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       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

            Friday, August 3, 2001, Vol. 2, Issue 151

                           Headlines


A R G E N T I N A

COMPANIA DE RADIOCOMMUNICATIONES/CTI HOLDINGS/TELECOM ARGENTINA:
- Moody's Downgrades From B3 To Caa1; Negative Outlook


B R A Z I L

CVRD: To Release Reports According To US GAAP
iG: Takes Control of hpG, Continues With Restructuring Plans
SANTOS NEVES: Closed, Liquidated By The Central Bank
TRANSBRASIL: Aerus Demands Exclusion From Pension Fund
VESPER: Qualcomm Deepens Its Involvement In Capital Restructure


C H I L E

STARMEDIA: Stull, Stull & Brody Announces Class Action Lawsuit
TELEX-CHILE: Chilesat's Sale Is Main Concern


E C U A D O R

FILANBANCO: Government Urges Ecuadorians To Stay Calm


G U Y A N A

GA 2000: Formally Closes Doors
GA 2000: Collapse Blamed On Political Climate


M E X I C O

AZURIAN: To Cease Costa Rica, Mexico Operations
CINTRA: Allegro May Bid In Forthcoming Auction
GRUPO DINA: Radical Cost-Cutting Measures, Delisting Shares
MOULINEX-BRANDT: Mulls Sale Of Mexican Factory
VITRO: Moody's Lowers Senior Notes With Negative Outlook


V E N E Z U E L A

SIVENSA: Advances Talks On Debt-Restructuring
XEROX: Withdraws From SOHO, Venezuelan Operations Continue



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A R G E N T I N A
=================

COMPANIA DE RADIOCOMMUNICATIONES/CTI HOLDINGS/TELECOM ARGENTINA:
- Moody's Downgrades From B3 To Caa1; Negative Outlook
----------------------------------------------------------------
Moody's Investor Services on Tuesday announced it has downgraded
the long-term foreign currency debt ratings of Compania de
Radiocommunicationes Moviles S.A., CTI Holdings S.A., and Telecom
Argentina STET-France Telecom S.A. to Caa1 from B3 in conjunction
with Moody's downgrade of the Republic of Argentina's sovereign
cross border obligations to Caa1 from B3. At the same time, the
rating outlooks are negative as a result of the negative outlook
on the Republic of Argentina's ratings. The ratings are
constrained by the sovereign ceiling.

Telefonica de Argentina's B2 rated foreign currency debt is not
affected and remains under review for possible upgrade as a
result of the recent change in Moody's country ceiling approach.



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B R A Z I L
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CVRD: To Release Reports According To US GAAP
---------------------------------------------
Companhia Vale do Rio Doce (CVRD), which currently publishes
annual report according to the GAAP (Generally Accepted
Accounting Principles), will publish its quarterly reports
according to the US GAAP, Gazeta Mercantil revealed in a report
Wednesday. The accounting move will make the Brazilian company,
which is aiming to strengthen in the global financial world and
attract resources from major foreign investment funds, more
transparent in the international capital market.

CVRD will have 3 ADRs negotiated in the NYSE when the Union sells
its common shares in it (32 percent common shares or 22 percent
of its capital). The operation is set to take place in 2001.

Meanwhile, CVRD will begin next month the creation of a new
executive structure to increase its focus on its core businesses:
mining, logistics and energy. According to Chairman Roger
Agnelli, CVRD will create new executive positions. He denied
plans to dismiss existing directors. Agnelli is responsible for
giving more transparency to the company.


iG: Takes Control of hpG, Continues With Restructuring Plans
------------------------------------------------------------
iG, which is controlled by GP Opportunity and Telemar, acquired
WebForce Networks-controlled hpG, South American Business
Information reported Wednesday. Consequently, with 3.1 million
unique visitors per month, iG commands the second spot on the
highest traffic list, according to Ibope eRatings. iG predicts
earnings of R$80 million for this year due to the restructuring
program outlined. The program will see a 42-percent reduction in
its workforce and a cut in its annual marketing investment from
US$25 million to US$1 million.


SANTOS NEVES: Closed, Liquidated By The Central Bank
-----------------------------------------------------
A single bad debt with a private company led the central bank to
close local bank Santos Neves and liquidate its assets, according
to central bank director Teresa Grossi in an AFX-Europe report
published Wednesday. Santos Neves is headquartered in the Santa
Catarina state capital of Vitoria and has just three branches in
Brazil, all within the state.


TRANSBRASIL: Aerus Demands Exclusion From Pension Fund
------------------------------------------------------
Brazilian pension fund Aerus is once again demanding that airline
Transbrasil be excluded from the fund, citing failure to pay debt
and monthly premiums, according to a report Wednesday in South
American Business Information. Early this year, Transbrasil
renegotiated its debts with Aerus, but now its debt of R$13.5
million has come due. The amount currently owed includes
deductions from workers' salaries that the carrier has not
forwarded to Aerus.

