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

            Thursday, August 9, 2001, Vol. 2, Issue 155



CORMINE: Winding Up Report To Be Submitted Aug. 10


EDELNOR: Liquidity Concerns Plague Edelnor, Says Fitch
EDELNOR: Electroandina International, Inc. Extends Tender Offer
ENERSIS: S&P Rates US$500M Syndicated Loan `A-`
STARMEDIA: Likely To Miss Year-End Breakeven Target
STARMEDIA: 2Q01 Results; Sales, Revenues Up Despite Tough Market
STARMEDIA: Announces New Chief Executive Officer
TELEFONICA CTC: Fitch Affirms `BBB+'; Revises Outlook Negative


FILANBANCO: Social Organizations Stage 48-Hr. Strike


COMERCI: Vector Maintains `Buy' Recommendation Despite Results


AERO CONTINENTE: Files Writ For "Economic Relief" Against Chile

      - - - - - - - - - - -


CORMINE: Winding Up Report To Be Submitted Aug. 10
A consulting firm working on the winding up of central Argentine
province Neuquen's mining company Cormine is due to submit its
final report on August 10, Business News Americas reported
Tuesday. As a result of the report, authorities will decide which
assets will be sold off and how.

"We are evaluating each asset individually, and only those that
merit it will be auctioned," said Cormine receiver Martin
Palacios. Assets include some 107 mineral properties.

Based on the consulting firm's report, a technical research team
will determine which mines or deposits to put out to public
tender, to sell via an auction to the highest bidder or to sell
directly to interested parties.


EDELNOR: Liquidity Concerns Plague Edelnor, Says Fitch
Empresa Electrica del Norte Grande S.A. (Edelnor) is facing
dwindling options to raise sufficient funds to meet short-term
debt service through the end of 2001 primarily due to
difficulties with the sale of non-core, sub-transmission assets.

In February 2001, Fitch noted that sources of additional cash
include minor asset sales, which combined with cash flow, could
potentially sustain the company for another 6-9 months. At that
time, Fitch downgraded Edelnor's ratings from `B-' to `CCC' and
maintained the ratings on Rating Watch Negative. The current
`CCC' rating and Rating Watch Negative status applies to
approximately $340 million of debt.

The company has pursued asset sales, which have totaled only $1.7
million in 2001, but opportunities for the sale of its sub-
transmission assets appear to have faded due to weak interest
from potential buyers.

It was previously expected that uncertainty regarding the timing
of the proposed asset sales would by covered by financial bridge
support from its parent, Mirant Corporation (Mirant), to meet
debt service until asset sale proceeds were received. Mirant's
recent affirmation that it will not infuse additional cash
without assurances of repayment implies that repayment (ie,
successful sale of assets) appears unlikely as this time. In
1998, Mirant (Edelnor's majority shareholder of 82%) announced
its intent to sell Edelnor and wrote down its Edelnor investment
following the deterioration of credit fundamentals at Edelnor.
Mirant made a further write down in second quarter 2001, taking
the basis in the company to zero.

Edelnor continues to face poor financial performance, and the
company's liquidity position remains very tight. Near term
operating cash flow is expected to be limited and insufficient to
cover interest payments alone. Cash on hand as of June 2001, was
approximately $3.5 million. The next coupon payment in the amount
of $9.687 million is due Sept. 15, 2001. Edelnor hopes to manage
cash receipts and payables sufficiently to meet the September
payment. The company's ability to make the $4.725 million coupon
payment in December remains uncertain.

If Edelnor is able to obtain sufficient cash through 2001, it
will face additional challenges in 2002 as operating cash flow
will likely be further affected by the expiration of the EMEL
supply contracts, which are priced higher than current spot
prices. The loss of the EMEL contracts will reduce contracted
capacity to less than 25% of Edelnor's installed capacity of 653
MW. Competitive pressures and low spot prices are not expected to
improve over the next year and there are few opportunities to
enter into new supply contracts, providing little prospect for
operational and financial improvement in the near term.

There are currently two separate bids outstanding for Edelnor's
debt. On Aug. 3, AES offered Edelnor bondholders $0.375 on the
dollar for all of Edelnor's $340 million of outstanding bonds.
The AES offer follows ElectroAndina's announcement in July to
launch a tender offer for all of Edelnor's bonds at a price of
$0.325 on the dollar. ElectroAndina's offer expires today. Both
offers are contingent on receiving 100% participation of
bondholders and Mirant's stock in the company. The objective of
these bids is to acquire the assets of Edelnor, which include
coal- and natural gas-fired generation plants, transmission
assets, and 163 MW (in 2002) of existing purchased power
agreements with large industrial and mining companies.

