TCRLA_Public/010810.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

            Friday, August 10, 2001, Vol. 2, Issue 156



FARGO SA: Misses $1.5M Loan Payment To Deutsche Bank
FARGO SA: No Longer In Talks With Bimbo On Potential Partnership


BANCO ECONOMICO: Statement On Control, Restructuring of COPENE
CESP: S&P Affirms 'B+' Rating; Off Watch; Outlook Stable
EMBRATEL: Remains In Tariff War Against Intelig
VARIG: Plans To Offer New Night Flights To Restore Profitability


EL SITIO: Board Approves 1:10 Reverse Split On Common Stock
STARMEDIA: Faces Possible Nasdaq De-Listing
STARMEDIA: Wolf Haldenstein, et al Commences Class Action Suit


FILANBANCO: Ecuador To Pay Back Deposits In Govt. Bonds


ABC-NACO INC.: 2Q01 Results; Quarterly Loss From Restructuring
AHMSA: Judge Delays Sentence Against Officers
GAM: Crisis Deepens After Debt Restructure Fails
GRUPO DINA: Errors, Bad Admin Strategies Triggered Problems
MINERA AUTLAN: To Shut Down Teziutlan Plant Permanently


PETROPAR: To Define Oil Refinery Strategy Within The Month


AERO CONTINENETE: Chilean Supreme Court Appoints Special Judge


SIVENSA: Orinoco Advances With Debt-Restructuring Talks

     - - - - - - - - - - -


FARGO SA: Misses $1.5M Loan Payment To Deutsche Bank
Argentina's biggest bread maker, Fargo SA, defaulted on a $1.5-
million loan payment to Deutsche Bank AG, Bloomberg reported
Wednesday. The bread maker, which also has $120 million of bonds
due 2008, missed the payment as investors grow increasingly
concerned that the Argentine government may default on $130
billion of debt or be forced to devalue the peso to pull the
country out of recession.

Fargo missed a payment on a $30-million loan and is now
renegotiating terms, affirmed S&P, which cut the company's local
and foreign-currency credit ratings to "SD," selective default,
from "B-." The credit agency said it expects "the parties
involved will reach an agreement in the coming weeks."

Parent company Exxel said it would cover payments on its bonds
but hopes to avoid making payments on the Deutsche Bank loan this

"We are negotiating with Deutsche to reschedule the debt so that
we don't have to pay anything this year," said Jorge Demaria,
vice president of Exxel. "I can't imagine that any Argentine
company isn't trying to reschedule its debt at the moment."

Fargo, which employs about 1,500 workers, has had to cut prices
by an annual average of 5 percent for each of the last two years,
to cope with the recession and increased competition, S&P said.

The shrinking margins have made it more difficult for Fargo to
service its debt. In May, Fargo said that first-quarter net sales
fell 1.7 percent to 33.8 million pesos, as packaged bread sales
fell 5.5 percent.

FARGO SA: No Longer In Talks With Bimbo On Potential Partnership
Negotiations on a potential partnership between Fargo, the
Argentinean bread company, and Bimbo, the largest food company of
Mexico, have stalled, Bloomberg said Wednesday in a report.

"They're dragging their feet now," said Jorge Demaria, vice
president of Exxel, Fargo's parent company. Bimbo said it's no
longer in talks.

The Exxel Group, presided by Juan Navarro, is being badly
affected by the Argentinean recession. The Exxel acquired Fargo 4
years ago. This bread company had a turnover of US$151 million
and made pre-tax profits of US$34 million in 2000.


BANCO ECONOMICO: Statement On Control, Restructuring of COPENE
The following text was published by the Mariani Group and the
Odebrecht Group, shareholders of COPENE - Petroquimica do
Nordeste S.A. (NYSE: PNE; BOVESPA: CPNE5), in respect of the
change of control of the Company described therein and the
restructuring of the Brazilian petrochemical sector. COPENE -
Petroquimica do Nordeste neither expresses nor implies any
opinion on, or endorsement of, any of the content thereof, and
reports it pursuant to this Form 6-K for information purposes

The Mariani Group and the Odebrecht Group, through Nova Camacari
Participacoes S.A., were the winners in the auction of the assets
of the so called "Ativos Economico S/A Empreendimentos" ("ESAE"),
carried out in the city of Sao Paulo on July 25, 2001, becoming
controllers of Norquisa which, in turn, controls COPENE.


