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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

            Tuesday, August 28, 2001, Vol. 2, Issue 168

                           Headlines


A R G E N T I N A

AEROLINEAS ARGENTINAS: Pellegrini, Eurnekian Present Offers
AEROLINEAS ARGENTINAS: Civilian Pilot Offers $3B For SEPI Stake
EL SITIO: 2Q01 Results; Net Revenues Off But EBITDA Improves
IMPSAT: Slashes Workforce; Liquidity Insufficient Beyond 2001
MULTICANAL: Seeking Financing To Cover Debt Obligations


B R A Z I L

CVRD: Vicunha Flows Red Ink From Cross-Ownership Untangling
EMBRATEL PARTICIPACOES: Discloses Two Federal Tax Assessments
TELEMAR: Inks US$256M Infrastructure Deal With Siemens


H O N D U R A S

VUELTAS DEL RIO: Troubles Lead To Deferral Of Debt-Payments


M E X I C O

QUADRUM: S&P Reveals Intervention Needed Five Years Ago
QUADRUM: Crisis Won't Drag In Other Institutions, ABM Says


P E R U

AERO CONTINENTE: To Begin Scheduled Flights Again In September
PETROPAR: Eight Companies Prequalify For Transport Auction
SIDERPERU: Commences Preventive Insolvency Process


S U R I N A M E

INTER TROPICAL: Abrupt End Strands 800 Passengers


V E N E Z U E L A

SAMSUNG: Court Rules Contract Breach With Venezuelan Distributor



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A R G E N T I N A
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AEROLINEAS ARGENTINAS: Pellegrini, Eurnekian Present Offers
------------------------------------------------------------
Argentinean businessmen Juan Carlos Pellegrini and Eduardo
Eurnekian went to Madrid more than a week ago to present their
offers for the Spanish state holding company Sepi's 92 percent
stake in the ailing Argentine carrier Aerolineas Argentinas,
Expansion reported Friday. The current total of interested
parties vying for the airline is four. The Marsans-Air Plus
consortium and a US investment fund have also made offers. SEPI
is currently reviewing all offers made and previously said that
the final sale will not take place until September.


AEROLINEAS ARGENTINAS: Civilian Pilot Offers $3B For SEPI Stake
---------------------------------------------------------------
Argentine businessman Maximo Jorge Panasiuk said he has offered
to buy SEPI's stake in Aerolineas Argentinas for US$3 billion,
AFX-Europe reported Friday. He announced he would take on the
carrier's liabilities, and said that all he wants is an
international auditor who can determine for him how large these
liabilities are.

Panasiuk is a civilian pilot, who claims to have the support of
several banks and a diamond mining group from Ghana. He describes
his backers as "a leading Swiss and leading US bank," adding that
he personally guaranteed the veracity of the offer.

When questions were raised with regard to his assets, Panasiuk
stated that his main asset was Carexis, which he valued at
US$2.76 billion. Carexis is the Geneva-based parent of Kiwatt, an
industrial diamond extractor from Ghana.


EL SITIO: 2Q01 Results; Net Revenues Off But EBITDA Improves
------------------------------------------------------------
In a company press release, El Sitio, Inc. (Nasdaq: LCTOD)*, a
leading Internet media company targeting Spanish and Portuguese
speakers in Latin America and the United States, reported Friday
results for the quarter and six months ended June 30, 2001.

Total net revenues were $2.9 million for the quarter ended June
30, 2001, compared with $7.1 million for the quarter ended June
30, 2000 and $3.0 million for the first quarter of 2001. Results
for the three- and six-month periods ended June 30, 2001 reflect
a series of steps taken since the announcement of the company's
pending merger with Ibero-American Media Partners II, Ltd., a
joint venture of members of the Cisneros Group of Companies and
funds affiliated with Hicks, Muse, Tate & Furst Incorporated, to
form Claxson Interactive Group Inc. (Claxson). Results for all
periods also reflect El Sitio's decision in the second quarter to
discontinue the operations of DeCompras.com, its e-commerce
business. In addition, El Sitio completed the sale of its
connectivity services business in Argentina in the second quarter
of 2001.

