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

            Wednesday, November 21, 2001, Vol. 2, Issue 228

                           Headlines



A R G E N T I N A

CORREO ARGENTINO: Included In Government Tax Exemption Plan
EPEC: Privatization To Proceed In 15 Days


B O L I V I A

LAB: Fuel Debts Cause Cancellation Of 3 International Flights


B R A Z I L

EMBRAER: Client Financing Drains Cash Coffers
ENRON: Brazilian Assets May Be Liquidated
USIMINAS: Shares Recover From Battering


C H I L E

EDELNOR: AES Eyes Assets, Prepares For Possible Distress Sale
EDELNOR: GasAtacama May Purchase Some Assets
STARMEDIA NETWORK: Restating Prior Period Results, CFO Resigns
STARMEDIA NETWORK: Susan Segal Apponinted Acting Chairman
STARMEDIA NETWORK: Nasdaq Halts Trading, Requests More Info
TELEFONICA CTC: Entel Warns Of Legal Action On Tarriff Revision


C O L O M B I A

BANCAFE: Privatization Expected In 2002


D O M I N I C A N   R E P U B L I C

DOMINICANA AIRLINES: Auction Winner Fails To Fulfill Obligations


E C U A D O R

INMOBILIARIA BIANCA: Ecuadorian Government To Auction Asset


M E X I C O

AHMSA: Modernization Program Brings World-Class Recognition
BANRURAL: To Implement Cost Cutting Measures To Shore Up Losses
BUFETE INDUSTRIAL: Struggling Without Positive Revenue
GRUPO MASECA: To Invest $25M In Consolidation Plans For 2002


P E R U

CONSORCIO TEXTIL: Creditors Approve Restructuring Plan
PESQUERA SANTA ROSA: Delays Restructuring Plan Until Sept 2002


     - - - - - - - - - -


=================
A R G E N T I N A
=================

CORREO ARGENTINO: Included In Government Tax Exemption Plan
-----------------------------------------------------------
Argentina's largest postal carrier Correo Argentina, which filed
for bankruptcy protection from creditors in September after
defaulting on a debt payment, has been included in the
Government's Competitiveness Plan (for tax exemptions), El Clarin
revealed in a report.

As a result, Correo Argentino, which reportedly owes 260 million
pesos in unpaid levies, has reduced costs by 10 million pesos
annually.

At the moment, Correo Argentino pays a levy of US$300,000 daily,
while its competitors pay US$12.

Correo Argentino reportedly has 740 million pesos in debt, which
includes a debt of 260 million pesos to the State and another 276
million pesos to the banks.


EPEC: Privatization To Proceed In 15 Days
-----------------------------------------
The privatization of regional integrated power company Epec,
which has seen a series of delays due to Argentina's depressed
economy, will be re-launched in the next 15 days, according to
Epec Spokesperson Adrian Calvo in a Business News Americas report
Monday edition.

The concession model is for 35 years with an annual 7 percent to
10 percent royalty on net revenue and a commitment to purchase
and sell on the part of the company.

"This new model and its details, and the date for the re-launch
of the process, depend on the provincial government, as these
decisions are made inside the government and not by Epec," Calvo
said.

The provincial government has already presented this alternative
to the three companies interested in Epec: Belgium's Tractebel,
US-based AES and Spain's Union Fenosa, he said.



=============
B O L I V I A
=============

LAB: Fuel Debts Cause Cancellation Of 3 International Flights
-------------------------------------------------------------
Bolivian flagship airline Lloyd Aereo Boliviano (LAB) cancelled 3
international flights - Santiago (Chile), Asuncion (Paraguay) and
Sao Paulo (Brazil) - on November 13 due to the fact that Air BP
refused to supply it with aviation fuel, La Razon reported.

Air BP claimed that LAB has debts of nearly US$500,000 related to
unpaid fuel supply.

Meanwhile, Ernesto Asbun, the Bolivian investor that recently
acquired Vasp's interest in LAB, awaits an audit before paying
for LAB's equity.

The amount that will be paid for the Bolivian airline has not
been defined yet and will depend on the results of the audit.



===========
B R A Z I L
===========

EMBRAER: Client Financing Drains Cash Coffers
---------------------------------------------
Embraer saw its cash on hand fell from US$696 million to US$129
million at the end of the third quarter, Valor Economico
reported.

One reason for the drop that Embraer, in its effort to sell
planes during July, August and September, provided financing for
its clients who were having a hard time making purchases.