The fund will make pension benefits available to Transbrasil
employees who are set to retire in the next 60 days. A meeting to
discuss the situation is scheduled for early August.

Adding further fuel to the turmoil, Transbrasil's employees have
not received salaries for July and the company's pilots are
currently on strike.


VESPER: Qualcomm Deepens Its Involvement In Capital Restructure
---------------------------------------------------------------
Qualcomm Inc. is considering participation in new financing and
capital restructuring, as well as assisting in the search for
additional strategic partners in Vesper, the Brazilian phone
company in which it has a 16.75-percent interest, South American
Business Information reported Wednesday. Qualcomm invested US$241
million in Vesper in the second quarter of this year, and it
continues to believe that Brazil is a very important market.
Qualcomm also believes that Vesper will be able to restructure
its businesses successfully and develop new sources of capital.

However, Qualcomm's plan raised speculation that it may want to
gain control of Vesper, as Bell Canada International (BCI) may be
inclined to sell its 32.1 percent interest in Vesper. According
to recent reports, BCI plans to sell its stake in the Brazilian
company. BCI expects to receive US$300 million in the deal, while
the initial expectation was closer to US$875 million, informed
BCI businessman Mr. Louis Tanguay.



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

STARMEDIA: Stull, Stull & Brody Announces Class Action Lawsuit
--------------------------------------------------------------
Notice is hereby given that a class action lawsuit was filed on
August 1, 2001, in the United States District Court for the
Southern District of New York, on behalf of purchasers of
StarMedia Network, Inc. ("StarMedia") (NASDAQ:STRM) common stock
between May 25, 1999 and December 6, 2000, inclusive (the "Class
Period").

The complaint alleges that defendants violated the federal
securities laws by issuing and selling StarMedia common stock
pursuant to the May 25, 1999 IPO without disclosing to investors
that some of the underwriters in the offering, including the lead
underwriters, had solicited and received excessive and
undisclosed commissions from certain investors.

The complaint alleges that, in exchange for the excessive
commissions, members of the underwriting group allocated
StarMedia shares to customers at the IPO price of $15 per share.
To receive the allocations (i.e., the ability to purchase shares)
at $15, the underwriters' brokerage customers had to agree to
purchase additional shares in the aftermarket at progressively
higher prices. The requirement that customers make additional
purchases at progressively higher prices as the price of
StarMedia stock rocketed upward (a practice known on Wall Street
as "laddering") was intended to (and did) drive StarMedia's share
price up to artificially high levels. This artificial price
inflation, the complaint alleges, enabled both the underwriters
and their customers to reap enormous profits by buying stock at
the $15 IPO price and then selling it later for a profit at
inflated aftermarket prices, which opened for trading on May 25,
1999 at $39.75 per share and surged to as high as $45.75 and
closed for the day at $38 per share. StarMedia shares continued
to soar, reaching a Class Period high of $66.875 per share on
July 6, 1999.

Rather than allowing their customers to keep their profits from
the IPO, the complaint alleges, the underwriters required their
customers to "kick back" some of their profits in the form of
secret commissions. These secret commission payments were
sometimes calculated after the fact based on how much profit each
investor had made from his or her IPO stock allocation.

The complaint further alleges that defendants violated the
Securities Act of 1933 because the Prospectus distributed to
investors and the Registration Statement filed with the SEC in
order to gain regulatory approval for the StarMedia offering
contained material misstatements regarding the commissions that
the underwriters would derive from the IPO transaction and failed
to disclose the additional commissions and "laddering" scheme
discussed above.


TELEX-CHILE: Chilesat's Sale Is Main Concern
--------------------------------------------
Nearly a year has passed now since Telex-Chile requested Salomon
Smith Barney to value Chilesat, a long distance and network
operator. The action was taken in order to make way for a
possibility of the entry of a strategic partner into the
company's capital, South American Business Information reported
Wednesday. Telex-Chile's top priority is the sale of Chilesat to
a partner, most preferably an international level
telecommunications operator. Almost all of the company's
stockholders have considered Chilesat a disposable asset. Telex-
Chile has now started the process of selling some of Chilesat's
assets.

Chilesat, which defaulted on an US$8.9-million credit facility in
April, is believed to be operating well, and will have enough
time to add value to its operations between now and when the
bidding begins.



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E C U A D O R
=============

FILANBANCO: Government Urges Ecuadorians To Stay Calm
------------------------------------------------------
Speculation that Filanbanco deposits will be frozen due to its
bankruptcy have made its account holders nervous, COMTEX reported
Wednesday. The Gustavo Noboa government has been appealing to
Ecuadorians to remain calm, asserting that the current troubles
would not be a repeat of the crisis that struck the banking
sector in the country two years ago.

