TCRLA_Public/010711.mbx        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, July 11, 2001, Vol. 2, Issue 134

                           Headlines



B R A Z I L

MENDES JUNIOR: 90% Of Creditors Agree To Financing Deal


C H I L E

CAP: To Issuing US$100M In Bonds To Refinance Debts
EDELNOR: Commences Cash Tender For All Loan Certificates
INVERRAZ: Bankruptcy Suit Will Not Affect Cosayach Sale


C O L O M B I A

CORFINORTE: Outside Authorities To Take Over Administration
SEVEN SEAS: Announces $45 Million Financing
SEVEN SEAS: Completes Guaduas-La Dorada; Updates El Segundo Test


M E X I C O

CORPORACION GEO: Under Pressure For Construction Rate Increase
DESC: 2Q01 Results Down Due To US Deceleration
GID: Reveals US$250M Debt-Restructuring Plan
GRUPO TRIBASA: Advent Back To Negotiating Table With Creditors
MEXICANA: 80TH Birthday Nothing To Celebrate


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B R A Z I L
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MENDES JUNIOR: 90% Of Creditors Agree To Financing Deal
----------------------------------------------------------
Bankrupt Brazilian steel company, Mendes Junior Siderurgica, is
advancing towards a financing deal with Belo Horizonte-based long
products maker Belgo-Mineira as about 90 percent of its creditors
have already approved of the agreement, disclosed Belgo director
Marcus Botelho in a Business News Americas report released
Monday.

"We are continuing negotiations with the other creditors. But it
is an open-ended agreement and will take as long as is necessary.
It depends on the creditors," said Botelho, who is heading up the
operation.

Considering the negative equity of Mendes, Belgo is not directly
paying Mendes' debt to the creditors. Instead, it is offering
creditors Belgo debentures, at a 25-percent discount, Botelho
said.

Moreover, Belgo also leases Mendes' 1Mtpy steel plant in Minas
Gerais state, southeast Brazil.

"The leasing payments go to Mendes, which continues to have a
corporate identity, but these days it employs only about nine
people dealing with the accounts and other administrative
matters," Botelho added.

Mendes Junior Siderurgica folded in 1995 with debts of some
US$400 million. Belgo signed the debt-restructuring agreement
with the creditors in 1998, when the debt totaled US$430 million.



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C H I L E
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CAP: To Issuing US$100M In Bonds To Refinance Debts
---------------------------------------------------
CAP, a Chilean iron and steel group, will issue bonds worth
almost US$100 million on the Santiago stock exchange for the
purpose of raising funds to refinance debts, Business News
Americas reported Monday. The company has debts totaling nearly
US$630 million. The bonds to be issued at a yet-to-be-specified
date will yield 6 to 8 percent.


EDELNOR: Commences Cash Tender For All Loan Certificates
--------------------------------------------------------
Electroandina International, Inc., a Cayman Islands limited
liability exempted company ("Electroandina International") and a
wholly-owned subsidiary of Electroandina S.A., a Chilean
corporation ("Electroandina"), announced Monday that it will
commence a tender offer for cash to purchase all, but not less
than all, the outstanding (i) 10 1/2% Senior Loan Participation
Certificates due 2005 (the "2005 Certificates"), and (ii) 7 3/4%
Senior Loan Participation Certificates due 2006 (the "2006
Certificates" and, together with the 2005 Certificates, the
"Certificates"). The 2005 Certificates and the 2006 Certificates
were issued in an aggregate principal amount of US$90,000,000 and
US$250,000,000, respectively. The Certificates represent pro rata
participation interests in all payments of principal and interest
made in respect of loans of Empresa Electrica del Norte Grande
S.A., a Chilean corporation ("Edelnor"). The consideration for
each US$1,000 principal amount of Certificates tendered pursuant
to the Offer will be US$325.00 plus accrued but unpaid interest
to but not including the date of payment for the Certificates.
The offer will expire at 9:00 a.m., New York City time, on August
7, 2001, unless extended or earlier terminated (such time and
date, as the same may be extended, the "Expiration Date").

The offer is conditioned upon, among other things (1) there being
validly tendered and not validly withdrawn all the outstanding
Certificates (the "Minimum Tender Condition") and (2) the
acquisition (the "Acquisition") by Electroandina or its
affiliates for a purchase price not exceeding US$1 of all the
shares (the "Shares") of capital stock of Edelnor owned, directly
or indirectly, by Mirant Corporation, a Delaware corporation
("Mirant"), representing not less than 82.3403% of all the
outstanding shares of Edelnor on a fully diluted basis.
Electroandina has not entered into any agreements providing for
the Acquisition.

