---

       T R O U B L E D   C O M P A N Y   R E P O R T E R

                  L A T I N   A M E R I C A

         Wednesday, February 7, 2001, Vol. 2, Issue 27

                           Headlines



B R A Z I L

BANESPA: Delivers First Check To Nossa Caixa Nosso Banco
CAEMI: CVRD Reiterates Interest In Local Mining Company
CAEMI: Sale Process Sees Alliance Between CVRD And BHP
CESP: S&P Assigns B+ Ratings, CreditWatch
CVRD: To Complete Sale Of Pulp, Paper Assets In 90 Days
DRYPERS: To Be Sold Off
ELETROBRAS: Strikes Deal Over Debt With Energy Market
ELETRONORTE: Government Begins Carrying Out Restructuring Plan
ELETROPAULO METROPOLITANA: Borrows From Cargill To Reduce Loan


C H I L E

BANCO DE CHILE: Luksic Group Aiming For Additional 5 Percent
ENERSIS: Posted Earnings Of $117.1M In Fourth Quarter 2000
GENER: Shareholders Approve Sale of Argentine Assets


M E X I C O

BANCRECER: On The Auction Block By The End Of The First Quarter
GRUPO BITAL: Chairman Sees Risk Foreign Control Of Banks
PEMEX: Management Designs Corporate Restructuring Plan
TRANSPORTACION FERROVIARIA: Financing Safe Railway Crossings


P E R U

ISCAYCRUZ: Copri Ponders Sell-off Before Presidential Elections


    - - - - - - - - - -


===========
B R A Z I L
===========

BANESPA: Delivers First Check To Nossa Caixa Nosso Banco
--------------------------------------------------------
A Banespa executive delivered a check worth R$448 million
Thursday evening at 8:05 p.m. to the headquarters of Nossa Caixa
Nosso Banco, Gazeta Mecantil said Friday. The check represents
the first of six monthly installments relating to escrow deposits
of R$2.8 billion that will be transferred under court order.

The Sao Paulo state Justice Court recently ruled that Banco do
Estado de Sao Paulo SA (BANESPA) cannot keep as much as 2.8
billion reais in escrow deposits. Furthermore, the court ruled
that Banespa must close 190 automated teller machines in court
buildings throughout the state.

Banco Santander Central Hispano of Spain (BSCH) recently acquired
Banespa in an all-cash deal worth about $1.2 billion.


CAEMI: CVRD Reiterates Interest In Local Mining Company
-------------------------------------------------------
Companhia Vale do Rio Doce (CVRD) again stated that it wants to
acquire control of local mining company Caemi, according to a
Brazil Financial Wire report Monday. However, it stressed that it
wouldn't do anything that would contribute losses to its
shareholders. Roger Agnelli, president of CVRD, cited synergies
between CVRD and Caemi assets to justify CVRD's interest in
Caemi, adding that the deal would also help the company
consolidate its global operations.

Regarding Caemi's pending lawsuits, Agnelli said it doesn't
bother CVRD at all but he emphasized that CVRD would not close a
deal unless given assurance that legal hindrances won't be a
problem in the future.


CAEMI: Sale Process Sees Alliance Between CVRD And BHP
------------------------------------------------------
The process of selling shares owned by the Frering brothers in
Caemi could bring forth an alliance between mining giant
Companhia Vale do Rio Doce (CVRD) and Australian company BHP,
Gazeta Mercantil said Friday. BHP's offer for the shares,
equivalent to 20 percent of the total capital of Caemi,
reportedly exceeded Vale's, but CVRD partners hasn't arrived at a
consensus on a new price proposal. However, other shareholders,
looking at the long term, believe that Vale won't allow a foreign
mining company to purchase Caemi "in its own backyard."


CESP: S&P Assigns B+ Ratings, CreditWatch
-----------------------------------------
NEW YORK, Feb 5 - Standard & Poor's today assigned its single-
'B'-plus local currency and foreign currency issuer credit
ratings to Companhia Energetica de Sao Paulo (CESP).

The ratings are on CreditWatch with developing implications due
to CESP's expected imminent privatization. As such, the ratings
reflect CESP's current business and financial profile and do not
incorporate credit enhancement from its status as a state-owned
company.

CESP is Brazil's and Latin America's third-largest electricity
generator, providing electricity to the four main distribution
companies serving the key state of Sao Paulo. Debt guaranteed by
the state of Sao Paulo or the government of Brazil (approximately
75% of total debt) is expected to diminish over time.

Risks include:

-- A high nominal debt service burden--As a result, gross cash
flow interest coverage is low at approximately 1.8 times
estimated for Dec. 31, 2000; comparing cash flow to the stock of
debt, the debt payback period is lengthy at 15 years.

-- Refinancing risk--CESP must refinance a DM1,075 million
Eurobond issue (US$500 million) due in May 2001.

