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

            Tuesday, August 7, 2001, Vol. 2, Issue 153



AEROLINEAS ARGENTINAS: SEPI Denies Selling Aerolineas To Marsans
CYBREL: Investors To Quit Yeyeye.com Participation
DIVEO: Slashes 40% Of Argentenian Jobs To Reduce Costs
ETAM: Financial Problems, Argentinean Operations To Restructure


PORTOBELLO: 2Q01 Net Loss Shrinks, Finance Costs Up
TELEMAR: Anatel Conducts Investigation Into Last Board Meeting
TELEMAR: To Go Ahead With Restructuring Of Phone Services
TRANSBRASIL/VARIG: Code Sharing Deal Alive For Another 90 Days


EDELNOR: AES Launching Tender Offer For Bonds At 62% Discount
EDELNOR: Reports 2Q01 Loss of US$9 Million, Sales Down


PAZ DEL RIO: Regulator To Confront Creditors' Objections


GRUPO DINA: Agreement With Bondholders Needed To Avoid Closure
GRUPO DINA: Meeting Held Aug. 4 To Approve Delisting Of Shares

     - - - - - - - - - -


The Spanish cabinet on Friday approved the appointment of Ignacio
Ruiz-Jarabo as chairman of the Spanish state industrial holding
company (SEPI), replacing Pedro Ferreras, Expansion said in a
report. Ruiz-Jarabo's first challenge is to resolve the crisis
over Argentine airline Aerolineas Argentinas. He has until August
16 to find a buyer for the airline and defuse a crisis that has
complicated the relationship between the Argentine and Spanish
governments. Reportedly, the Spanish government's deteriorating
image in Argentina was one of the reasons prompting Ferreras'
departure. At this juncture, the only solution to avoid the
company's liquidation is its sale.

AEROLINEAS ARGENTINAS: SEPI Denies Selling Aerolineas To Marsans
Spanish state holding company SEPI refuted a Buenos Aires
Economico (BAE) report that it made a final decision to sell its
stake in the beleaguered Argentine airline Aerolineas Argentinas
to a consortium led by Spanish tour operator Viajes Marsans, AFX
Europe reported Friday. According to an unnamed spokesman, "no
decision" has been made regarding the planned sale of Aerolineas.

BAE reported that Sepi has reached a decision to sell its stake
in Aerolineas to Marsans. According to that scenario, Marsans
signed an agreement with the Spanish government, a key part of
which is to guarantee Aerolineas' jobs for two years. Under the
deal, SEPI would reportedly retain a stake in Aerolineas in
exchange for a financial contribution.

CYBREL: Investors To Quit Yeyeye.com Participation
Businessman Francisco de Narvaez and the investment fund Chase
Capital Partners will sell their shares in Cybrel Digital
Entertainment, leaving the balance of the company's shares in the
hands of its founder, Charly Alberti, according to a report
Wednesday in El Cronista. Both the businessman and the investment
fund reportedly own shares in the company's primary asset, the
Spanish music portal Yeyeye.com. The site is rumored to be on its
last leg financially and close to quitting operations.

Yeyeye.com commenced operations in 1999, with Alberti and Narvaez
owning equal parts. They invested US$2 million to develop this
portal, which has over 50,000 registered users. In 2000, the
Chase Capital Partners invested US$10 million to become part
owner of the site.

DIVEO: Slashes 40% Of Argentenian Jobs To Reduce Costs
In a bid to cut costs as part of a regional restructuring
program, American broadband telecoms company Diveo has decided to
reduce by 40 percent its personnel of 180 people in Argentina, El
Cronista reported Wednesday. According to Marcelo Cancelliere,
director general of Diveo Argentina, the restructuring aims at
reaching profitability sooner. However, despite personnel
reduction, the company will still continue with its current
investment plan, Cancelliere added.

Word in the market says that Diveo is for sale, but sources close
to the company said that the firm is looking for new investors.
Diveo hopes to make at least US$200 million before the end of
this year.

Goldman Sachs, Alta Communications and Norwest, the company's
leading shareholders, injected US$78 million in the company 2
months ago.