In order to improve the value of the ESAE Assets, the Central
Bank, as Liquidator of the Banco Economico, structured a process
that contemplated the sale, together with the sale of the ESAE
Assets, of a block of assets, including the participations of
other companies in Norquisa, thus forming the so called "Grupo
Protocolo" ("Protocol Group"). It then announced two auctions for
the sale of the package of participations, in December 2000 and
March of 2001, both frustrated.

The Odebrecht and Mariani Groups, as large investors in the
Northeastern Center (Camacari and Alagoas), had a greater
interest that the difficulties that inhibited the development of
COPENE be overcome, and for this reason decided to contribute
decisively to a solution. With this aim, the Odebrecht and
Mariani Groups presented a Purchase Proposal of the so called
ESAE Assets to the Central Bank, which led the Central Bank to
call a third auction, which was held successfully on July 25th.


The 3rd Auction had as its objective the sale of 100% of the ESAE
Assets for the minimum price of R$785 million. The winner of the
3rd Auction, upon buying ESAE, obligated itself to respect the
following rights of joint sale ("tag along") of the remaining
constituents of the Protocol Group and of the Conepar
shareholders agreement:

Assets                             % Total Capital
ESAE (1)                                    100.00
Rights of Joint Sale (tag along)
Intercapital (1)(2)                         100.00
Conepar shares (2)                           11.76
Proppet                                     100.00
Copene shares                                 0.60
Norquisa shares                              13.79
Norquisa shares                              13.84
    (1) ESAE and Intercapital hold, respectively, 56.31% and
31.92% of total Conepar capital.
    (2) Minimum values calculated proportionately to the
ESAE value.

Owner                         Minimum Value (R$1,000)
Banco Economico                               785,000

Nova Odequi / Pronor / CBP                    444,880
BNDESPAR                                      183,997
Nova Odequi / Nitrocarbono                     23,535
Nova Odequi                                     8,127
Trikem                                        183,604
Pronor                                        184,138


Declared winner of the 3rd Auction and having exercised the
subsequent rights of joint sale, Nova Camacari became holder of
all the common shares issued by Conepar - Companhia Nordeste de
Participacoes, and of Proppet S.A. Conepar holds the control
(66.67% of voting capital) of Polialden Pertoquimica S.A. and an
important participation of 31% in the capital of Politeno S.A.
Industria e Comercio, both second generation operational
companies, producers of thermoplastic resins.

Trikem exercised its right of joint sale against Odebrecht
Quimica, by signing a contract option for the sale of 16.03% of
the voting capital of Norquisa, which will be exercised within
the 120 day contractual period.

Within the context of the 3rd Auction, Odebrecht Quimica acquired
23.69% of the common shares of Norquisa, held indirectly by
Polialden, for R$242 million - proportionate value resulting from
the exercise of the joint sale of Trikem and Pronor - thus
consolidating the control of Norquisa, with the Mariani Group.
The participation of the two Groups in the Norquisa voting
capital is now 55.78%. Norquisa holds 58.41% of the voting
capital of COPENE.

Still in the context of the 3rd Auction, Nova Camacari acquired,
as a result of the exercise of the joint sale, 31.92% of Conepar
capital, held indirectly by the Odebrecht and Mariani Groups, and
11.76% held by BNDESPAR, now holding 100% of Conepar capital.
Furthermore, by the exercise of the joint right of sale held by
companies controlled by the Odebrecht and Mariani Groups, Nova
Camacari acquired 100% of the capital of Proppet.

With prior authorization of the Board of Administration, after
the 3rd Auction, COPENE acquired Nova Camacari, assuming assets
acquired in the context of the Auction - ESAE, Intercapital,
direct participation of BNDESPAR in Conepar and Proppet - as well
as respective loans, for the amount of R$1,417.5 million.