The government decided in mid-July to liquidate Filanbanco after
finding it was on the verge of ruin, and announced an agreement
with private entities that will take over the bank's portfolio of
400,000 clients. According to the resolution, deposits of up to
$300 will be handled by the Central Bank, while those of up to
$10,000 be passed on to the private banks.

The government is reportedly drawing up a payment schedule to
return funds to account holders with more than $10,000, a plan
that will depend on the state's ability to make such payments.
However, the accord with private banks was delayed, which fuelled
doubts among clients who then began to demand to withdraw their
deposits. The general population is once again deeply worried
about the solvency of the country's finances.




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G U Y A N A
===========

GA 2000: Formally Closes Doors
------------------------------
Following recent deliberations by Cabinet on the fate of the
privately owned and operated national flagship carrier Guyana
Airways 2000 (GA 2000), Secretary to the Cabinet and Head of the
Presidential Secretariat, Dr. Roger Luncheon announced the
airline's formal closure, reported Caribbean Air News reported
Wednesday. Subsequently, the usual procedures of companies
running into insolvency and bankruptcy would be put in place to
deal with debtors, creditors and other forms of financial and
contractual obligations, Luncheon said.

Mr. Ronald Alli, Senior Partner of Jack A. Alli and Sons, has
been appointed the official receiver of GA 2000 in accordance
with Section 272 of the Companies Act 1991 and pursuant to
conditions of the First and Second Debentures issued by GA 2000
in favor of Demerara Bank. The value of the assets charged to
Demerara Bank Ltd. as Secured Creditors are sufficient to cover
the outstanding debts of GA 2000 to the bank and it is confident
it will recover the full amounts due from GA 2000.

Management of the bank has decided to resort to the terms of the
debentures, in the interest of its shareholders, in conformity
with the prudent policies of the bank. In addition, the financial
results of Demerara Bank Ltd. for 1999 and 2000, were very good
and the bank's management is confident good profits and financial
results will continue for the year ending September 30, 2001.

According to Luncheon, Cabinet also took the opportunity to have
the Ministry of Tourism, Industry and Commerce and the Chief
Executive Officer of the Go-Invest agency to encourage the
marketing of group rights held by GA 2000 and increase the
presence of international flights in and out of Guyana and
subsequent to the closure of GA 2000.

He said the holding up and closure of GA 2000 must have
sensitized the likely investors.

"...and I believe we are looking at a measure of targeting the
investor community (those involved in providing aviation
services)...", Luncheon said.

GA 2000 last week indicated that it had attracted a potential
investor and was granted an extension of a deadline by the
Government to finalize related matters. But, according to a
source close to the deal, it failed to have the expression of
interest materialize. Sources said last week that the government
was not inclined to grant any further extension.


GA 2000: Collapse Blamed On Political Climate
---------------------------------------------
Chairman of Guyana Airways 2000, Mr. Yesu Persaud, blamed the
airline's demise to failure in attracting new investment and
exploring an operational alliance with other airlines on "the
prevailing political climate," Caribbean Air News reported
Wednesday. According to Persaud, the decision was made after
efforts to restructure and restart the airline's operations with
new investors proved to no longer feasible.

The airline's Chairman expressed "the most profound regret and a
deep sense of sadness, in spite of every possible effort on the
part of management and the employees, that the airline is no
longer able to remain in business".

He expressed his "disappointment that the first major venture
between a group of local private sector investors and government,
working together and dedicated to the establishment of a viable
national air carrier, has not been successful".

Persaud said all efforts to attract new investment were marked
with disinclination to invest in Guyana at this time.



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

AZURIAN: To Cease Costa Rica, Mexico Operations
----------------------------------------------
Alvaro Jaramillo, president of Azurian (www.azurian.com),
disclosed that the Miami-based Internet consulting firm and web
builder will be closing its Costa Rican office this week, and its
Mexican office by the end of the month, Business News Americas
reported Wednesday.

"We are restructuring the company, focusing on our most
profitable operations and eliminating those that are losing
money," Jaramillo said.

According to the president, the Mexico office was not self-
financing and failed to generate sufficient sales. The Costa
Rican operations will be managed from Colombia and the manager of
Azurian Colombia is currently in Costa Rica visiting clients,
Jaramillo added.

The board met two weeks ago in Colombia and agreed on a US$1-
million capital increase for the company's more profitable
operations. Under a restructuring plan, Azurian's Chilean
subsidiary will be responsible for operations in Peru, Brazil and
Argentina, while its Colombian subsidiary will take on Ecuador
and Central America.