-- High foreign currency exposure--CESP is exposed to
fluctuations in the value of the real, in which it derives its
earnings, while about 75% of its debt is in foreign currencies.

-- Fundamental uncertainties regarding the structure and
regulation of the power market--CESP sells all of its assured
energy to its distribution customers under initial contracts that
end in 2006. Brazil is forecast to be short of power, and the
buying and selling of energy post-2006 should be at a market
rate. These conditions suggest a seller's market, which should
benefit CESP; but the regulation for pricing and contracting for
power is untested.

-- Potential environmental concerns--CESP's inability to raise
the water level behind the Porto Primavera plant to the design
height of 259 meters from the currently licensed 257 meters
highlights a source of regulatory risk. While the impact on
capacity should be fractional, a related issue is the possibility
of additional, unexpected expenditures as the other plants
undergo environmental re-licensing.

These weaknesses are offset by the following strengths:

-- CESP's generation sources are fairly new, in good condition,
and evidence strong availability rates. CESP has always generated
more than its designated "assured energy." As a hydro producer,
CESP has a negligible marginal cost of production.

-- A tight energy market suggests that for the near-term future,
CESP should have no trouble in finding buyers for its output.

-- The market is large and growing, consisting of the Sao Paulo
metropolitan area and, eventually, the south-southeastern region
of Brazil. This region is Brazil's richest and most
industrialized.

-- CESP participates in a risk-sharing mechanism with all other
hydro plants in the nation to minimize the risk of poor hydro
conditions occurring in any one hydrological basin. All of CESP's
generating plants are hydroelectric and four stations generating
98% of CESP's energy are located either on or near the Parana
River.

Currently, CESP provides power to much of the Sao Paulo
metropolitan area through its sales to four distribution
companies. Growth in electricity demand is high as the city and
its environs continue to industrialize. In a liberalized market,
CESP will sell power to the entire south-southeastern market of
Brazil, which is still the most developed and rapidly growing in
the country.

The national government, in an effort to create a competitive
generation market, has restructured the contracts between
government-owned entities and the largely privately owned
distributors.

Energy sales are currently made under initial contracts that
mandate an annual decline of 25% in contracted volume beginning
in 2003 to provide a transition to a competitive wholesale
market. Distributors and generators must negotiate contracts to
replace the initial contracts.

CESP to date has refrained from entering into replacement
contracts as it expects prices to become more favorable with the
passage of time. The pricing of these contracts and the
availability of energy, particularly from potential thermal
sources, are uncertainties bondholders face.

CESP was to have been privatized in December 2000. The attempt to
privatize CESP failed due to concerns surrounding debt coming due
and completion of the Porto Primavera plant. The state of Sao
Paulo anticipates putting the company back up for sale after
these problems are solved.

The issues that prevented the privatization of CESP should be
resolved shortly, and the state of Sao Paulo plans to privatize
the company during the first six months of 2001.

CESP's CreditWatch Developing status reflects uncertainties
surrounding the creditworthiness of the purchaser of CESP, the
manner in which the acquisition will be financed, and the
resultant capital structure, Standard & Poor's said.


CVRD: To Complete Sale Of Pulp, Paper Assets In 90 Days
-------------------------------------------------------
Companhia Vale do Rio Doce (CVRD) president Roger Agnelli
announced his company expects to complete the sale of its four
woodpulp and papers assets in 90 days, Brazil Financial Wire
reported Monday.

Celmar has a single bidder and will be sold first, according to
market sources. Bahia Sul, Cenibra and Floresta do Rio Doce will
go next. Bahia Sul, in which CVRD holds 50 percent, might be
acquired by Suzano that holds the remainder of the company's
voting shares. Cenibra is held by Vale with 51.48 percent and
Japanese companies with 48.52 percent.

The deal is complex, according to Agnelli, as it involves several
operations at different fronts, requiring careful examination.
CVRD is also concerned about respecting agreements made with
shareholders in the companies being negotiated, the executive
added.


DRYPERS: To Be Sold Off
-----------------------
Drypers Corporation (US), the fifth largest player in the
Brazilian diapers market, which filed for bankruptcy in November
of last year, is to be sold off, South American Business
Information reported Friday. DSG International and Paragon Trade
(which controls 49 percent of MPC-Mabesa) are reportedly
interested in acquiring Drypers. Should MPC-Mabesa, currently the
second-largest Brazilian diaper maker succeed, it would become
the industry leader in the Brazilian market, exceeding Kimberly
Clark and its 18.7-percent market share. Drypers Brasil posted
R$90 million gross turnover in 2000 down from R$100 million in
1999.