This announcement does not constitute an offer with respect to
any securities. The offer will be subject to the terms and
conditions set forth in an offer to purchase (the "Offer to
Purchase") and the accompanying letter of transmittal (the
"Letter of Transmittal") which, as amended from time to time,
together will constitute the "Offer Documents". Electroandina
International will furnish the Offer Documents to holders of the
Certificates. All holders of Certificates should read the Offer
Documents carefully before making any decision regarding
tendering their Certificates.

J.P. Morgan Securities Inc. is acting as dealer-manager for the
tender offer. Questions regarding the tender offer may be
directed to J.P. Morgan Securities Inc. at (877) 217-2484 (toll
free), (1-212) 552-4083 (international callers only) and (212)
648-1521 (at your own expense). Requests for documentation may be
directed to D.F. King & Co., Inc., the information agent for the
offer, at (800) 859-8509 (toll free) or (212) 269-5550 (collect).

Edelnor is a partially integrated electric utility engaged in the
generation, transmission, and sale of electric power in northern
Chile. Electroandina S.A. is an electric utility company engaged
in the generation, transmission and sale of electric power in
northern Chile.


INVERRAZ: Bankruptcy Suit Will Not Affect Cosayach Sale
-------------------------------------------------------
Chile's Inverraz holding company is now facing a bankruptcy suit
filed against it by the lawyers representing Case Corp of the US
in a Santiago civil court last Wednesday, Business News Americas
reported Monday. The lawsuit, which demanded that Inverraz be
declared bankrupt, is related to a US$70-million and 1-million-
euro line of credit granted by Case to Inverraz's automobile
distribution unit Cidef.

However, according to Inverraz's controlling shareholder
Francisco Javier Errazuriz, the suit will not affect the sale of
the group's Cosayach iodine subsidiary to industrial minerals
producer SQM. He described the lawsuit as an act of "undue and
immoral pressure," and claimed it had not been filed in
accordance with legal procedures.

SQM has agreed in principle to buy Cosayach for US$140 million
and is carrying out due diligence. Errazuriz said he expects the
deal to be finalized within the next few weeks.



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C O L O M B I A
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CORFINORTE: Outside Authorities To Take Over Administration
-----------------------------------------------------------
Following a decision by the nation's Superintendencia Bancaria,
outside authorities will take over the administration of
Corfinorte (Corporacion Financiera del Norte) of Colombia,
according to a report Monday in South American Business
Information. The company's financial woes began in April 1999
when Superbancaria ordered the company to inject capital of 50
billion pesos to ensure a steady, safe and self-sufficient
growth. Meanwhile, Fogafin loaned Corfinorte 19.752 billion pesos
along with an equity capitalization of 25.478 billion pesos by
shareholders that took place in June 1999.

Since then, the financial entity started defaulting on its
repayments. Superbancaria ordered it to ensure a minimum level of
liquidity in November 1999 and through 2000, the situation
remained stable. However, in March 2001, a GAP report showed a
risk in liquidity terms. In late May, Corfinorte shareholder,
Valores Bavaria, was informed of the need for a capital injection
and of the continued failure to keep up with the performance
plan. But in mid-June, Bavaria responded saying it would not come
up with the required amount 50 billion pesos. From there,
Superbancaria has put the operation into administration.


SEVEN SEAS: Announces $45 Million Financing
-------------------------------------------
Seven Seas Petroleum Inc. (Amex: SEV) announced Monday a $45
million financing to fund its 2001-2002 business plan. The
principal points of the financing follow:

-- Chesapeake Energy Corporation, a public oil and gas company
traded on the New York Stock Exchange, has agreed to purchase
$22.5 million of senior secured notes with detachable warrants to
purchase 12,612,140 shares of Seven Seas common stock at
approximately $1.78 per share.  After all the transactions
contemplated in this financing are completed, Chesapeake will
have warrants to purchase 20% of the Company's common stock.
These notes will bear interest at 12% per annum, compounded
quarterly, and interest will be accrued for the first two years.
Principal and accrued interest will be due at maturity on
November 7, 2004.

-- A group of qualified investors led by Robert A. Hefner III,
the Company's Chairman and Chief Executive Officer, will agree to
purchase $22.5 million of short-term secured notes.  Mr. Hefner
will purchase $15 million of these notes, and two of the
Company's independent directors will participate as well.  A
limited liability company controlled by the father of a third
independent director will also participate.

-- As soon as possible after the closing of the senior secured
notes and the short-term secured notes, Seven Seas will offer to
current shareholders, in the form of a rights offering, $22.5
million of senior secured notes with detachable warrants to
purchase 12,612,140 shares at approximately $1.78 per share.  The
terms of these notes will be substantially similar to those
offered to Chesapeake.  If shareholders take up all their rights
to purchase these notes, they will receive warrants to purchase
20% of the Company's common stock.