The Development of the Petrochemical Sector

The restructuring of the Northeastern Center, started with the
success of the 3rd Auction, is a milestone for the development of
national petrochemistry, as it will permit:

- The immediate resumption of the modernization and growth of the
Northeastern Center;

- The reduction of its operational and fiscal costs, with the
elimination of one link in the productive chain through
integration of an important segment of the second generation
companies of the Northeastern Center into COPENE;

- Open the way for new investments, such as the expansion of the
installed capacity in the production of Polyethylenes,
Polypropylene, Styrene, PVC, and PET;

- As a result of gains in scale, accelerate investments in
technology to assure full dominion of, and capacity to develop
the technologies used;

- Align the interests of all COPENE shareholders and of the
second generation companies related to it, under a single results

The outcome of the process that is now beginning should be an
integrated company that will exert a leadership position in the
thermoplastics market, not only in Brazil, but in all Latin

Only large companies, holders of technology and internationally
competitive, will be able to survive in the global market and
face the strong competition that acts within and outside our

Adding value to COPENE by the synergistic benefits and good
corporative management practices that they impart, Petrobras
Quimica S.A. - Petroquisa, and the Petros and Previ Foundations,
COPENE's principal minority shareholders, have signed with the
Odebrecht and Mariani Groups, Memoranda of Understanding for the
execution of a COPENE Shareholders Agreement.

Consequently, COPENE will be a company of a scale that will
guarantee its competitiveness and vocation of a truly open
capital company, that will permit access to capital markets to
finance its growth.

The Odebrecht and Mariani Groups undertake the following
commitments before the companies and institutions that
participate in the restructuring process, their shareholders, and
other capital market agents:

- In order to assure the absence of conflicts of interests, the
  petrochemical assets of the Odebrecht and Mariani Groups will
  be opportunely integrated into COPENE, and the operations for
  such will be object of broad publicity. The elimination of
  potential conflicts of interests was the objective of
  understandings with Petroquisa and the Petros and Previ
  Foundations, and will be implemented as soon as possible.

- All the assets belonging to the Odebrecht Groups (namely
  Odebrecht Quimica-OPP Quimica and their participations in
  Trikem and Copesul), the Mariani Group (Nitrocarbono), or
  third parties, to be integrated into COPENE, will be the object
  of independent appraisal by a first line investment bank.

- The resulting company will be managed by modern corporate
  governance principles and its managers will make every effort
  to rank it, as soon as possible, in the Level 1 segment of
  companies, as defined in Resolution 2829 of the National
  Monetary Council (CMN).

- Going beyond the requirements of Resolution 2829 of the CMN
  for companies ranked in Level 2, the right of joint sale (tag
  along) of their respective participations, shall be assured to
  all COPENE shareholders of common and preferred shares, in the
  hypothesis of the sale of the controlling interest in COPENE.

- The principles of "open books" (full disclosure), established
  in Resolution 2829, shall be practiced as of this moment.

- Priority attention will be given to the entities that
  regulate capital markets and that protect free competition,
  such as CVM - Brazilian Securities Commission, CADE - Economic
  Defense Administrative Council, and the Specialized
  Secretariats of the Ministries of the Economy and of Justice
  (SAE and SDE), in order to assure the timely availability of
  all information  necessary to evaluate and deliberate the
  operations that must follow this first step.

- Equal attention will be rendered to the SEC - Securities
  Exchange Commission of the United States, where COPENE
  securities are already traded.

CESP: S&P Affirms 'B+' Rating; Off Watch; Outlook Stable
Standard & Poor's--Aug. 8, 2001--Standard & Poor's on Wednesday
affirmed its single-'B'-plus rating on Companhia Energetica de
Sao Paulo (CESP). The rating has been removed from CreditWatch
with developing implications where it was placed (concurrent with
its initial rating assignment) on March 7, 2001, due to its
previously expected, imminent privatization. The outlook is

The rating reflects the stand-alone credit profile of CESP,
including the near-term financial uncertainties caused by
mandated power rationing and attendant loss of revenues.