Edelnor is a Chilean electric generating and transmission company
that supplies electricity under long-term purchased power
agreements to distribution companies and large industrial
consumers in Chile's northern region. Edelnor is owned primarily
by Mirant (MIR), formerly Southern Energy, Inc., which announced
its intent to sell its Chilean operations at year-end 1998.

EDELNOR: Electroandina International, Inc. Extends Tender Offer
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 Tuesday that it is
extending the expiration date of its cash tender offer for 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") until 9:00 a.m., New York City
time, on August 17, 2001, unless extended or earlier terminated
(such time and date, as the same may be extended, the "Expiration
Date"). The tender offer previously had been scheduled to expire
at 9:00 a.m., New York City time, on August 7, 2001.

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 2005 Certificates and the 2006 Certificates were
issued in an aggregate principal amount of US$90,000,000 and
US$250,000,000, respectively. As of the date of this release, the
approximate principal amount of 2005 Certificates and 2006
Certificates tendered was US$8,925,000 and US$11,726,000,

J.P. Morgan Securities Inc. is the dealer manager for the tender

ENERSIS: S&P Rates US$500M Syndicated Loan `A-`
Standard & Poor's on Tuesday assigned its single-'A'-minus rating
to Enersis S.A.'s US$500 million syndicated bank loan, due August
2004. The outlook is stable. The rate is LIBOR plus 75 basis
points. The funds will be used to refinance outstanding debt.

The rating reflects the combined credit profile of Enersis'
subsidiaries, the most prominent of which are 98% owned Chilectra
S.A., (issuer credit rating, single-'A'-minus/Stable), and 60%-
owned Empresa Nacional de Electricidad S.A. (Endesa Chile; issuer
credit rating: triple-'B'-plus/Stable/--). These companies hold a
dominant position, respectively, in electricity distribution and
generation in Chile. In addition, 65% owner Endesa Spain (single-
'A'-plus/Negative) has provided financial support and enabled
Enersis and Endesa Chile to obtain third-party financing at
favorable rates. Furthermore, the US$1.7 billion remaining of the
US$2.1 billion inter-company loan provided to Enersis by Endesa
Spain is expected to be capitalized. Chilean operations are
expected to comprise about 60% of consolidated net income going
forward. The balance will be derived from subsidiaries of
Chilectra (engaged in distribution) and Endesa Chile (generation)
in Argentina, Brazil, Colombia, and Peru, which are considered
riskier credits due to greater country risk and, on balance,
greater regulatory risk. Chilectra, the largest distributor in
Chile (about a third of Enersis' projected earnings) serving most
of Santiago, benefits from monopoly operations in a supportive
and proven regulatory environment. The value added in
distribution margin is designed to allow a return of from 6%-14%
for distributors in the aggregate, with individual distributor
margins reflecting efficiency. Chilectra faces high demand
growth, projected at 6% annually and little competition. Endesa
Chile (about a third) is Chile's largest and lowest cost
generator. Endesa, which generated 54% in the SIC in 2000 with
hydro generation in a normal hydro year, benefits from the
competitively low marginal cost of power. Generation demand
growth is also projected to be strong 5%. However, the Chilean
power market has become more risky for generators due to more
onerous penalties for failure to meet supply commitments (a
reaction to the protracted 1998/1999 drought) and uncertainty of
long-term node pricing and implications of the proposed new
energy law, which was recently passed into Congress for
discussion. However, passage is not expected earlier than two

Enersis and Chilectra's most important non-Chilean subsidiaries
are Argentine distributor Empresa Distribuidora Sur S.A.(Edesur;
double-'B'-minus/Negative/--) and Brazilian distributor Companhia
de Eletricidade do Rio de Janeiro (CERJ; local currency double-
'B'/Stable/--; foreign currency double-'B'-minus/Stable/--).
While 2000 financials improved over 1999, they remain weak for
the rating. The former year's results were severely affected by
the drought in Chile, higher interest rates, and challenges at
international subsidiaries due to multiple reasons, including
unfavorable hydrology, low market pricing, and weak economics.
Financial parameter results for the first half of 2001 are
modestly improved; funds from operations (FFO) interest coverage
was 2.9 times.