-- Proceeds from the rights offering will be used to redeem the
short-term secured notes sold to Mr. Hefner and the qualified
investors.  Any senior secured notes with warrants not purchased
in the rights offering will be exchanged for the remaining short-
term secured notes owned by Mr. Hefner and the other qualified
investors.  If shareholders exercise none of their rights, and
all the warrants are then issued to Chesapeake and the qualified
investors, upon exercise of all the warrants, Chesapeake will own
20%, the qualified investors will own 20% and current
shareholders will own 60% of the Company.  In this case, for his
$15 million commitment, Mr. Hefner will be issued warrants to
purchase 13.33% of the Company, or 22.22% of the current number
of shares outstanding.  The number of shares issuable upon
exercise of all of the warrants is equal to approximately 66.67%
of the current number of shares outstanding.

-- If after closing of the rights offering Mr. Hefner has
purchased less than $10 million of notes, he has granted
Chesapeake an option that could require Mr. Hefner to purchase
from Chesapeake an amount of notes and a proportionate share of
the warrants equal to the difference between $10 million and the
amount of notes Mr. Hefner acquired through the rights offering.
If Mr. Hefner purchases $10 million of notes in the aggregate, he
would acquire warrants to purchase 5,605,397 shares or 8.89% of
the Company, or 14.81% of the current number of shares
outstanding.

-- Pursuant to the agreement with Chesapeake, $15 million will be
escrowed for the drilling of an exploration well to test the
Subthrust Dindal Prospect, located below the Guaduas Oil Field.
Additionally, for the first two years, the Company will escrow
1/6 of its semi-annual $6.9 million interest payment on its $110
million senior notes on a monthly basis to provide greater
security that such payments will be made.

-- Closing is set for July 23, 2001.  Closing of this financing
is subject to CIBC World Markets Corp. (CIBC), an independent
investment banking firm and the Company's financial advisor,
rendering an opinion that the planned transactions are fair to
the Company from a financial point of view.  CIBC is expected to
provide its written opinion on the fairness of the transactions
following a review of the final documents.

The American Stock Exchange (AMEX) would normally require that
the Company seek shareholder approval prior to closing this
financing.  However, pursuant to the Company's request, the AMEX
has granted the Company an exception from the shareholder
approval requirement based on the Company's representation that
the time required to seek shareholder approval would seriously
jeopardize the financial viability of the Company.


SEVEN SEAS: Completes Guaduas-La Dorada; Updates El Segundo Test
----------------------------------------------------------------
Seven Seas Petroleum Inc. (Amex: SEV) announced Friday that it
has completed the Guaduas-La Dorada Pipeline on schedule and
within budget.  The 40-mile Guaduas-La Dorada pipeline connects
the Guaduas Oil Field to international oil markets via Colombia's
existing pipeline infrastructure.  Current pipeline production is
approximately 2,800 total barrels per day from the El Segundo 1-S
and El Segundo 1-N wells.

Pipeline production from the Tres Pasos 1-E and Tres Pasos 1-W
wells has been delayed due to mechanical difficulties with the
heater treater, but will commence immediately after the problem
is resolved.  The Company is addressing the problem and exploring
other alternatives, but cannot estimate at this time when the
matter will be resolved.

Production testing of the El Segundo 5-S well resumed at rates
between 1,800 and 2,800 barrels per day over a three and one-half
day period until the submersible pump failed.  Because the Tres
Pasos 5-W well is being drilled from the same surface location as
the El Segundo 5-S, the Company will temporarily stop drilling
operations while it replaces the submersible pump. Pipeline
production from the El Segundo 5-S well will commence immediately
after the pump has been replaced and production testing and clean
up operations are complete.



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M E X I C O
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CORPORACION GEO: Under Pressure For Construction Rate Increase
--------------------------------------------------------------
In its bid to reduce Mexico's estimated deficit of 6 million
homes, the Mexican government is now relying on Corporacion Geo,
to help build 750,000 new homes in the next 5 years, according
to a report Monday in the Financial Times. However, the
government's position is seen putting pressure on the country's
troubled low-income housing developer as it also needs to find
ways to cut its debt load and refinance a $50-million loan before
next May.

Geo has been posting a string of poor results in recent quarters
and has seen sales growth slip from 30 percent in 1999 to 3
percent last year ever since it made an unsuccessful attempt to
expand into the US.

In April, Geo was forced to adopt a controversial "poison pill"
financing stance, issuing options convertible into 50 million Geo
shares, to fend off a possible hostile takeover. The so-called
"Poison pill" allows company executives and employees to keep
control of the company even if a bidder acquires all the
company's shares traded in the stock exchange.