In addition, CESP's rating reflects the following:

-- CESP has a high nominal debt service burden.

-- High foreign currency exposure, which could hurt earnings--
CESP is exposed to the fluctuating value of the real, in which it
derives its earnings; however, 81% of its debt is in foreign
currencies (and the company has no hedging policy in place). As a
result of both the high debt load and high use of foreign
currency, funds from operations interest coverage was low at 1.1
times for the fiscal year-ending Dec. 31, 2000.

-- Fundamental uncertainties about the energy regulatory regime
in Brazil--Current low water conditions have resulted in an
energy shortage, which may result in additional financial stress
for CESP, a state-owned large generator, despite the fact that
the state of Sao Paulo has not asked CESP to modify its rates or
undertake additional investment to help ameliorate the impact of
the energy crisis. If distribution companies exercise "Annex 5"
of their initial contracts, generators (including CESP) would
have to pay distributors in cash for nearly 5% of their
contracted energy commitments (assured energy) per an Annex 5

These weaknesses are offset by the following strengths:

-- CESP's generation sources are in good condition and
have strong availability rates. Prior to the energy crisis,
CESP had always generated more than its designated assured

-- A very tight energy market meaning that, over the near
term, CESP has a very strong market for its energy. Brazil, in
which more than 90% of its installed capacity is hydroelectric,
is experiencing a low-water year.

-- CESP participates in a risk-sharing mechanism (relocation
of energy mechanism-MRE) with all the 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 within or near the Parana River.
While this mechanism has worked well in the past,
transmission interconnections are insufficient to import energy
to the southeast region, which is facing a severe water shortage.

Currently, CESP provides power to the greater 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
area in the country.


The outlook reflects the indefinite postponement of privatization
by CESP's 74% owner (53% economic interest), the state of Sao
Paulo, as a result of Brazil's energy crisis. It also reflects
concerns regarding CESP's financial health due to current
rationing, and a potential continuation of rationing in 2002. In
addition, the weakening of the real further exacerbates CESP's
ability to service debt. However, Standard & Poor's expects a
reasonable resolution of the implementation of Annex 5, and
potential easing of stringent rationing requirements in 2002
given interregional transmission upgrades, emergency power
additions, and hopefully, a return to normal rainfall. As initial
contracts expire, beginning in 2003, they will be replaced with
free market contracts and/or spot market sales expected to be at
more favorable rates.

EMBRATEL: Remains In Tariff War Against Intelig
Embratel reduced the price of calls to the United Kingdom and
Japan to R$0.07, while Intelig slashed to R$0.06 per minute to
the same countries. The two phone services carriers continue in
their war over tariffs, Jornal do Commercio reported Tuesday. The
countries were chosen as they represent 10 percent of the overall
international calls in Brazil. Embratel controls almost 90
percent of the domestic international calls market, estimated at
R$1 billion per year. The company has been posting losses for two
quarters prompting Worldcom, the company which acquired it in
1998, to exclude it from its consolidated balance sheets.

VARIG: Plans To Offer New Night Flights To Restore Profitability
In a bid to boost its profitability, Brazilian air transportation
company Varig is intending to offer new night flights, Gazeta
Mercantil reported Tuesday. Varig has been hit by a drop in both
domestic and international air travel in Brazil this year, as
well as a significant decline in the local currency and higher
interest rates and jet fuel costs. Although the company is
attempting to cut costs, results beyond those already realized in
a similar restructuring effort in 1999 may be difficult to
achieve. Varig's management has completed a refinancing of some
short-term debt and may derive some additional relief from the
sale of a stake in its cargo transport business, but financial
flexibility nonetheless remains limited.


EL SITIO: Board Approves 1:10 Reverse Split On Common Stock
El Sitio, Inc. (Nasdaq: LCTO) announced Wednesday that its Board
of Directors has approved a 1-for-10 reverse share split for its
common shares. The split will be effective on August 22, 2001.
Shareholder approval of the split is not required.