The stable outlook reflects expectations that financial ratios
will improve as earnings grow and debt is paid down. Enersis'
foreign acquisition strategy is expected to be put on hold as it
strengthens its balance sheet over the next several years. The
stable outlook assumes that over the medium term, any material
expansions in Latin America will be financed by Endesa Spain, and
that the transfer of these assets to Enersis over time would not
result in greater leverage

STARMEDIA: Likely To Miss Year-End Breakeven Target
Rodrigo Goes, an analyst at Credit Suisse First Boston (CSFB)
predicted that New York-based Starmedia is likely to miss its
year-end breakeven target even if it does see profits this year,
Business News Americas reported Tuesday. According to Goes, the
regional Internet company is highly likely to slip back into the
red in the first quarter next year as a consequence of the
seasonally sluggish advertising market.

Starmedia's share price has lost 50 percent in the last couple of
weeks, which according to Goes, could be the result of investor
concern that a recently formed partnership with Bellsouth might
scare off potential buyers such as Spain's Telefonica or Brazil-
based UOL. This, together with the tough online advertising
environment and the question marks over its breakeven capability,
are expected to see the company's trading volatility continue.

"... They're going to have a very hard time going up over a
dollar," Goes said.

Regarding the Bellsouth deal, in which the US wireless carrier
took an 11 percent equity stake for US$25 million, he said there
are definitely opportunities but the wireless market has not
panned out as expected in the US and would certainly take longer
in Latin America.

"I think (the alliance) opens doors, but I don't think it's
anything for the near future, maybe a little further down the
line. It did give them a little breathing room, but there are a
lot of people wondering what Starmedia's exit strategy is.
According to management, there is no exit strategy. They're in
this market for the long run and they want to compete with the
big guys, but the company totally relies on advertising and there
is not much of that to go around at this point," he said.

STARMEDIA: 2Q01 Results; Sales, Revenues Up Despite Tough Market
StarMedia Network (Nasdaq: STRM) (,the  
leading integrated Internet media and solutions company targeting
Spanish- and Portuguese-speaking audiences, announced Tuesday
financial results for the second quarter ended June 30, 2001.
StarMedia also announced that its Board of Directors has
appointed Enrique Narciso, current President, as the Company's
new Chief Executive Officer. Fernando Espuelas will remain in his
role as Chairman of the Board.

*  Company gains efficiencies as pro forma EBITDA (earnings    
   before interest, taxes, depreciation and amortization) loss of
   $23.1 million represents a 35% year-over-year improvement and
   10% sequential improvement

*  Strong bottom-line improvement seen with pro forma net losses
   decreasing 26% year-over-year

*  Revenues grow 3% versus the same period one year ago despite
   challenging market conditions

StarMedia Network reported $14.2 million in total revenues for
the quarter ended June 30, 2001, a 3% increase over total
revenues of $13.8 million reported in the year-ago period and an
11% decrease over total revenues of $16.0 million for the quarter
ended March 31, 2001.

The Company saw continued improvements in its cost structure, a
result of ongoing cost containment initiatives. For the quarter
ended June 30, 2001, StarMedia Network reported a net loss of
$30.6 million, or a basic and diluted net loss per share of
$0.41, on a pro forma basis, excluding costs associated with a
company-wide realignment, losses in unconsolidated subsidiaries,
and certain preferred stock dividends and accretions. This
compares to a net loss of $41.5 million or a basic and diluted
net loss per share of $0.63 for the quarter ended June 30, 2000,
and a net loss of $31.2 million, or a basic and diluted net loss
per share of $0.46, on a pro forma basis, for the quarter ended
March 31, 2001. Pro forma calculations assume the conversion of
all Outstanding Redeemable Preferred Shares on a one for one
basis. Including these items, reported net loss available to
common shareholders for the second quarter was $48.0 million, or
a basic and diluted net loss per share of $0.69.


StarMedia Network had 23.2 million unique users worldwide during
the month of June 2001. This figure represents unduplicated users
of the, LatinRed, and Cade? Brands. This is down
34% from the 35.2 million users reported during the quarter ended
March 31, 2001, a result of our previously announced effort to
reduce costs associated with Network applications that have
proved historically difficult to monetize.

Page views for the quarter ended June 30, 2001 were 4.0 billion,
a 47% increase over the 2.7 billion in the quarter ended June 30,
2000 and essentially flat versus the 4.0 billion reported in the
quarter ended March 31, 2001.