El Sitio's second quarter EBITDA** loss of $7.1 million,
excluding merger and restructuring expenses, represented a 56%
improvement over the $16.0 million EBITDA loss for the year-ago
second quarter. EBITDA loss excluding merger and restructuring
expenses for the first quarter was $12.4 million. First half
EBITDA loss of $19.4 million, excluding merger and restructuring
expenses, improved 36% over the $30.1 million EBITDA loss for the
first half of 2000. Merger and restructuring expenses totaled
$1.6 million and $4.0 million for the 2001 second quarter and
first half, respectively.

Claxson Transaction Update

As reported on August 16, 2001, the Securities and Exchange
Commission has declared effective the Form F-4 registration
statement filed by Claxson. El Sitio has scheduled a special
meeting of shareholders for September 7, 2001 to vote on the
Claxson transaction.

Audience Update

Total page views in the second quarter of 2001 were 424 million
compared with 580 million for the first quarter of 2001. Average
monthly unique users totaled 2.6 million during the second
quarter of 2001 compared with 3.0 million for the preceding
quarter. El Sitio's network added 165,000 new registered users
during the second quarter, for a total of approximately 2.3
million at the end of June 2001. El Sitio attributes these
audience traffic comparisons primarily to decreased branding and
advertising expenditures. (Unique user and page view data for the
second quarter of 2001 have been audited by Engage I/Pro.)

Financial Highlights

Net revenue for the second quarter of 2001 totaled $2.9 million,
compared with $7.1 million for the corresponding period in 2000
and $3.0 million in the first quarter of 2001. For the first half
of 2001, net revenue totaled $5.9 million, compared with $12.8
million for the corresponding period of 2000. El Sitio's revenue
for the second quarter of 2001 reflected several factors,
including efforts to effect the transition of the business from a
stand-alone Internet model to its contemplated role within
Claxson, El Sitio's decision to discontinue its e-commerce
operations, and the sale of its connectivity services business
Argentina.

Net advertising revenues for the second quarter and first half of
2001 totaled $1.9 million and $3.6 million, respectively,
compared with $4.8 million and $7.7 million for the corresponding
periods in 2000, respectively. Net advertising revenue for the
first quarter of 2001 was $1.7 million. Reduced branding and
advertising expenditures, as well as continuing softness in
advertising demand due to regional economic conditions,
contributed to the results in the first half of 2001.

Net connectivity services revenues for the second quarter and
first half of 2001 totaled approximately $1.0 million and $2.3
million, respectively, compared with $2.3 million and $5.1
million for the corresponding periods in 2000. As previously
disclosed, El Sitio completed the sale of its connectivity
services business in Argentina in the second quarter of 2001, and
results for the 2001 periods include the results of this business
through April 30, 2001. El Sitio currently is seeking to sell its
connectivity services businesses in Colombia and Brazil.

El Sitio's net loss from continuing operations for the second
quarter of 2001 was $14.8 million, or $3.28 per share, compared
with $22.6 million, or $5.46 per share in the 2000 period. For
the first half of 2001, net loss from continuing operations was
$34.1 million, or $7.54 per share, compared with $42.9 million,
or $10.54 per share a year ago.

Including losses from discontinued operations of $18.8 million
and $21.0 million for the second quarter and first half of 2001,
respectively, El Sitio reported a net loss of $33.6 million, or
$7.43 per share, for the second quarter and $55.1 million, or
$12.19 per share, for the first half of 2001. For the
corresponding periods of 2000, the net loss figures were $23.5
million, or $5.69 per share, and $43.9 million, or $10.77 per
share, respectively.

Per share results for all periods reflect the 1-for-10 reverse
share split of El Sitio's common shares, which was effective as
of August 22, 2001.

As of June 30, 2001, El Sitio had a balance of cash, cash
equivalents and investments of $34.8 million and no indebtedness.

* Due to the 1-for-10 reverse share split effective as of August
22, 2001, El Sitio's common shares are trading under the symbol
"LCTOD" for an interim period of 20 trading days. At the end of
that period, El Sitio's common shares will resume trading under
the symbol "LCTO".

**EBITDA is defined as operating income before depreciation and
amortization and share-based compensation expenses. EBITDA is not
a measure of performance calculated in accordance with U.S. GAAP,
this measure may not be comparable to similarly titled measures
employed by other companies.

