TCRLA_Public/010919.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

            Wednesday, September 19, 2001, Vol. 2, Issue 183



MUSIMUNDO: Chilean Creditors Seek To Foreclose
PARMALAT: Closes Cordoba Dairy Products Plant


DELPHI INTERNATIONAL: Settling Liabilities; Ceases Operations


EL MUTUN: Legislation Rules Out Direct Sale To Private Sector


ARAPUA: Conflict With Evadin Still On
CELESC: Sale Of Casan Shares Awaits Atty. General's Green Light
COPENE: Results Ending August 31 Show Net Loss; Higher Financing
SOCIEDAD NACIONAL: Successfully Renegotiates Bank Debt


BANCRECER: IPAB To Scrap Auction If No Decent Bid Offered
GRUPO AZUCERO: Investor Claims Govt. Breached Nafta Rules
GRUPO DINA: Must Find Buyer Immediately


CORPOSANA: Still Carries Heavy Load Of Debt Even After Reduction


ORINOCO IRON: CVG To Up Stake In Ailing Briquette Firm

     - - - - - - - - - - -


MUSIMUNDO: Chilean Creditors Seek To Foreclose
Musimundo's Chilean creditors are calling for a foreclosure on
the Argentinean music, record and casset distributor, according
to a report September 11 in El Diario. EMI Chile, to which
Musimundo owes US$57 million, has requested the Argentine
company's foreclosure in the 30th Civil Court in Santiago. Warner
Chile, on the other hand, is looking for a judicial settlement
with Musimundo.

Musimundo operates 11 stores in Chile - in La Serena, Vina del
Mar, Concepcion and Santiago - and has 220 employees locally.

PARMALAT: Closes Cordoba Dairy Products Plant
Parmalat shut the doors of its cheese factory in the Arias
district, Cordoba province, but left another operation in the
country open, South American Business Information reported
Saturday. The closed factory produced between 120,000 and 150,000
liters of milk daily and, apart from cheese, it produced ricotta.
Parmalat started operating in Argentina in the 90s through the
acquisition of the plants and installations of the bankrupted La

Parmalat, in March, also decided to close down its unit in
Itamonte in Minas Gerais, Brazil until late 2001, citing a 40-
percent decrease in the production of milk in the region over the
last three months.


DELPHI INTERNATIONAL: Settling Liabilities; Ceases Operations
In a company press release, Delphi International Ltd. (Nasdaq:
DLTDF) announced on September 14 that it has reached an agreement
with its primary reinsureds, creditors and preferred security
holders pursuant to which it will settle substantially all of its
reinsurance obligations, as well as its obligations under its
debt securities and preferred shares.  In furtherance of this
agreement, the Company's subsidiary, Oracle Reinsurance Company
Ltd., will cease operations and commute all of its reinsurance
agreements currently in effect.  Upon completion of these
commutations and settlement of its remaining liabilities, the
Company and its subsidiaries intend, subject to receipt of
shareholder approvals, to commence winding up and liquidation
proceedings.  Under the terms of the agreement reached by the
Company, which is subject to certain regulatory approvals, the
Company's common shareholders will receive a liquidating
distribution in the amount of $3.00 per share.  Subject to timely
receipt of shareholder and regulatory approvals, the Company
believes that the liquidation process will be completed in the
first quarter of 2002.

Colin O'Connor, President and Chief Executive Officer, commented:  
"Our ability to create value for our shareholders depends on the
availability of letters of credit on commercially viable terms,
superior investment returns and an attractive niche reinsurance
market environment.  While our investment returns have been
acceptable, attractive specialty reinsurance business has not
been available due to difficult conditions in the market and our
small capital base.  Perhaps most important, letters of credit
supporting existing reinsurance are expiring early next year and
cannot be renewed or replaced. In light of these limits on our
growth prospects, the Board believes the best course is for the
Company to wind up its activities, settle its existing
liabilities and distribute the remainder to shareholders.  We
believe that, subject to receipt of the necessary approvals,
$3.00 per share of liquidation proceeds should be distributed to
common shareholders in next year's first quarter."

Delphi International Ltd. is the parent of Oracle Reinsurance
Company Ltd., a Bermuda-based specialty reinsurer.

To see company's latest financial statements:


EL MUTUN: Legislation Rules Out Direct Sale To Private Sector
Carlos Romero, the head of the Economic Development Ministry's
Mines Restructuring Unit (URM), announced that Bolivia's
legislation does not contemplate the direct sale of state assets
to the private sector, Business News Americas reported Friday.
Romero's announcement came after Bravo, the Bolivian partner of
Brazilian steelmaker Sidersul, put in a bid for 15 percent of the
El Mutun iron ore deposit in Southeast's Bolivia Santa Cruz

Bravo presented its offer to the Santa Cruz government, rather
than to Comibol or the central government. The Sidersul proposal
is to build a US$50 million plant at El Mutun to produce
300,000tpy pig iron, for which it only needs 15 percent of the
deposit's reserves.