Unique user and page view figures have been audited by ABC
Interactive, in compliance with Internet Advertising Bureau (IAB)
standards. ABC Interactive is the interactive auditing unit of
the Audit Bureau of Circulations (ABC), which provides online
auditing services for leading Internet companies worldwide.

Active e-mail accounts during the quarter were 5.5 million, a 24%
increase over the 4.4 million active e-mail accounts in the same
period a year ago, and a 9% increase over the 5.0 million
reported in the quarter ended March 31, 2001. 'Active' e-mail
accounts refers to those e-mail accounts that have been used at
least once within the last 90 days.

The Company continues to enjoy a prominent position within its
markets. According to Nielsen//NetRatings (June 2001) StarMedia
Network is the second and third most visited network on the Web
in Brazil and Mexico, respectively. The company reaches over 44
percent of Brazilian Internet users, and approximately 40 percent
of Mexican Internet users.

STARMEDIA: Announces New Chief Executive Officer
StarMedia Network announced Tuesday that, effective immediately,
Enrique Narciso, StarMedia's current President, has been
appointed to the role of Chief Executive Officer. Fernando
Espuelas will remain as Chairman, where he will continue to build
upon StarMedia's vision and support the Company's long term

"Over the last five years, we have built StarMedia into the
leading Latin American company for the Internet," said Fernando
Espuelas. "Upon careful, personal reflection, I have decided to
seek new challenges and new vistas. I believe that Enrique has
demonstrated strong leadership at StarMedia and, after much
searching, I am confident that he is the right person to lead the
Company through its next stage of growth."

"StarMedia has achieved great success under Fernando's
leadership," said Enrique Narciso, CEO of StarMedia Network. "I
look forward to building on that foundation to create long-term
value for StarMedia's users, clients, and investors."

A native of Venezuela, Narciso has a strong background in finance
and operations with over 15 years of management experience. Since
becoming President of StarMedia Network on June 1, 2001, Narciso
has been responsible for managing the company's operations and
executing its global strategy, expanding StarMedia's leadership
throughout its markets. Prior to that, he served as General
Manager of StarMedia Mobile, overseeing StarMedia's wireless
initiatives, building a complete suite of wireless Internet
services and solutions, and establishing partnerships with major
carriers across Latin America. He was one of the founders and
President of PageCell International Holdings, a company acquired
by StarMedia Network in 1999. Previously, Narciso served as
Managing Director for Latin America of Alpha Investments, a two
billion dollar hedge fund based in New York and also served as
partner and board member for various financial institutions in
Latin America.

"As StarMedia's largest investor, we are confident in StarMedia's
ability to continue its market leadership under Enrique's
experienced guidance," said Susan Segal, Partner, JPMorgan

"We look forward to working with StarMedia under Enrique's
leadership to continue to execute on our strategic alliance,"
said Roberto Peon, Chief Marketing Officer of BellSouth

TELEFONICA CTC: Fitch Affirms `BBB+'; Revises Outlook Negative
Fitch has affirmed the `BBB+' international scale local and
foreign currency ratings of Compania de Telecomunicaciones de
Chile (CTC) and revised the Rating Outlook to Negative. The
affirmation is the result of Fitch's review of the company's
restructuring and cost reduction actions and an expected
improvement in credit protection measures in the near term, all
of which are key to supporting the ratings. The change in the
Rating Outlook from Stable to Negative reflects the company's
below average financial performance for the rating category, the
execution risk associated with the company's strategy to improve
financial results and an expected increase in competition,
particularly in the unregulated sectors, e.g. mobile. At this
juncture, a downgrade is unwarranted given the anticipated upward
trend of fundamentals resulting from the financial and
operational measures taken by the company.

CTC's ratings reflect its leading position in the Chilean
telecommunications industry and its diverse telecom revenue mix,
i.e., local, long distance, data transmission and wireless
telephony. CTC benefits from the operational support received
from Telefonica S.A., particularly in the use of Telefonica's
global network for the introduction of competitive wireless and
international long distance product offerings. Fitch lowered
CTC's ratings in September 1999 to `BBB+' from `A'- following the
implementation of the five- year tariff reset. The tariff reset
resulted in a 25% decrease in the average regulated revenue per
line and lowered regulated revenue by $155 million and $236
million in 1999 and 2000, respectively. The impact of this
regulatory event has been factored into Fitch's ratings.