To see company's latest financial statements:
http://www.bankrupt.com/misc/El_Sitio.doc


IMPSAT: Slashes Workforce; Liquidity Insufficient Beyond 2001
-------------------------------------------------------------
Following the release of a dismal second quarter performance,
Argentina-based regional broadband service provider Impsat Fiber
Networks dismissed over 13 percent of its total workforce, or 214
employees, Business News Americas reported Wednesday. With the
move, Impsat expects an annual cost savings of US$10 million.

Impsat registered second quarter Ebitda of US$100,000, sharply
lower than the US$4.3 million in the previous quarter, due to
one-time severance charges. Sequential revenues also fell 11.5
percent to US$78.5 million for the quarter.

"Our cash flows and liquidity are currently insufficient to
satisfy all our obligations beyond the end of 2001," related
Impsat CFO Guillermo Jofre. "We have begun evaluating the
availability of additional equity financing and/or restructuring
our debt."

Furthermore, Impsat vice-CFO Guillermo Verdaguer reportedly
disclosed that the company is negotiating the restructuring of
US$650 million in debt with three debt holders.

"We are just entering preliminary negotiations. We are also
studying the possibility of bringing on an investor that would
buy part of the company," Verdaguer said.
  
To see company's latest financial statement:
http://www.bankrupt.com/misc/Impsat.doc


MULTICANAL: Seeking Financing To Cover Debt Obligations
-------------------------------------------------------
Struggling to raise funds in order to stave-off a default,
Argentina's Multicanal SA sold a 4-percent stake in satellite
television company DirectTV Latin America LLC to its parent Grupo
Clarin for $150 million, Bloomberg reported Friday. Grupo Clarin
reportedly purchased the stake through another subsidiary, Raven
Media Investments LLC.

Moreover, Multicanal also sold $144 million worth of two-year
bonds to seven banks to refinance two debt securities coming due
next week, according to Grupo Clarin spokesman Jorge Rendo. The
$164 million coming due was reportedly held by the same seven
banks.

"What Multicanal has done is cover almost all of its debt
obligations this year and in 2002," Rendo said.

The banks that bought the new paper include Credit Suisse First
Boston, Citigroup Inc.'s Citibank, FleetBoston Financial Corp.'s
Bank of Boston, Toronto-Dominion Bank, Credit Lyonnais, Deutsche
Bank AG, and state-owned Banco de la Nacion, according to ING
Barings analyst Christopher Taylor. The company wouldn't identify
which banks hold its debt.

Multicanal, in a statement released Thursday, revealed that the
new floating-rate bonds will pay interest of 5.5 percentage
points above the London interbank offered rate (LIBOR).

The company has $25 million of commercial paper coming due next
month, $125 million of bonds due in February and $450 million of
bonds due in 2007 and later.



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B R A Z I L
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CVRD: Vicunha Flows Red Ink From Cross-Ownership Untangling
-----------------------------------------------------------
The complex untangling of CVRD-CSN cross-ownership, a process
which took place earlier this year, brought with it 2nd quarter
losses for Vicunha Siderurgia, according to a report Thursday in
Business News Americas.  Vicunha is the controlling shareholder
of CSN. The company informed CVM, the country's stock market
regulator, that it lost 73.1 million reais (US$29 million at
today's rate) during the period on its debenture financing issue
required as part of the CVRD-related transaction.

For the quarter, Vicunha posted a net loss of 52.1 million reais,
against a net gain of 19.2 million in the corresponding-period in
the last year. The first-half equivalents were a 199-million-real
net loss and 29.7-million-real net gain. Vicunha increased its
CSN ownership to 46 percent.


EMBRATEL PARTICIPACOES: Discloses Two Federal Tax Assessments
-------------------------------------------------------------
In a recent company press release, Embratel Participacoes S.A.
(NYSE: EMT)(BOVESPA: EBTP3 EBTP4) (Embratel Participacoes or the
"Company"), the Company that holds 98.8 percent of Empresa
Brasileira de Telecomunicacoes S.A. ("Embratel"), announced
Friday that Embratel was informed by Brazil's Receita Federal
(Internal Revenue Authority) of tax assessments amounting to R$
501 million.

On August 21, 2001 Embratel received from the Receita Federal two
tax assessments totaling R$ 501 million, including fines and
interest related to PIS/COFINS taxes from prior years.