CINTRA: Allegro May Bid In Forthcoming Auction
----------------------------------------------
Allegro, Mexico's largest charter airline, wants to take
advantage on the planned sale of Cintra, and its owners have now
found a partner to provide US$25 million to put toward a bid for
the holding company's auction, COMTEX reported Wednesday.
Meanwhile, Allegro is also in discussions with foreign banks
about financing options, should it decide to make a bid. Even if
Aeromexico and Mexicana, the two leading airlines controlled by
Cintra, will go to other bidders, Allegro will look for new
strategic partnerships with other non-winning bidders.


GRUPO DINA: Radical Cost-Cutting Measures, Delisting Shares
-----------------------------------------------------------
Consorcio Grupo Dina is to implement a strict program of cost
reduction, which, according to Dina Chairman and President
Gamaliel Garcia, will lead to savings of around $1 million
annually, COMTEX reported Wednesday. The cost cutting measures
will involve the closure of Dina Camiones y Composite, the
dismissal of an additional 800 employees, and the cancellation of
the company's listing on the Mexican Stock Exchange. The
difficult financial situation that the manufacturer of trucks,
plastic components and auto parts has experienced over the past
year forced the board of directors to take drastic measures,
reasoned Gamaliel.

"What we have to keep doing is redefine the business and make it
small, ... and try to keep going until we can arrive at some
concrete options," he said.


MOULINEX-BRANDT: Mulls Sale Of Mexican Factory
----------------------------------------------
The troubled French domestic appliances group Moulinex-Brandt is
reportedly studying the sale of its Celaya factory in Mexico,
along with the sale of Krups-North America, according to a report
Wednesday in Europe Intelligence Wire.

Moulinex, which currently has debts of 860 million euros, is
seeking the funds needed to put its restructuring plan into
action. The group is set to make a further appeal to its major
shareholder, the Nocivelli family. Moulinex is planning to carry
out a capital increase of 91.5 million euros in order to
successfully deploy its recovery plans.

A recovery plan put together by Patrick Puy forecasts savings of
a total of 110 million euros by 2003, but offers no concrete
proposals relating to the group's capacity to generate added
value.


VITRO: Moody's Lowers Senior Notes With Negative Outlook
--------------------------------------------------------
Moody's Investors Service on Wednesday announced it lowered the
ratings of Vitro, S.A.'s ("Vitro") senior notes issued at the
holding company, Vicap S.A., and also lowered the senior
unsecured issuer rating and the senior implied rating as follows:

- $175 million 10.25 percent senior unsecured notes, due 2002, to
B1 from Ba3

- $250 million 11.375 percent senior unsecured notes, due 2007,
to B1 from Ba3

- Senior Unsecured Issuer Rating to B1 from Ba3

- Senior Implied Rating to Ba3 from Ba2

"The ratings action reflects the cumulative effects of adverse
economic conditions" which hurt the company's profit margins,
Moody's said in a statement.

The outlook on Vitro's rating is "negative," Moody's said,
because a strong peso and a U.S. economic slowdown are hurting
the company's exports. "Further deterioration in credit
statistics would likely result in a ratings downgrade," the
ratings agency said.

According to Moody's, Vitro has had "pressure from imports in the
flat glass division as well as product substitution and reduced
demand in glass containers."

Last month, Vitro said it would fire about 1,100 managers in a
cost-cutting measure. The company has been hurt as higher energy
costs boost production expenses and strong peso cuts into export
sales, which have also slowed amid weak demand from a U.S.
economic slowdown.



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V E N E Z U E L A
=================

SIVENSA: Advances Talks On Debt-Restructuring
---------------------------------------------
Caracas-based steel group Sivensa announced that it is making
progress on debt-restructuring talks, Business News Americas said
Wednesday in a report. Advancement in the negotiations, which
also involves a possible debt restructuring in its hot-briquette
iron operation Orinoco Iron, included work towards completion of
a terms sheet to convert maturities from short- to long-term.

Orinoco is a 50:50 joint venture at Puerto Ordaz with BHP
Billiton, which has refused to inject fresh capital into the
project and wrote off some US$410 million earlier this year.
Sivensa owns its Orinoco interest through International Briquette
Holding (IBH), which saw a drop in sales to US$17 million in the
April-June period from US$30 million in same-period last year.

Sivensa, during the quarter ended June 30, the third in its
fiscal year, declared a US$15.4-million net loss, almost
quadrupling the US$4-million loss in same-period last year.


XEROX: Withdraws From SOHO, Venezuelan Operations Continue
----------------------------------------------------------
Xerox has announced its withdrawal from the SOHO (small
office/home office) market globally - R&D stops as of now and its
products such as Inkjet will be off the shelves in six months, El
Nacional reported Tuesday. However, support will still be given
to SOHO users.

SOHO is just one of 14 product areas Xerox Venezuela handles.
Xerox Venezuela is focused on attending to the needs of the
corporate market, having reduced its key client portfolio from
7,500 to 75. SOHO sales represented just 5 percent of the
subsidiary's total.




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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