ETAM: Financial Problems, Argentinean Operations To Restructure
Financial difficulties prompted Etablissement Mayer (Etam), a
women's clothing chain, to restructure its operations in
Argentina, El Cronista said Wednesday in a report. Etam, which
called in the creditors in 1999, decided to turn over all of its
shops to its suppliers under a franchise system. Additionally,
the company intends to launch a direct sales system.

In early June, Etam gave 46 of its 49 shops to 15 suppliers
represented by a grouping of four companies, under a franchise
system. Univista, a group of importers, kept 32 shops; Impecor, a
jumpers manufacturer, obtained 6; Carlos Rizzo has 5 shops; and
Textiles Asfoura the other 3 shops of Etam. The franchisers pay a
5-percent royalty to Etam for the use of the brand.

Ten other suppliers have yet to accept to operate Etam's shops
under a franchise system. This group is a creditor of
approximately 20 percent of Etam's commercial debt, which
represents nearly US$1 million.

Etam, owes banks US$7.29 million and commercial debts of over
US$4 million, closed 18 of its branches this year. Ironwood
Equity, the Argentinean-American investment fund has controled
Etam since 1999.


Brazil's No.1 power distributor, Eletropaulo Metropolitana SA,
disclosed it has obtained approval from its board to seek
financing worth $350 million to help it roll over debt coming
due, Bloomberg reported Friday. The money, which will also be
used to fund new investments, will be generated from the sale of
commercial paper, loans or other forms of financing from the
Brazilian or international debt markets, the company stated in a
note published by the Sao Paulo Stock Exchange Friday.

Eletropaulo reportedly has estimated debts of 3.4 billion reais
($1.4 billion). According to Charles Barnett, an analyst at
Lehman Brothers do Brasil in Sao Paulo, the company wants to be
ready to raise money to meet its financing needs when the
opportunity arises. Eletropaulo has a $100 million one-year bond
maturing in January among other commitments.

Meanwhile, Eletropaulo's board also agreed to increase the value
of its European commercial paper program approved in July 1999 to
$300 million from $200 million.

PORTOBELLO: 2Q01 Net Loss Shrinks, Finance Costs Up
Brazilian manufacturer of ceramic facings Portobello saw a 7-
percent year-over-year decrease in its net loss in the second
quarter, to R$6.3 million, Valor Economico revealed Wednesday in
a report. Net revenue stood at R$58.8 million, up 39 percent from
the R$42.2 million in the previous year.

The a strong dollar helped the company's export income somewhat.
However, financial costs were R$15.2 million, up from R$8.8
million, mainly due to the high dollar and the company's foreign
debts. At the end of June, Portobello recorded net assets of
R$49.3 million.

In June this year, Brazilian market analysts expressed mounting
apprehension about Portobello's debts, which have reached a total
of R$138.13 million.

TELEMAR: Anatel Conducts Investigation Into Last Board Meeting
The Brazilian Agencia Nacional das Telecommunicacoes (Anatel) is
conducting an investigation into Telemar's most recent board
meeting, in which the president of the company, Horacio Francisco
da Silva, was fired. According to a report Friday in O Globo, the
agency has requested Telemar to provide it with copies of the
minutes of the company's last board meeting. Antel is looking for
evidence that would confirm rumors that representatives of
Lexpart Participacoes were present at the meeting. Lexpart is
controlled by the Opportunity Bank, which in turn owns
convertible debentures in Telemar held by Inepar.

If the Lexpart representatives were present, this would represent
contravention of the Lei das Telecommunicacoes, the legislation
which regulates the privatization of Brazilian
telecommunications. Anatel has various legal options to pursue if
it determines a violation in the case.

TELEMAR: To Go Ahead With Restructuring Of Phone Services
Telemar shareholders agreed to restructuring the 16 phone
services carriers held by the company, O Globo reported Friday.
Consequently, Telerj (known as "Nova Telerj" in the Brazilian
market) will take over all the carriers and will be called
Telemar Norte Leste. Shareholders may convert their certificates
into the new company's shares. Furthermore, Telerj's capital will
increase from R$3.268 billion to R$7.084 billion and more than 20
percent of the shares will be negotiated in Sao Paulo Stock
Exchange (Bovespa).