The company is reviewing the arguments and calculations
supporting these assessments. Our initial evaluation indicates
that Embratel has strong grounds of legal defense and there is no
substantive support to warrant these assessments.

The first assessment -- R$ 159 million -- involves pre-1995 PIS
amounts that were offset in accordance with the Complementary Law
7/70. In similar cases, the Brazilian Superior Court and the Tax
Court have supported the offset.

The second assessment -- R$ 342 million -- deals with the
exemption of COFINS related to exported services. Embratel
understands its inbound revenues are subject to such exemption.
The company has legal opinions supporting such understanding.

Embratel is the premier communications provider in Brazil
offering a wide array of advanced communications services over
its own state-of-the-art network. It is the leading provider of
data and Internet services in the country. Service offerings
include: advanced voice, high-speed data communication services,
Internet, satellite data communications and corporate networks.
Embratel is uniquely positioned to be the all-distance
telecommunications network of South America. The Company's
network has countrywide coverage with 28,388 km of fiber cables
comprising 1,045,617 km of optic fibers.


To see company's financial statement:
http://www.bankrupt.com/misc/Embratel.doc


TELEMAR: Inks US$256M Infrastructure Deal With Siemens
------------------------------------------------------
Brazilian telecoms carrier Telemar signed a US$256-million
contract with the German company Siemens for the supply of cell
phone infrastructure, Gazeta Mercantil reported Friday. The deal
will see Siemens supplying the infrastructure networks in the
states of Bahia, Sergipe, Rio Grande do Norte, Paraiba,
Pernambuco and Alagoas. The contract is a first for Siemens in
the Brazilian mobile communications market.

Telemar won a tender for the provision of cell services in the D
band. Nokia and Alcatel will also supply Telemar.



===============
H O N D U R A S
===============

VUELTAS DEL RIO: Troubles Lead To Deferral Of Debt-Payments
-----------------------------------------------------------
Sparked by the company's financial difficulties, Vueltas del Rio
gold mine in Honduras announced it has deferred payments to
several of its creditors, Business News Americas revealed
Wednesday. In addition, the company requested and received a
deferral of payments totaling US$850,000 which were required to
be made into the sinking fund. According to the Vueltas, the
payments are scheduled to be made during the remainder of this
year.

An official at parent company Geomaque Explorations admitted that
Vueltas has no chance of meeting its 56,000oz production target
this year. The mine started producing on March 9 and has since
turned out 10,200oz of gold, reaching commercial production in
June.

However, the company had to make operational changes during the
second quarter, including the addition of a larger agglomerator
to increase crusher throughput. While the amount of ore being
crushed and stacked doubled as a result, gold production did not
increase proportionately.

"By producing too much on a small leach pad, the ore was not
getting the primary leach it needs," according to Geomaque's VP
Phillip Walford. He estimated the mine would produce around
30,000oz of gold this year, but stressed that was not an official
forecast. In order to increase available leach pad area, an
expansion project originally scheduled for 2002 has been
accelerated and is expected to be completed by late October.



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M E X I C O
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QUADRUM: S&P Reveals Intervention Needed Five Years Ago
-------------------------------------------------------
According to a Standard & Poor's financial specialist Ursula
Wilhelm, Mexico's Banca Quadrum has been in financial trouble
since 1995 but authorities never did anything about it, Mexican
financial daily El Economista revealed Friday. Wilhelm said that
the financial group's subsidiaries, as well as its financing
company, should have been intervened four years ago.

Analysts said that Quadrum's problems stemmed from the company
venturing into the railroad car financing business at the
beginning of the last decade. Later, in 1994, it obtained
approval from the Finance ministry to open a bank. Problems from
the company's other businesses found their way into the bank's
books, eventually leading to insolvency.


QUADRUM: Crisis Won't Drag In Other Institutions, ABM Says
----------------------------------------------------------
The intervention of financial regulator the National Banking and
Securities Commission (CNBV) into Banca Quadrum does not indicate
the start of a new series of bank interventions, said Mexican
Bankers' Association (ABM) President Hector Rangel Domene in a
Mexican financial daily El Economista report released Friday.
According to Rangel, the country's banking system is in good
shape.

"It's a very small bank, and we should not magnify the matter.
Its problems are nothing new," Rangel said.

