no more than one interest payment past due on interest.

If the holders require the Company to liquidate assets twice (without bringing interest current in the interim) and the Company then fails to pay all deferred interest (plus interest thereon) within 30 days, that failure will constitute an event of default allowing the Trustee or the holders of 25% of the then-outstanding aggregate principal amount of New Bonds to accelerate the New Bonds.

If Excess Cash (as defined in the Offering Circular) exceeds U.S. $5,000,000 on any interest payment date, the Company will be required to apply all Excess cash to amortize principal of the New Bonds on that date.

If at any time the principal amount of and accrued interest on the New Bonds then outstanding is less than (a) the remaining amount then available under the BNDES financial support or (b) 10% of the initial principal amount of the New Bonds, then BNDES will have the right to require the Company to redeem all remaining New Bonds at a price equal to the principal amount plus accrued interest.

In addition, on any interest payment date on or after June 1, 2001, BNDES will have the right to require the Company to redeem all remaining New Bonds at a redemption price that will equal 1101 of the principal amount if the redemption occurs during the 12 months beginning on June l. 2001 and will decline until it equals 100% of the principal amount if the redemption occurs on or after June 1, 2004, plus in any case accrued Interest.

DETERMINING EXCHANGE RATIOS

For purposes of determining exchange ratios pursuant to the Invitation, New Bonds will be valued at a price per U.S. $1,000 principal amount the (`Near Bond Price') intended to result in a yield to maturity on the Settlement Date (the `New Bond Yield') equal to (a) the yield to maturity of the UST 4 _% Bond due 2008 on the date that is two trading days before the Expiration Date (the `UST Benchmark Rate') plus (b) a spread (the `Clearing Spread') selected by the Company in its sole discretion pursuant to the modified Dutch auction process desaribed below. In addition, Old Bonds of any particular series will be valued at a price per U.S. $1,000 principal amount (including accrued interest) (the `Old Bond Price') intended to result in a yield on the Settlement Date equal to (a) the UST Benchmark Rate plus (b) the Clearing Spread plus (c) an additional spread for such Old Bonds selected by the Company in its sole discretion and announced at least ten trading days before the Expiration Date.

The principal amount of New Bonds that the Company will issue in exchange for each U.S. $1 in principal amount of Old Bonds of any particular series exchanged pursuant to the Invitation will be the lesser of (a) (i) the relevant Old Bond Price divided by (ii) The New Bond Price or (b) U.S. $1.

MODIFIED DUTCH AUCTION PROCESS

A Bondholder may submit either: (i) a `Competitive Offer' that specifies a minimum spread that the Bondholder would accept as the Clearing Spread (the `Offer Spread') or (ii) a `Noncompetitive Offer' that does not specify such a minimum spread.

After expiration, the Company will determine the principal amount of New Bonds that it will issue in the transaction and a Clearing Spread tbat it will use for purposes of determining exchange ratios as described above. The principal amount issued in exchange for Old Bonds other than Floating Yield Notes issued by BNDES may not be less than U.S. $1 billion. The Clearing Spread may not be less than a Minimum Clearing Spread nor more than a Maximum Clearing Spread calculated as follows:

The `Minimum Clearing Spread' will equal the lesser of (a) the Spread to Treasuries of Brazil's 2027's on the date that is two trading days before the Expiration Date and (b) the Spread to Treasuries of Brazil's 2004's on that date. (The Spread to Treasuries of Brazil's 2027's is (.a) the yield to maturity of Brazil's 10 1/8% USD due 2027 minus (a) the yield to maturity of the UST 5 ¬% Bond due 2028. The Spread to Treasuries of Brazil's 2004's is (a) the yield to maturity of Brazil's 115/8% USD due 2004 minus (a) the UST 4 _% Bond due 2004.)

The `maximum Clearing Spread' will equal the Minimum Clearing Spread plus 500 basis points (i.e., 5%).

The Company will then accept all Noncompetitive Offers and all Competitive Offers with Offer Spreads at or below the Clearing Spread, subject to the Seniority Rules and Concentration Limits described below.

The Old Bonds have been divided into five groups, numbered 1 through 5 (each, a `Group'), as specified in Annex A to the Offering Circular. If, as a result of accepting Exchange Offers as specified above, the principal amount of the New Bonds issuable pursuant to the Invitation would be greater than the principal amount that the Company has determined to issue, Old Bonds that would otherwise be accepted for exchange will be excluded in the order of declining Group number (i.e., first Old Bonds in Group 5 will be excluded. then Old Bonds in Group 4 will be excluded, and so on), until a Group is reached that does not need to be completely excluded, and within that Group Old Bonds will be excluded in the order of declining Offer Spread.

There will be no limit on the amount of Old Bonds of BNDES that may be acquired pursuant to the Invitation. The aggregate Old Bond Price of all of the Old Bonds of any other Old Bond Issuer acquired persuant to the Invitation may not exceed a maximum percentage of the aggregate Old Bond Price of all of the Old Bonds acquired pursuant to the Invitation. That maximum percentage, which ranges from l% to 10% depending on the Group, is specified in the Offering Circular.

All Bondholders whose Exchange Offers are accepted will be entitled to the benefit of the Clearing Spread, even if it is higher than the Offer Spreads they specified in their offers. LEAD MANAGERS AND EXCHANGE AGENT

Goldman, Sachs & Co. are acting as Lead Managers and Citibank, N.A. (London) is acting as Exchange Agent for the Invitation.

THIS ANNOUNCEMENT IS NOT AN OFFER OR SOLICITATION OF OFFERS IN THE UNITED STATES. THE INVITATION TO SUBMIT OFFERS IS MADE SOLELY BY THE OFFERING CIRCULAR REFERRED TO ABOVE. THE NEW BONDS HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE U.S. SECURITIES ACT OR ANY OTHER SECURITIES LAWS AND MAY BE OFFERED AND SOLD ONLY IN TRANSACTIONS THAT ARE EXEMPT FROM, OR ARE NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE U.S. SECURITIES ACT. THE INVITATION IS BEING MADE IN THE UNITED STATES ONLY TO QUALIFIED INSTITUTIONAL BUYERS IN A PRIVATE OFFERRING UNDER SECTION 4(2) OF THE U.S. SECURITIES ACT AND OUTSIDE THE UNITED STATES IN OFFSHORE TRANSACTIONS IN RELIANCE ON REGULATIONS UNDER THE U.S. SECURITIES ACT.

The distribution of the Invitation materials and the transactions contemplated thereby may be restricted by law in certain jurisdictions. Persons into whose possession the Invitation materials come are required by the Company to inform themselves of and to observe any such restrictions. The Invitation materials do not constitute, and may not be used in connection with, an offer or solicitation bar anyone in any jurisdiction in which such offer or solicitation is not authorized or in which the person making such offer or solicitation is not qualified to do so or to any person to whom it is unlawful to make such offer or solicitation. (mc)LO
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-0- (CRL) Apr/27/1999 9:43