The reverse share split is being undertaken in an effort to
enable El Sitio to comply with the minimum share price
requirements of The Nasdaq National Market and to preserve the
listing of El Sitio's common shares. El Sitio expects to receive
a delisting notice from the Nasdaq next week because the minimum
bid price for its common shares has continued to be below the
required $1.00 per share. However, prior to actual delisting, El
Sitio understands that it will have an opportunity to appeal and
anticipates that the reverse share split will bring its common
shares back into compliance with Nasdaq's bid price requirements.

As previously disclosed, El Sitio has signed a definitive
agreement to merge with Ibero American Media Partners, a
combination that will form Claxson Interactive Group. The merger
will be completed on the basis of the number of El Sitio common
shares outstanding after the reverse share split, which will not
change the percentage ownership interest in Claxson to be held by
El Sitio's shareholders.

STARMEDIA: Faces Possible Nasdaq De-Listing
Michael Simpson, an analyst at Lehman Brothers, Inc., slashed his
prediction for StarMedia Network Inc.'s share price by three
quarters, Bloomberg reported Wednesday. If the stock reaches his
forecast, the Internet company will still face possible de-
listing by the Nasdaq Stock Market.

Simpson expects StarMedia shares to rise to 80 cents in the next
12 months, down from his previous forecast of $3. Nasdaq-traded
companies, whose shares fall below $1 for 30 consecutive days,
receive a notice from the market that they will be de-listed
unless the stock rebounds in the next 90 days.

Unless StarMedia gets a buyer, a cash infusion, or has a
significant recovery in its business, there's little chance the
shares will rise above $1 soon, Simpson said. That means the
stock may soon trade through the over-the-counter market, in the
so-called "pink sheets".

"What's kept this stock in the market is the retail investor,"
Simpson said. "If they go to the pink sheets, even the
(individual investors) are going to cut their losses."

StarMedia said it was being hurt by the economic crisis in
Argentina, the economic slowdown in the United States, and the
slump in advertising spending. It said it was unlikely to achieve
its goal of breaking even in the fourth quarter.

STARMEDIA: Wolf Haldenstein, et al Commences Class Action Suit
Wolf Haldenstein Adler Freeman & Herz LLP has filed a class
action lawsuit in the United States District Court for the
Southern District of New York, on behalf of purchasers of
StarMedia Network, Inc. ("StarMedia" or the "Company") (Nasdaq:
STRM) securities between May 25, 1999 and December 6, 2000,
inclusive, against defendants StarMedia, certain of its officers
and directors, and its underwriters.

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.

Specifically, the complaint alleges that in exchange for the
excessive commissions, defendants allocated StarMedia shares to
customers at the IPO price. To receive the allocations (i.e., the
ability to purchase shares) at the IPO price, 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 enabled both the
underwriters and their customers to reap enormous profits by
buying stock at the IPO price and then selling it later for a
profit at inflated aftermarket prices.


FILANBANCO: Ecuador To Pay Back Deposits In Govt. Bonds
Ecuador will pay back in government bonds deposits over $10,000
held at Filanbanco SA, which it closed last month after
operations became unsustainable due to growing losses and overdue
loans, according to a report Wednesday in Bloomberg.

Finance Minister Jorge Gallardo disclosed that deposits of more
than $10,000, which total $199 million, will be placed in a trust
fund. Of that, $155 million will be backed by government bonds
and the remaining $44 million by other assets of the bank.
Gallardo, however, warned that depositors would not receive their
funds immediately.


ABC-NACO INC.: 2Q01 Results; Quarterly Loss From Restructuring
ABC-NACO Inc. (ABCR) announced Wednesday its financial results
for the 2nd quarter and six months ended June 30, 2001.

For the second quarter of 2001, ABC-NACO reported a net loss of
$24.5 million, or $1.27 per share, which includes a significant
restructuring charge. This compares to net income of $0.2 million
in the prior year quarter. Net sales from continuing operations
for the quarter declined 27.5% from the prior year quarter to
$97.4 million, primarily due to the significantly lower level of
new freight car building in North America.