TRANSBRASIL/VARIG: Code Sharing Deal Alive For Another 90 Days
Transbrasil and Varig renewed their existing code sharing deal
for another 90 days. Under the agreement, Brazilian carriers will
continue share seats in the Rio-Sao Paulo route and in flights
for Lisbon (Portugal), O Globo reported Friday.

According to market analysts, Varig might take over Transbrasil's
route to the Portuguese capital until late this year.
Transbrasil, which recently had its bankruptcy application
denied, has subsequently failed to pay its employees. Losses
during the first quarter of this year amounted to R$37 million.


EDELNOR: AES Launching Tender Offer For Bonds At 62% Discount
The AES Corporation (NYSE:AES) announced on Friday that it
intends to launch, through a wholly owned subsidiary, a cash
tender offer to acquire all of the outstanding loan participation
certificates of Empresa Electrica del Norte Grande S.A.

Edelnor operates in northern Chile and consists of 716 megawatts
of generation, 1,056 kilometres of transmission and it is also an
electric marketing and sales company selling to distribution and
large industrial companies.

The price intended to be offered for the Participation
Certificates is $375 for each $1,000 of nominal principal due
under the Participation Certificates, plus interest accrued until
the date of payment (excluding the date of payment).

The offer to acquire the Participation Certificates is subject to
a number of conditions, including, among them, a 100%
participation of the bondholders and the successful acquisition
of all of the shares of Edelnor owned by Mirant Chile S.A.
(presently 375,844,194 shares) at a total price of $1,000.

AES has retained the services of Banc of America Securities LLC
as its financial advisor in connection with this transaction.

Naveed Ismail, President of AES Andes, commented, "This step by
AES is further evidence of our confidence in Chile and the
business climate we currently experience. We believe our offer is
fair for the existing bondholders and is also an attractive
investment for AES."

Mr. Dennis W. Bakke, President and Chief Executive Officer of
AES, stated, "We have been looking for additional ways to serve
Chile. Edelnor appears to be an ideal vehicle for expanding our
ability to make a difference in that exciting country."

EDELNOR: Reports 2Q01 Loss of US$9 Million, Sales Down
Empresa Electrica del Norte Grande S.A. (EDELNOR) reported a loss
of Ch$22.3 billion through second quarter 2001, compared to a
gain of Ch$6.2 billion for the same period of 2000.  Results were
negatively impacted by a non-cash monetary correction adjustment
(price level restatement) required under Chilean accounting rules
in the amount of Ch$17.5 billion.

(Had EDELNOR reported its results in U.S. dollars using U.S.
accounting rules rather than Chilean rules, net income would have
been a loss of US$9.0 million for the period compared to a gain
of US$7.9 million for the same period in 2000).

Revenues through second quarter 2001 decreased 13.7 percent to
Ch$27.8 billion, compared with Ch$32.2 billion for the same
period in 2000, and sales decreased 12.6 percent from 1,214 GWh
to 1,061 GWh.

The company's operating income decreased to Ch$(1.5) billion,
compared with Ch$3.6 billion for the same period of 2000.
Operating income was affected primarily by decreased operating
revenues due to the termination of the Escondida contract, and
increased operating costs, mainly due to gas transportation
associated with the operation of Mejillones III.

EDELNOR has three main central generating units located in the
town of Mejillones in addition to several smaller diesel and
hydro facilities in the first and second regions of Northern
Chile.  The company's Mejillones I unit is a coal-fired facility
with a maximum capacity of 166 megawatts and through second
quarter 2001, the unit operated with 96.5 percent equivalent
availability and a 35.5 percent capacity factor.  The company's
Mejillones II unit is a coal-fired facility with a maximum
capacity of 175 megawatts, which operated with 81.4 percent
equivalent availability and a 45.7 percent capacity factor for
the period.  The company's Mejillones III unit, which began
commercial operation on June 17, 2000, is a gas-fired combined
cycle facility with a maximum capacity of 250 megawatts.  This
unit operated with 96.6 percent equivalent availability and a
54.9 percent capacity factor.  As of June 30, 2001, all of the
units in the Interconnected System of the Great North (SING) were
limited to an output of 180 megawatts.