"If you want to transfer a company to the private sector or put a
concession out to tender it has to be done through the
privatization law," said Romero.

"Therefore El Mutun cannot be transferred [by Santa Cruz
department] to private hands unless it is through the
privatization law or under specific legislation."

The URM is responsible for selecting an investment bank to handle
the official auction for El Mutun, which is owned by state mining
company Comibol.


ARAPUA: Conflict With Evadin Still On
Conflict between Evadin, a manufacturer of television sets, and
Arapua, a Brazilian retain Chain, continues, reported South
American Business Information on Friday. Evadin representatives
are currently denying published reports that Arapua had obtained
a legal decision allowing it to restructure while under agreement
with its creditors, along the lines of the US Chapter 11
legislation, which is not provided for under Brazilian law.
Arapua was granted an agreement with creditors in 1998 and was
obliged to pay 40 percent of its total R$1 billion debt to
creditors in April this year. The retail chain still owes Evadin
about US$85 million.

CELESC: Sale Of Casan Shares Awaits Atty. General's Green Light
The sale of Santa Catarina state power distributor Celesc's 19.3
percent stake in state water and waste company Casan awaits
approval from the Santa Catarina attorney general's office,
Business News Americas reported Monday.

"We will announce the share sale when we receive the attorney
general's decision," a Celesc spokesperson said.

Celesc expects to raise some US$50 million from the sale of its
shares in Casan. The power distributor will use the sale proceeds
to pay US$61 million in euro commercial paper that originally
matured July 14. The sale is part of Celesc's activity and
administrative restructuring process, which international
consultant Accenture is carrying out.

COPENE: Results Ending August 31 Show Net Loss; Higher Financing
COPENE Petroquimica do Nordeste S.A (NYSE: PNE; BOVESPA: CPNE5)
announced Monday results for the eight-month period ended August
31, 2001. All figures presented are based on Brazilian Corporate

As a result of the decision to incorporate Nova Camacari and its
subsidiaries ESAE, Intercapital and Proppet, acquired by the
Company following the auction that took place on July 25, 2001,
COPENE decided that it was necessary to survey, publish and audit
the Company's results through August 31, 2001, to comply with the
requirements of Instruction No 319 of CVM - Comissao de Valores
Imobiliarios (Brazilian SEC). In Brazil, the CVM regulates the
incorporation of companies.

COPENE announced a net loss for the period of R$47.7 million,
showing a significant year-over-year decline from net income of
R$214.2 million for the same eight-month period of 2000.

Analysis of Results

For the period, the Company posted net sales of R$2,051.20
million, representing an 11.5 percent improvement over net sales
of R$1,839.10 million for last year's equivalent period. This was
the result of improved prices, as the volume of chemical products
sold through August 2001 declined by 12.2 percent when compared
with the same period last year, and sales of automotive gasoline,
which represented 6 percent of net sales for the period.

For the period, exports represented 10.4 percent of net sales of
chemical products and 8.8 percent of the Company's total net
sales. For the same period of 2000, exports represented 12.1
percent of net sales of chemical products and 11.0 percent of the
Company's total net sales.

In the month of July, the price of naphtha remained unchanged
from June levels at R$633.60 per ton, while substantially
dropping in August to R$523.00 per ton. During July and August,
the price of naphtha, which is the Company's main raw material,
continued to be calculated on the basis of the formula agreed
with Petrobras in 4Q00. The variables in this formula are the
price of naphtha in the international spot market and the U.S.
Dollar - Real exchange rate.

Due to the higher year-over-year price of naphtha during the
first eight months of this year, and the problems resulting from
the August maintenance shutdown, which resulted in a decline in
production volume and sales, gross margin continued to be under
pressure declining to 13.7 percent for the period. For the same
period of 2000, gross margin was 22.7 percent.

Financial expenses for the period rose year-over-year by 217.0
percent to R$403.3 million. This was the result of the strong
devaluation of the Real against the U.S. Dollar in the period.
Financial expenses for the period, in thousands of Reais (R$),
were broken down as follows:

                           8-mos-01       8-mos-00     Var. %

Financial expenses         (94,901)       (80,580)      17.8
Monetary and Exchange
Variations (Liabilities)  (308,434)       (46,647)     561.3
Total                     (403,335)      (127,227)     217.0

As the correction of liabilities that were denominated in U.S.
Dollar were negatively affected by the devaluation of the Real in
period, the assets in US$ took benefited from that, thus leading
to a
69.5 percent growth in financial revenues, when compared with the
figure for the first eight months of 2000. Financial income for
period, in thousands of Reais (R$), was broken down as follows:

                            8-mos-01       8-mos-00     Var. %

Financial income             83,587         83,859          -
Monetary and Exchange Rate
Variations (Assets)          88,914         17,916      396.3
Total                       172,501        101,775       69.5

Another item that contributed to the decline in the performance
of the Company for the eight-month period, when compared with the
equivalent period last year, was the results of participations in
subsidiaries and affiliates. Results of participations in
subsidiaries and affiliates for the period were a loss of R$13.4
million, mostly in connection with R$31.2 million in equity
losses resulting from the participation in Nova Camacari, the
company acquired by COPENE in July 2001.