The loss from operations of continuing businesses in the 2nd
quarter was $20.7 million compared to operating income of $3.3
million in the prior year quarter. The following factors are the
major reasons for the significant decline in profitability
between the two quarters:

    --  A $36.9 million decrease in sales

    --  Lower selling prices due to competitive pressures and
        product mix

    --  The $9.2 million of restructuring costs recorded in this
        year's second quarter for the downsizing of the Company's
        cost structure

    --  The cost of maintaining idled facilities

    --  The labor work stoppage at the Sahagun, Mexico facility

Offsetting these negative factors was a favorable change in
selling, general and administrative costs of $2.7 million.

EBITDA was a negative $12.7 million for the 2nd quarter.
Included, however, were approximately $12.0 million of costs
associated with the restructuring charge, idled facilities and
the Sahagun work stoppage. Debt was reduced by $17.8 million in
the 2nd quarter and $31.0 million in the first six months of

Sales for the Company's Rail Products Group, which sells
primarily to the new freight car and locomotive markets, were
lower than the prior year quarter by $31.3 million, or 43.9%, and
accounted for almost 85% of the quarter's total net sales
decrease. The sales decline is due in large part to the
significantly lower level of new freight cars and locomotives
being built and the Company's decision during the 1st quarter of
2001 to indefinitely idle its wheel manufacturing plant in
Calera, Alabama. The previously announced labor work stoppage at
the Sahagun, Mexico plant, which started on May 30, 2001 and is
continuing, resulted in lower sales of approximately $3.0
million. Revenues of the Rail Services Group, which sells wheel
mounting services and other railcar repair and maintenance
products, were lower by $5.6 million, or 14.6%, from the prior
year quarter due primarily to lower sales of wheelsets to
manufacturers of new freight cars. The Track Products Group's
sales were lower by $3.2 million, or 10.9%, from the prior year
quarter primarily due to lower volumes of track repair activity.
A further reason for the decline in sales was the sale of the
Company's former Rail Systems Division in the 1st quarter of
2001, which had sales of $5.1 million in the 2nd quarter of the
prior year.

Vaughn W. Makary, President and CEO of ABC-NACO stated,
"Recently, we have completed a significant financial
restructuring, reduced debt by $31.0 million, closed, idled, or
sold eleven facilities, and reduced over 30% our salaried
employees. Unfortunately, ABC-NACO has been suffering from the
same severe, market downturn as many of our customers and other
suppliers in the rail industry. Recently released statistics have
shown that the 2nd quarter was the worst quarter for order input
(3,460 freights cars) in over 10 years and the worst for new car
deliveries (9,056 freight cars) in nearly 10 years. To put this
downturn in perspective, total new car deliveries for the
calendar years 2000, 1999 and 1998 were 55,791, 74,222 and
75,686, respectively."

The gross profit from continuing operations for the 2nd quarter
was a loss of $1.3 million compared to a profit of $16.8 million
in the same quarter of the prior year. The results for this
quarter were dramatically affected by the lower sales described
previously and the competitive pressure upon selling prices and
the margin on a number of the Company's products. In addition,
the low order volume and the results of inventory reductions did
not allow the Company to absorb all of its fixed costs. Another
factor is that the current order product mix is comprised of a
lower percentage of the higher margin items than in the prior
year quarter. The Company has closed or temporary idled a number
of facilities in order to reduce costs. The cost of maintaining
idled facilities (amounting to approximately $3.0 million of cost
of goods sold in the 2nd quarter) is substantially less, in
aggregate, than operating all facilities at low sales levels. In
addition, the work stoppage at the Sahagun, Mexico facility had a
negative effect on gross profit of about $1.5 million for the
quarter due to lower sales, unabsorbed fixed costs and the costs
to relocate production.

Selling, general and administrative expenses from continuing
operations were $10.8 million compared to $13.5 million in the
prior year quarter. The decrease of $2.7 million, or 19.7%, was a
result of a significant reduction in personnel leading to
decreased payroll and related costs plus a sizeable reduction in
other controllable expenses. Somewhat offsetting this achievement
were approximately $0.6 million of costs for consultants,
advisors and others involved in the financing transactions that
were completed in this quarter.