However, analysts are urging Geo to reduce its borrowing levels
and make headway on refinancing a $50-million Eurobond before
May, rather than concentrating on sales growth. Geo's debt burden
is currently $240 million.

Gonzalo Fernandez, a construction analyst at Banco Santander in
Mexico City, warned that a failure to refinance the loans could
mean a further fall in sales for Geo.

"The company is in a tight financial situation," he said. "Debt
refinancing should be Geo's top priority for now." He added that
Geo also had debt maturities of $31m in August 2003.

Geo denied it was under pressure on both sides, saying it had
begun talks to roll over the $50m loan in domestic or
international markets at a fixed interest rate of 10 percent. The
company also said it was looking at ways to find more funds
internally to give it the resources to increase its growth rate.

According to Dan McGoey, an analyst at Deutsche Bank in New York,
the key to reversing Geo's fortunes lay in reducing the time it
took the company to build houses and collect payment.

"The whole process is taking Geo 180 days. Its main rival,
Consorcio Ara, is taking 90 days. If Geo could get down to 100
days it would be able to reduce its bridge loans, free up
additional capital and return to a growth rate of 15-20 per
cent."


DESC: 2Q01 Results Down Due To US Deceleration
--------------------------------------------
Mexican conglomerate Desc, which operates in the car-parts,
chemicals, food and property sectors, has seen lower results in
the second quarter of this year, South American Business
Information reported Monday. The company attributed its
disappointing results to the recent US deceleration. Profits for
the quarter fell to US$48 million from US$70 million in April-
June 2000 while its operating margin is down 2.8 points to 8.8
percent. The production levels and sales at its car-parts
subsidiary, Unik, are down with its profits down to US$28 million
against $47 million posted in the same-period last year.
Meanwhile, DESC's margin down is 5 points to 11.2 percent.
Chemicals subsidiary Girsa has suffered a 1.3 percent dip in its
margin to 7 percent. These are preliminary results ahead of tax
news to be released in three weeks' time.

DESC recently sold its truck-component manufacturing subsidiary
TSP to Eaton Corporation. The sale is the latest in a string of
recent divestments by the group, including its stake in Four
Seasons Punta Minta hotel. Analysts see DESC's divestment program
as a direct consequence of the company's financial pressure. The
company's troubles essentially arose after using cash to buy back
a major block of its own shares last year.


GID: Reveals US$250M Debt-Restructuring Plan
--------------------------------------------
Mexican paper and packaging group Grupo Industrial Durango (GID)
disclosed a plan to restructure a US$250-million debt, which is
presently due in 2003, South American Business Information
reported Monday. The company wants to push repayment back to 2006
or initiate another seven-year bond with parent/holding group
Corporacion Durango. According to the plan, the holding group
would exchange up to US$50 million in GID promissory paper for
the debt to 2006 and up to US$200 million to 2008. Bondholders,
who accept such plans will receive a payment which is yet to be
defined. The move, however, will only work if there is 80 percent
acceptance (i.e. US$200mil). In January of this year, Corporacion
Durango issued debt worth US$150 million at 13.18 percent over
five years so as to meet interest payments of 12 percent on Grupo
Durango debt maturing soon after.


GRUPO TRIBASA: Advent Back To Negotiating Table With Creditors
--------------------------------------------------------------
U.S.-based capital fund Advent, which has expressed willingness
to back Mexican construction firm Grupo Tribasa in its debt-
restructuring plan, was expected to reinitiate contact with
creditors of the debt-laden Mexican construction company, Mexico
City daily Reforma reported Monday. Advent and Tribasa reportedly
agreed in late June that a new proposal, featuring Advent's
participation, would be presented to the banks. However, the
hostile attitude, which has been adopted by the creditors of
Tribasa, towards the company's efforts to refinance its debt,
would certainly pose as a hurdle to Advent's move. Tribasa's
creditors are determined to force the financially troubled
company into bankruptcy, even to the point of sacrificing
everything owed to them by Tribasa, in order to force such an
outcome.


MEXICANA: 80TH Birthday Nothing To Celebrate
-------------------------------------------
Leading Mexican airline Mexicana de Aviacion, which celebrates
its 80th year in the business this year, expects to have a bleak
outlook on its birthday due to a slump in the U.S. economy,
Mexico City daily Reforma reported Monday. The airline saw its
net losses reach $33 million during the 1Q01, and it is heading
for another losing period in the second quarter of this year.
However, the airline hopes that a busy summer peak season and a
recovery in economic activity, possibly in September, will allow
it to end the year in the black.




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.

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