In response to questions regarding the risks of other banks
hiding their weaknesses and reporting false data, as in the case
of Banca Quadrum, Rangel said it was up to the authorities to
monitor this. The CNBV's intervention in Banca Quadrum is
evidence that authorities are aware of what's going on and are
ready to act in order to avoid larger losses of capital, he said.



=======
P E R U
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AERO CONTINENTE: To Begin Scheduled Flights Again In September
--------------------------------------------------------------
Peruvian Aero Continente chairwoman Guadelupe Zevallos announced
on a Chilean radio station that the airline will resume normal
operations in September, Broward Daily Business Review reported
Thursday. The announcement came after last week's ruling by a
Chilean judge that the airline can fly again after four airline
managers accused of laundering drug money were released
from custody.

Judge Victor Montiglio Rezzio, who was appointed by Chile's
Supreme Court Aug. 7, lifted every restriction on the airline.
Montiglio's predecessor, Judge Juan Carlos Urrutia, on July 18
seized the five airplanes of Aero Continente's Chilean
subsidiary, froze $37 million in assets. In addition, the judge
had four executives arrested and issued arrest warrants for
chairwoman Zevallos, who lives in Peru, and company founder
Fernando Zevallos, a Miami resident.


PETROPAR: Eight Companies Prequalify For Transport Auction
----------------------------------------------------------
The Paraguayan oil company Petropar launched August 20 a new
fuels transportation auction, revealed Diario ABC in a report. Of
the 9 water transportation companies that had expressed interest
in the auction, 8 are already pre-qualified in the tender. These
are Yeruti, U.A.B.L. Paraguay, Soparna, Consorcio Paraguay Nave-
Unitrans, Merco Fluvial, Naviera Cono Sur, Petrovia and Mercopar.
The ninth company, National Shipping, was disqualified. Petropar
informed that bids are to be unveiled within the next 10 weeks.


SIDERPERU: Commences Preventive Insolvency Process
--------------------------------------------------
Peruvian iron & steel company Siderperu, with liabilities
totaling 458.95 million soles at the end of June this year,
disclosed it has started a preventive insolvency process at
Indecopi commission, Gestion revealed August 21, 2001. The next
step is for the company to submit a restructuring plan. Of the
company's total obligations, 365.36 million are listed as  
current liabilities.



===============
S U R I N A M E
===============

INTER TROPICAL: Abrupt End Strands 800 Passengers
-------------------------------------------------
The sudden closure of Suriname-based charter carrier Inter
Tropical Aviation Airlines left about 800 passengers stranded in
the South American country, according to a report August 20 in
The Associated Press. Suriname's Ministry of Transportation
revealed that the airline had its last flight from the former
Dutch colony to Europe on July 23. There are another 300
passengers waiting in the Netherlands for return flights to
Suriname, the ministry said. The carrier has subsequently closed
its offices.

Ruud Treffers, the Dutch ambassador to Suriname, has estimated
that more than half of the 800 passengers left in Suriname are
Dutch. The ambassador has already met with several of the
passengers and indicated that his staff are looking into ways to
help people get home.

ITA began operating in 1999 as an alternative to Suriname Airways
and KLM, which have exclusive rights to fly to the Netherlands.
ITA flies passengers to Belgium and then takes them to the
Netherlands by bus.



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

SAMSUNG: Court Rules Contract Breach With Venezuelan Distributor
----------------------------------------------------------------
Venezuelan Supreme Court ruled that Samsung Electronics Co., a
troubled South Korean Maker of consumer electronics, breached
terms of an exclusivity contract with Samtronic de Venezuela
C.A., the Venezuelan exclusive importer of Samsung products,
Bloomberg revealed Friday. The Venezuela court's ruling
invalidates a previous decision by a judge giving Samsung
permission to sell its products to other Venezuelan importers and
distributors.

"With this, we ratify our status as the only authorized importer
of Samsung products" in Venezuela, said Ezequiel Zamora,
Samtronic's attorney. According to Zamora, Samtronic built up the
prestige of the Samsung brand in Venezuela "under the terms of
exclusivity that Samsung violated with no reason."

The ruling may clear the way for Samtronic to obtain $236 million
in compensation from Samsung, which has allegedly allowed its
television sets, freezers and computers to enter the Andean
country illegally since 1997. The suit, filed last September by
Samtronic against Samsung's 49 subsidiaries around the world,
seeks damages from lost sales.




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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