Interest expense and amortization of deferred financing costs
were $7.7 million in the 2nd quarter of 2001 compared to $6.4
million in the prior year quarter. The increase of $1.3 million
was largely due to the costs associated with the new and revised
financing facilities resulting from transactions completed during
the 2nd quarter.

The Company sold its Flow and Specialty Products business on May
2, 2001 for an after tax gain of $1.9 million. For the one month
period prior to the sale, the business recorded income, after
taxes, of $0.1 million compared to $1.6 million for the full
quarter of the prior year. The 2001 income tax benefit reported
for continuing operations represents the offset to the income tax
provision associated with the discontinued operation.

The Company continues to meet its obligations by managing the
collection of its receivables, reducing inventory levels,
significantly reducing capital expenditures and reducing
controllable operating expenses as there is a limited amount of
unused availability under the Company's primary credit agreement
at this point in time. In light of the weak rail market,
management is exploring alternatives, which include, among
others, one or more transactions of a financing or operating
nature or a sale of assets in a further attempt to reduce debt
and/or to provide additional cash resources. However, there can
be no assurances that any of these alternatives will be

The Company is in compliance with the financial covenants under
its U.S. senior bank credit agreement at the end of the 2nd
quarter. Additionally, pursuant to a 2nd quarter amendment, all
financial covenants under its $75 million subordinated notes
agreements have been eliminated until 2002. Nonetheless, this
debt is reflected in the financial statements as a current
liability due to the difficult market conditions facing the
Company and their resulting impact on recent and future near term
operating results and on loan compliance.

Mr. Makary commented, "Rail supply is a cyclical industry and it
can turn upward as rapidly as it has slid into today's depressed
condition. Our primary emphasis at ABC-NACO is to manage our
costs and to focus on maximizing our product and service
offerings to our customers. We sincerely appreciate the efforts
of our dedicated employees and the loyalty and support of our
many fine customers and suppliers. We believe our people,
products, services, technology and manufacturing processes are
unsurpassed and there is significant long-term value in our

ABC-NACO is one of the world's leading suppliers of
technologically advanced products to the rail industry. With four
technology centers around the world, ABC-NACO holds pre-eminent
market positions in the design, engineering and manufacture of
high-performance freight car, locomotive and passenger suspension
and coupling systems, wheels and mounted wheel sets. The Company
also supplies railroad and transit infrastructure products and
services and technology-driven specialty track products. It has
offices and facilities in the United States, Canada, Mexico,
Scotland, Portugal and China.

AHMSA: Judge Delays Sentence Against Officers
A Monterrey judge temporarily postponed an August 2 jail sentence
against Grupo Acerero del Norte (GAN) executives, President
Xavier Autrey and Vice President of Finance Jorge Ancira, Mexico
City daily Reforma reported Wednesday. The sentence against the
said officers was suspended due to a complaint by the company
that the evidence presented to the previous judge was inadequate,
according to GAN's legal representative, Fernando Gomez.

On July 16, Banco de Bajio brought a penal suit against GAN and
the executives, accusing them of misrepresenting information in
order to gain a credit of $8.5 million, destined for company
Agronitrogenados. GAN is a holding company for Altos Hornos de
Mexico (AHMSA).

GAM: Crisis Deepens After Debt Restructure Fails
Mexico's second leading producer of sugar Grupo Azucarero Mexico
(GAM) failed to restructure a US$145-million debt, which 15
months ago, obliged it to declare a suspension of payments, El
Financiero reported Tuesday. The company posted net losses of
133.2 million pesos in the first quarter of this year, far worse
than the 55.6-million net loss posted in the same period last
year. GAM received total credit of 84.3 million pesos for
repayment of cane supplies from Focam, which matured in May 2001.
The company has registered advance sales of 66.5 million pesos
for sugar and honey produce.