The company has taken several actions to offset the impact of the
regulatory action and improve profitability which include: a
major job-reduction program, the selling of non- core assets,
reducing debt, renegotiating spreads, and lowering capital
expenditures. To date, these cost reduction initiatives have
generated annual savings of $107 million in 2000 and should
generate an additional $44 million in annual savings associated
with its recently concluded job reduction program. The company
reduced capital expenditures to $349 million in 1999 and $274
million in 2000 from an average $649 million in previous years.
Capital expenditures in 2001 should approximate $274 million. The
company has not experienced a decline in quality of service
associated with the capital expenditure reductions and has used
excess capacity to service demand. The reduction in capital
expenditures, prepayment of debt, refinancings and new issuances
will result in an increased net change in cash of roughly $80
million for 2001.

As a result of the aforementioned measures to improve financial
fundamentals, CTC is expected to be better positioned within the
`BBB+' rating category by 2003. EBITDA/Gross Interest Expense is
expected to range between 5 times (x) and 6x by 2003 and Total
Debt/EBITDA is expected to decrease to slightly below 2x over the
same period. CTC is expected to continue to deleverage,
renegotiate spreads, lengthen maturities, and operate with a
significantly reduced operating cost structure compared to
historical levels.

As previously mentioned, the Rating Outlook Negative indicates
the possibility that credit protection measures may improve at a
slower-than-anticipated pace should the competition increase
beyond expectations and/or the anticipated cost reduction
initiatives be less robust, and/or an improvement in the debt
profile fail to occur. Failure to achieve improvements in
financial performance may pressure credit quality and result in
further negative rating actions.

Compania de Telecomunicaciones de Chile is the leading provider
of telecommunications services in Chile and is headquartered in


FILANBANCO: Social Organizations Stage 48-Hr. Strike
Seeking to pressure the government to pay off the debts of the
clients of Filanbanco, Ecuadorian social organizations announced
their plans to lodge a 48-hour strike beginning Wednesday, EFE
said in a report. According to the social organizations, the
failure to pay debts by dozens of bank clients is the cause of
Filanbanco's crisis. Filanbanco, formerly the country's largest
bank, was shut down in July to begin the privatization process.  

If the government does not punish those responsible for
Filanbanco's crisis "it will go down in history as an
accomplice," charged Luis Villacis, president of the Patriotic
Front, an umbrella group of several social organizations.

Demonstrators demand that the government suspend plans to
privatize a number of companies.


COMERCI: Vector Maintains `Buy' Recommendation Despite Results
Mexican brokerage Casa de Bolsa Vector recommended the purchase
of retailer Controladora Comercial Mexican (COMERCI) stock, even
recognizing the company's weak second-quarter results, reported
Mexico City daily el Universal. Vector analysts informed Comerci
continues to trade below book value and that the company has
price/earnings ratios of between 5 and 6, compared to an average
of 15 for its competitor Wal-Mart de Mexico (WALMEX).

Just recently, the supermarket retailer said it would cease
releasing monthly sales figures, a move seen by Salomon Smith
Barney retail sector analysts as an indication of the severity of
the company's current situation.


AERO CONTINENTE: Files Writ For "Economic Relief" Against Chile
Following the seizure of the assets of its Chilean affiliate that
has been charged with money laundering and conspiracy, Peruvian
airline Aero Continente on Tuesday filed a writ for "economic
relief" against Chile, court officials confirmed in an EFE

Chilean attorneys Hugo Ortiz de Filipi and Julio Dissi filed the
appeal with the Santiago Appellate Court in an attempt to block
the liquidation of the airline and staunch the financial fallout
from the orders issued by Judge Juan Carlos Urrutia. The filing
came a day after defense attorneys filed a separate appeal with
the court regarding the four Aero Continente executives charged
with conspiracy to launder funds, proceeds from drug trafficking.

The executives, who were arrested on July 19, are Peruvian
national Maximo Zadi Desme and Chileans Jorge Schomburgk - the
company's general manager - Felix Gonzalez and Jorge Portilla,
husband of Lupe Zevallos, one of the owners of the airline. Judge
Urrutia indicted the four executives July 27th on charges filed
by the Attorney General's Office.

The court also seized five of the airline's planes, froze the
firm's bank accounts and appointed an oversight administrator.

According to Aero Continente, the charges were part of a strategy
to push it out of the air-transportation market.

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 and Edem
Psamathe P. Alfeche, Editors.

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

This material is copyrighted and any commercial use, resale or
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Information contained herein is obtained from sources believed to
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