On July 19, 2001, the Comision Regional del Medio Ambiente
(COREMA) of the second region approved a provisional
authorization for EDELNOR to burn mixtures of petcoke and coal in
one of its units at Mejillones.  However, the written order has
not yet been received by the company.  The authorization does not
set specific mixtures, but limits emissions to agreed-upon
standards for SO2, nickel plus arsenic, vanadium and particulate
matter.  This provisional authorization will be in effect until
COREMA rules on the Environmental Impact Study (EIS) filed by the
Company on June 7, 2001.  If the IES is approved, the units will
have long-term fuel flexibility.  No date has been set for that

EDELNOR owns 21.1 percent of Gasoducto Nor Andino, a natural gas
pipeline company which brings gas to northern Chile from

EDELNOR is 82 percent owned by Mirant (NYSE: MIR), formerly known
as Southern Energy.  The remainder of the equity is traded on the
Chilean stock exchange.


PAZ DEL RIO: Regulator To Confront Creditors' Objections
Colombia's trade practices regulator this month is expected to
deal with objections presented by two Paz del Rio creditors,
which are holding up the company's restructuring, Business News
Americas reported Friday. However, a company executive, who spoke
on the condition of anonymity, said both Gilberto Gomez, the
government-appointed mediator of the Colombian debt-laden steel
company, and the entire administration "are confident Paz del Rio
can end the process successfully."

Commenting on claims a 50-percent fall in Paz del Rio's June
sales was due to departmental politicians' interference, the
executive attributed the drop to the month's four or five
holidays that meant short working weeks. The shortened work
periods affected all companies' sales, not just Paz del Rio, he

The company saw an increase in its sales in the first half of
this year, but remains in the red. To June, its accumulated
losses were US$118 million, and its short-term debts almost
doubled to US$90 million from US$57 million at December 31.
Currently, the company's assets remain greater than its


GRUPO DINA: Agreement With Bondholders Needed To Avoid Closure
Grupo Dina, Mexico's technically bankrupt bus and truck maker, is
desperately trying to reach a debt restructuring agreement with
bondholders in the coming weeks, as it faces the growing threat
of complete closure, Ft.com reported Sunday. Dina is now working
frantically to persuade bondholders to accept Dina's remaining
24.3 percent stake in Motor Coach Industries International, the
US bus-maker, in lieu of payment after defaulting in February on
a $164-million convertible bond.

If Dina fails with this move, it will be obligated to sell all
remaining assets, according to Mauricio Mendoza, its legal

"If we do not restructure in the short term we will have to
close," he said. "Without sales we will be forced to sell assets
to fulfil our financial commitments."

However, the proposed swap faces regulatory hurdles in the US
while a worldwide crisis in the trucking sector has made the MCII
stock virtually worthless, Mr. Mendoza admitted.

In 1999, at the height of a vehicle industry boom, Dina sold a
61-percent stake in MCII for $175 million. That sale price,
according to US-based bondholder, The Weston Group, represents
twice the current enterprise value of the stock.

"Unfortunately it is not very attractive, but it is the only
asset we have," said Gamaliel Garcˇa, Dina's chairman.

GRUPO DINA: Meeting Held Aug. 4 To Approve Delisting Of Shares
Grupo Dina held an extraordinary shareholders meeting on August 4
to approve the delisting of its shares, which were suspended from
trading in New York and Mexico in February having fallen behind
on interest repayments on bonds that mature in 2004, Ft.com
reported Sunday. Dina posted losses of 353.3 million pesos in the
first semester of 2001 (more than the loss of 300.3 million
dollars last year in the first six months), and is worried about
the costs involved in featuring on the stock market and its
liquidity problems. The company will put some $2 million into a
trust to buy 116 million publicly floated shares.

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
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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.

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