GAM's debt of US$145 million, is divided among Bancomext with
US$40 million, Inverlat with US$10 million, FIRA with US$12
million, the extinct Fina body with US$4 million, US bondholders
with US$70 million, and other small financing operations with
US$5 million. Bancomext rejected a restructuring proposal in July

GRUPO DINA: Errors, Bad Admin Strategies Triggered Problems
Javier Jimenez, an analyst at Bursametrica, said that aside from
the financial environment, which has been the main factor in
Grupo Dina's collapse, errors and bad administrative strategies
also triggered crisis at the company, Mexico City daily Reforma
revealed Wednesday. These errors resulted in the company's
inability to respond with the speed necessary to avoid the
company's current problems, Jimenez said.

"Decisions were taken on impulse and with little provision. Dina
suffered from the Mexican economic crisis and all that resulted
from it, but also lacked flexibility to modify its plans before
everything broke up," he said.

Dina has announced plans, which are yet to be ratified at an
extraordinary shareholders meeting, to close its truck assembly
plants, the largest component of the company's business.

MINERA AUTLAN: To Shut Down Teziutlan Plant Permanently
Due to the low demand brought about by the slump in the U.S.
economy, mining company Minera Autlan will be closing its
Teziutlan plant permanently, Mexico City daily El Universal
revealed Wednesday in a report. Consequently, 200 unionized
employees will be put out of work. Management will meet with
union leaders in the next few days to guarantee employees their
severance pay. According to Autlan President Fernando Rivero
Larrea, the plant's machinery and ovens will be transferred to
the company's Tampico plant. The Teziutlan plant had been in a
production freeze since May 1, Rivero disclosed.


PETROPAR: To Define Oil Refinery Strategy Within The Month
Petropar and the Paraguayan government will define within the
next 30 days a strategy for the Vila Elisa oil refinery, which
itlans close down after having generated annual losses of US$4
billion, Diario ABC reported August 3, 2001. Petropar has
shrugged off the idea of investing in a new refinery, which would
have to be built by private investors only.

Early this month, Petropar President Genaro Ramon Burro announced
that the oil company is officially bankrupt. The company
generated losses totaling US$33 million after the state obligated
it to sell gasoil at subsidized prices last year leading to its
current financial state.


AERO CONTINENETE: Chilean Supreme Court Appoints Special Judge
The Supreme Court of Chile appointed a special judge to handle
the case of Peruvian airline Aero Continente, EFE reported
Wednesday. The Peruvian carrier has been indicted for money
laundering. According to officials, although no party had
requested it, the Supreme Court justices intervened due to public
outcry the case has generated.

Judge Victor Montiglio Rezzio of the Santiago Court of Appeals
will replace Judge Juan Carlos Urrutia, who had presided over the
case since issuing an indictment against the firm based on a
complaint filed by the Attorney General's Office.

Aero Continente denies the charges, alleging that the case is
merely a ruse to take it out of the air-transportation market,
and has filed a $1 billion suit against the Chilean government.


SIVENSA: Orinoco Advances With Debt-Restructuring Talks
Alberto Hassan, president of the Venezuelan hot-briquette iron
maker Orinoco Iron, announced that debt restructuring talks
between the company and its lenders "are making good headway,"
Business News Americas reported Wednesday.

Puerto Ordaz-based Orinoco Iron is a 50:50 joint venture between
the IBH division of Caracas-based iron and steel company Sivensa
and Australian mineral house BHP. The company is operating only
one of its four production lines because to enter the market with
additional capacity "will not benefit prices of the product on
the international market," he said.

Orinco is conserving cash flow and the line is operating at below
its 550,000tpy capacity to avoid unnecessary technical costs. All
of its production is sold with closed contracts. "We sell very
little on the local market, almost 99% is exported," Hassan said.

Orinoco has never operated near its 2.2Mtpy capacity rate due to
technical problems since starting-up more than a year ago. It
defaulted on a US$16.3 million interest payment earlier this year
and BHP has said it will not put any more money into the venture
and is prepared to write off an estimated US$410 million.

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.

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