ELETROBRAS: Strikes Deal Over Debt With Energy Market
-----------------------------------------------------
After nearly a year and a half of negotiations Eletrobras and the
Energy Market (MAE) have finally arrived at a deal for paying the
R$578-million debt to Furnas, according to a Gazeta Mercantil
report published Friday.

At present, the liquidation of commitments, which demand an
immediate release of R$185 million, awaits clearance from
electricity regulator Aneel.

Details of the agreement include:

- Eletrobras would be permitted to include the deal in its 2000
balance sheet.

- The return to normal operations by the MAE, whose liquidation,
due to the impasse over the debt, has been behind since
September, when the market initiated operations with its own
rules.


ELETRONORTE: Government Begins Carrying Out Restructuring Plan
--------------------------------------------------------------
The central government is now in the early stages of
restructuring the energy generator and distributor Eletronorte,
according to a Brazil Financial Wire report published Monday.
Ultimately, the plan will see the privatization of Eletronorte,
which operates in 58 percent of the national territory.

Restructuring of the company is divided into two distinct phases.
The first phase anticipates spinning off Eletronorte's loss-
making divisions and transfering of power sector subsidy payments
to Eletrobras, the federal holding company for the electric power
sector.

Secondly, Eletronorte is to be spun off into areas of energy
transmission and generation. Later, the generating portion is
expected to be divided into regional companies by state and each
will be controlled by one parent (Eletrobras or Eletronorte).


ELETROPAULO METROPOLITANA: Borrows From Cargill To Reduce Loan
--------------------------------------------------------------
In an attempt to diminish the cost of $100 million in loans,
Eletropaulo Metropolitana SA said it would borrow soybeans from
Cargill Inc., Bloomberg reported Monday. Eletropaulo is Latin
America's largest power distributor serving Sao Paulo, Brazil's
largest city. According to the power distributor, it would borrow
the $100 million for three years in two $50 million parts, in the
coming months.

The loan will be arranged through an Eletropaulo offshore
subsidiary, Metropolitana Overseas II Ltd., set up to export
commodities. To get the loan at trade finance rates, the company
will borrow soybeans from Cargill International SA, a unit of
Wayzata, Minnesota-based Cargill.

Trade finance loans are made at interest rates below that of most
corporate bonds because the tradable commodity secures the
credit, reducing the risk of loss to the lender. The transaction
is reportedly being arranged by Banco Itau SA.




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

BANCO DE CHILE: Luksic Group Aiming For Additional 5 Percent
------------------------------------------------------------
The Luksic business group offered to pay $63.8 million for the
purchase of an additional 5 percent of Sociedad Matriz Banco de
Chile SA, the holding company that owns Banco de Chile SA,
Bloomberg reported Monday. The move would likely see Luksic
taking control of the nation's No.2 non-government bank. Luksic-
family controlled Quinenco SA said it would pay 60 pesos ($0.11)
for B-series shares of Banco de Chile's holding company,
representing a 61 percent premium over their price on the
Santiago exchange. Quinenco offered the same price for the shares
that the company agreed to pay in December for 35 percent of the
bank from a small group of shareholders. That 35 percent purchase
will cost $555 million, according to an agreement signed Feb. 1,
Quinenco said.

The Luksic group is looking to merge Banco de Chile and Banco de
A. Edwards, a bank that the group already owns. As a result, the
bank would get about 20 percent of the country's loan market,
displacing the country's present non-government leader, Banco
Santigao SA, which has about 15 percent of the loans.


ENERSIS: Posted Earnings Of $117.1M In Fourth Quarter 2000
----------------------------------------------------------
Chilean energy company Enersis SA said it earned $117.1 million
in the fourth quarter of last year compared to a loss of $84.8
million in the fourth quarter of 1999, Bloomberg reported Monday.
Net income was less than a $119.7 million estimate by Santander
Investment Research. In addition, earnings per New York-traded
share were $1.23, reversing a loss of $1.09 last year.

The company attributed its earnings to the sale of transmission
division Transelec, part of a strategy to shed companies not tied
to energy generation and distribution. The sale helped offset
$70.7 million of interest expenses and government-imposed cuts in
the fees that distributor Chilectra SA can charge for
distributing energy in Chile.

Enersis is Latin America's biggest non-government energy holding
company and is owned by Endesa SA of Spain.


GENER: Shareholders Approve Sale of Argentine Assets
----------------------------------------------------
Shareholders of Chile's second largest power producer Gener have
formally agreed to sell the company's Argentine power assets, as
announced in a Reuters report released Monday. According to the
report, the move is just a mere formality since U.S. power giant
AES Corp. controls 95.67 percent of Gener, which it acquired
through a public tender offer and share swap. In November of last
year, AES announced plans to sell Gener's Argentine electricity
and transmission assets to French oil giant TotalFinaElf. Gener's
Argentine assets consist of Central Puerto SA (CEP), InterAndes
SA, TermoAndes SA, and Hidroneuquen SA, a shareholder of
Hidroelectrica Piedra del Aguila SA.