EBITDA for the period was R$276.1 million, compared with EBITDA
of R$396.6 million for the same period of last year. This decline
was the result of the continued pressure on operating margin
experienced in the period because of the higher year-over-year
naphtha prices and the devaluation of the Real against the U.S.


Capital expenditures through August 31, 2001, increased year-
over-year by 242.6%, as shown in the table below. This increase
was due to the investments made year-to-date in the expansions of
ethylene production capacity and improvements made in the
maritime terminal at Aratu.

                            8-mos-01       8-mos-00     Var. %

Production Expansions        91,924         17,234      433.4
Logistics                    50,544          4,897      932.1
Permanence                   38,971         25,342       53.8
Maintenance Shut Down        28,594         11,358      151.8
Catalysts                     2,636          1,278      106.3
Others                          714          1,963      (63.6)
Total                       212,669         62,072      242.6

As already announced, the postponement of the works to increase
COPENE's ethylene production capacity by 80 thousand tons did not
affect expenditures related to the Company's Capacity Expansion
Program for this year.

COPENE's capital expenditures of R$133.5 million carried out in
the first semester of 2001 were 11.6 percent greater than all the
investments made in the year 2000.

Total capital expenditures expected for the year 2001, in
millions of Reais (R$), are as follows:

Capacity expansion                       163.2
Logistics                                 52.3
Permanence                                57.3
Maintenance shutdowns                     54.8
Catalysts                                  6.8
Other                                      2.2
Total                                    336.6

COPENE expects to fund its plan of capital expenditures for this
year predominantly from the BNDES and the Company's own


On August 31, 2001, COPENE's gross debt was R$1.5 billion, a
figure that has been in constant growth due to the devaluation of
the Real against the U.S. Dollar. Of the portion of COPENE's debt
that is U.S. Dollar-denominated, which is 91 percent of the
Company's total debt, only US$150 million had, on that date, no
hedge protection mechanism.

COPENE's net debt on August 31, 2001, reached R$879.3 million, or
US$344.8 million, representing a 13.2 percent increase from
R$776.9 million, or US$337.0 million, on June 30, 2001, and 60.1
percent increase from R$549.0 million, or US$ 280.6 million, on
December 31, 2000. Nevertheless, this increase was for the most
part due to devaluation of the Real in the period, since COPENE's
gross debt is predominantly indexed to the U.S. Dollar, and thus
is very sensitive to these variations.


Around 73.3 percent of the Company's total debt denominated in
U.S. Dollar is protected against a devaluation of the Real either
through some hedge mechanism or because some of the debt are
export pre-payment operations, which are considered to be a
natural hedge.


Sales of automotive gasoline for the first eight months of 2001
reached 203.3 million liters, with monthly sales maintaining the
average of the previous months. The sales volume for the last two
months could have been higher, if it had not been for the general
maintenance shut down that took place in that period. Net sales
for the period resulting from sales of automotive gasoline
reached R$119.8 million, representing 6.5 percent of net sales of
chemical products and fuel for the period. In 2000, production of
automotive gasoline started in August, but sales only started
during the month of September.

ANP - Agencia Nacional de Petroleo (Brazil's National Petroleum
Agency) has already approved the production and sale of LPG and
Diesel Fuel by petrochemical centers. COPENE is in its final
development phase before it can get started with the production
and sale of LPG.

CONTACT: COPENE Petroquimica do Nordeste S.A               
         Carlos Augusto de Oliveira Freitas                
         Tel: +55-71-632-5847                              
         Fax: +55-71-632-5047                              
         Breakstone & Ruth International            
         Luca Biondolillo                          
         Tel: 646-536-7012                         
         Fax: 646-536-7100                         

SOCIEDAD NACIONAL: Successfully Renegotiates Bank Debt
The SNA (Sociedad Nacional de Agricultura) finally signed a deal
with creditor banks and handed the land (31.5 hectares) of Fisa
de Maipu over as payment following months of negotiations, South
American Business Information reported September 11. The move
indicates that SNA paid US$17 million in debt with the banks. The
creditor banks were Security, Edwards, Bice, Dresden, BCI and Sud

SNA will be able to use the Fisa to sponsor markets and displays
until 2002. The only business sector kept within the SNA is the
Agricultural radio station.