===========
M E X I C O
===========

BANCRECER: On The Auction Block By The End Of The First Quarter
---------------------------------------------------------------
Mexican bank bailout agency IPAB revealed it is now in the final
stages of arranging the auction of government-intervened
Bancrecer. The bank could go on the auction block on March, El
Economista/Infolatina said Monday. This story refutes recent
comments made by Bancrecer management hinting that the auction
could be delayed until later in the year owing to the complicated
process of separating the bank's assets from its bad-loan
portfolio.

Widespread reports suggest that Grupo Financiero Banorte is the
institution most interested in acquiring Bancrecer.


GRUPO BITAL: Chairman Sees Risk Foreign Control Of Banks
--------------------------------------------------------
Antonio de Valle Ruiz, chairman of Grupo Financiero Bital, said
that the Mexican banking system should not be run by foreigners,
citing that in times of crisis the decisions of foreign-owned
institutions will not safeguard the country's best interest. In
an El Universal/Infolatina report Monday, De Valle said that
foreign control of Mexican banking institutions has now reached a
point beyond whith it should not increase.

"It's so extensive that it cannot be allowed to increase
further," he said. "Unfortunately the law allows it. But it's
risky that important decisions by these banks are not taken in
Mexico," De Valle said, adding that the issue is management
rather than ownership.

As previously reported in the TCR-LA, Grupo Financiero Bital
needs about 12 billion pesos to recapitalize Atlantico, which it
acquired in 1998.


PEMEX: Management Designs Corporate Restructuring Plan
------------------------------------------------------
Raul Munoz, an executive at Mexican state-owned energy
conglomerate Petroleos Mexicanos (Pemex), said in an Infolatina
Monday report that management is devising a corporate
restructuring plan. The plan seeks to ensure that all Pemex
subsidiaries optimize their working plans and provide support for
eachother.

"We're talking about reorganizing the corporation and giving it
what it needs to make its leadership effective and dynamic, which
will optimize results at Pemex as a whole," he said. According to
Leos, Pemex-Exploracion & Produccion, Pemex-Gas, Pemex-
Petroquimica and Pemex-Refinacion will work in a more-closely
coordinated fashion.


TRANSPORTACION FERROVIARIA: Financing Safe Railway Crossings
------------------------------------------------------------
Nuevo Leon state officials and city governments is putting heavy
pressure on Transportacion Ferroviaria Mexicana (TFM) to fund
completely the construction of safe railway vehicle crossings, El
Economista said Monday. Just recently, a fatal accident at a
railway crossing claimed the lives of all the occupants of the
vehicle. The management of TFM reportedly offered to pay 25
percent of the costs incurred in building the new crossings,
proposing that the remaining costs be shouldered in equal
proportions by the federal, state and municipal governments. Each
new crossing will cost between $50,000 and $130,000 dollars.

TFM is a subsidiary of Transportacion Maritima Mexicana (TMM)



=======
P E R U
=======

ISCAYCRUZ: Copri Ponders Sell-off Before Presidential Elections
---------------------------------------------------------------
Copri, Peruvian privatization authority, is contemplating
selling-off the state's 25 percent stake in Iscaycruz zinc mine
in February or March before the first round of presidential
elections on April 8. Manuel Salazar, from sale adviser
Sudamericano Bolsa, told BNamericas.com that general terms and
mechanics for the auction have been approved. There is still no
definite date and price yet, although last year, Cepri, a unit of
Copri, and the group of sale advisors agreed on a price US$20-27
million for the minority stake.

Glencore, the main shareholder of Iscaycruz with 45-percent
ownership, is reportedly one of those interested in acquiring the
position. However, given the high price, it will not likely
participate in the auction.




S U B S C R I P T I O N   I N F O R M A T I O N

Troubled Company Reporter Latin American is a daily newsletter
co-published by Bankruptcy Creditors' Service, Inc., Trenton, NJ,
and Beard Group, Inc., Washington, DC. John D. Resnick, Edem
Psamathe P. Alfeche and Janice Mendoza, Editors.

Copyright 2001.  All rights reserved.  ISSN 1529-2746.

This material is copyrighted and any commercial use, resale or
publication in any form (including e-mail forwarding, electronic
re-mailing and photocopying) is strictly prohibited without prior
written permission of the publishers.

Information contained herein is obtained from sources believed to
be reliable, but is not guaranteed.

The TCR Latin America subscription rate is $575 per half-year,
delivered via e-mail.  Additional e-mail subscriptions for
members of the same firm for the term of the initial subscription
or balance thereof are $25 each.  For subscription information,
contact Christopher Beard at 301/951-6400.


* * * End of Transmission * * *