BANCRECER: IPAB To Scrap Auction If No Decent Bid Offered
If Banorte fails to make an adequate offer for the acquisition of
Bancrecer, Mexican bank bailout agency IPAB will not proceed with
the failed bank's auction. In a report Monday in Mexico City
daily El Universal, Bancrecer CEO Carlos Septien Michel announced
they would wait for 12 months to begin a new auction.

"We would do it once the market conditions are adequate," Michel

According to the executive, the auction has not received the
interest that had originally been expected because of external

"There was a slowdown in the U.S. economy, and that meant that
for a lot of large financial groups, Mexico was not a priority,"
said Septien.

"But there is confidence that the auction will turn out well, and
that a good price will be paid for the institution," he said.

GRUPO AZUCERO: Investor Claims Govt. Breached Nafta Rules
Well-known bankruptcy adviser and investor, Wilbur Ross, claimed
that the Mexican government breached rules set down by the North
American Free Trade Agreement on September 4 when it expropriated
27 of the country's 60 sugar refineries, the Financial Times said

Ross is one of the investors in Grupo Azucero Mexico, a company
affected by the move. His claim is based on the fact that that
the government sets the prices of raw and refined sugar.

Powerful sugar cane growers have pushed the price of raw sugar
above that of refined sugar in other parts of the world, while
the cost of refined sugar has been kept low owing to oversupply
in the domestic market. That narrow spread placed sugar mills in
a very uncomfortable position.

"This led to severe pressure on the industry," said Ross, adding,
"Sugar in Mexico is a highly politicized commodity."

The government was finally spurred to expropriate the mills by
sugar workers, who were incensed that they had not been paid.
Shortly afterwards, the government allowed sugar prices to rise
by $15 a ton, Ross said.

On the basis of the new price, Ross believed Grupo Azucero would
have an annual cash flow of $50 million, which would be plenty
for the company not just to cover its debt service but also to
provide a reasonable return for investors. Grupo Azucero has been
struggling to emerge from bankruptcy for the past year.

Previously, the government had refused to allow a half-dozen
inefficient mills to go out of business, Ross revealed. Their
disappearance could also have allowed the mill he invested in to
have made a reasonable return, he argued.

"We think what would be a more sensible solution would be a real
private market solution," Ross said.

Ross charged that unless Mexico compensated investors at a price
for the mills based on the new price of sugar, the government
would be breaching Nafta's rules on expropriations. Ross
estimated the full value of the mills would be $1 billion.

"This is the first case of expropriation in any of the
Nafta countries," Ross said, adding, "At least we feel they
should make a fair and prompt payment."

GRUPO DINA: Must Find Buyer Immediately
Mexico's 50-year old truck manufacturer, Consorcio Grupo Dina,
which last week closed its plant in Sahagun, Hidalgo, will have
to work with the Finance and Labor ministries to plan the sale of
the company's assets unless an investor comes forward to buy the
company, Mexican financial daily El Economista reported Monday.

For the past eight years, the truck maker has been swimming
against the current, after the company's separation from Navistar
and the 1994 economic crisis, factors leading the company to take
on $700 million in debt.


CORPOSANA: Still Carries Heavy Load Of Debt Even After Reduction
Negotiations with the federal government allowed the Paraguayan
water company Corposana to slash debts by more than G$18 billion
(14 percent), according to a report in South American Business
Information. But the company's payment obligations are still
quite high with debts amounting to G$901.170 billion. Corposana's
bank debt increased by nearly G$11.3 billion between December
2000 and the present date. Its income grew by 28 percent over the
period, including last February's 10 percent fare increase. Over
the mentioned period, 465 employees, or 27 percent of the total,
were laid off.

Corposana is soon to be privatized by the Paraguayan government.


ORINOCO IRON: CVG To Up Stake In Ailing Briquette Firm
Gen. Francisco Rangel, president of Venezuela's state industrial
holding company Corporacion Venezolana de Guayana (CVG), revealed
that the company is likely to increase its stake in the ailing
hot briquetted iron plant Orinoco Iron, Reuters reported Monday.

"It is possible that we could increase our share holding in the
Orinoco Iron company and are ready to do that with the greatest
of pleasure," said Rangel.

Rangel also disclosed that government was also taking part in
talks with banks to restructure the $900 million plant's heavy
debt burden.

The CVG already holds an equity stake in the Orinoco Iron plant
through its 13.2 percent holding in local iron producer IBH,
which owns 50 percent of the struggling plant.

BHP Billiton, the other 50 percent owner of Orinoco Iron, earlier
said it would not commit any more funds to the plant. Orinoco  
has suffered from commissioning problems since its start-up last
year and is currently operating with only one of four production

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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