This eventually led to a 2.03-percent decline in the company's
shares, despite the 34.2 percent increase in net profits to
R$252.5 million.

Another factor in the decrease in cash on hand was the increase
in the number of parts in stock, a result of the reduction in
investments by airlines following the September 11 attacks.

The company has dismissed 1,800 employees and reduced its
production flow in order to diminish inventories.

Embraer ended September with an order book of US$23.8 billion, of
which US$11.2 billion is in firm orders. Around US$1 billion in
purchase options were cancelled in the quarter.

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

CONTACT:  Investor Relations Department
          Phone: 55-12-3945-1216
          e-mail: mercapit@embraer.com.br


ENRON: Brazilian Assets May Be Liquidated
-----------------------------------------
Enron is in a race against time as a deadline for the payment of
a $690-million debt looms ahead, Reuters reported.

In a filing with the U.S. Securities and Exchange Commission made
Monday, Enron disclosed that it is up against a short deadline to
meet a $690-million debt obligation triggered by a credit
downgrade last week.

The triggered event starts a nine-day period that expires on Nov.
26, during which Enron must pledge collateral against the debt
owed to a third party in one of its myriad partnerships.

Otherwise, the partner has the right to liquidate all of the
assets of the partnership, which includes a Brazilian natural gas
company that Enron was counting on selling to raise $250 million
in cash.

The company is working to make alternative payment arrangements,
since it can ill-afford to pay the debt now. Enron has already
used up its $3 billion credit line, secured roughly $2 billion in
loans and is looking for more cash to stay afloat.

Meanwhile, Enron also issued a warning that a further drop in its
credit rating could force it to pay $3.9 billion to other
partnerships, the bulk of it to Osprey Trust and Marlin Water
Trust.

Such an outcome would keep Enron from paying its revolving credit
accounts and "would likely have a material adverse impact on
Enron's ability to continue as a going concern," the company
wrote.


USIMINAS: Shares Recover From Battering
---------------------------------------
Brazilian iron and steel maker Usiminas saw the price of its
shares rise 10.8 percent on Monday as traders bought the stock
after earnings showed that impact of electricity rationing was
smaller than expected, Reuters reported Monday.

"The shares had suffered from expectations that energy rationing
would hit the company hard," said Cristiane Viana, an analyst
from Espirito Santo Research. "That ended up not happening as you
can see in last week's excellent results."

Usiminas' shares rose to 5.84 reais late in the session, but
still remain about a third weaker than where they began the year.

The company posted a net loss of 2.9 million reais ($1.2 million)
for the first nine months of the year, below the 144 million
reais it made in the period in 2000, after a steep depreciation
in the real magnified its overseas debt costs.

However, analysts were pleased to see that output rose 4.5
percent and the volume of sales was 12.6 percent higher than the
first nine months of 2000.



=========
C H I L E
=========

EDELNOR: AES Eyes Assets, Prepares For Possible Distress Sale
-------------------------------------------------------------
Although it has withdrawn its bid for Edelnor debt before the
process was completed, U.S. power giant AES is still interested
in purchasing the Chilean generator, AES Gener general manager
Felipe Ceron revealed in a Business News Americas report.

"It is possible Edelnor will declare itself bankrupt and if so,
we will be prepared. We are interested in all its assets," Ceron
said.

"This interest is explained by the fact that the price we have
offered is less than it would cost to construct a new generation
project, and we believe we have competitive advantages operating
in this area," he added.

To see company's financial statement:
http://www.bankrupt.com/misc/Edelnor.pdf

CONTACT:  Jason Cuevas of EDELNOR, +1-678-579-6017


EDELNOR: GasAtacama May Purchase Some Assets
--------------------------------------------
A source from Chilean generator GasAtacama revealed that the
company is angling for some of the assets of fellow generator
Edelnor, in the event that the latter is declares bankruptcy,
Business News Americas reported.

"We are looking into this, as the gas-fired plant they possess
could be important for us, if the transport of gas were through
the GasAtacama gas pipeline, which we own," the source said.

According to the source, GasAtacama is not interested in
acquiring all Edelnor's assets, considering the difficult
situation that company is in at present.

In December Edelnor has to pay US$4.5 million to bond holders,
and in March 2002, US$9 million.


STARMEDIA NETWORK: Restating Prior Period Results, CFO Resigns
--------------------------------------------------------------
In a company press release, StarMedia Network, a struggling Latin
American Internet company, announced Monday that it plans to
restate its unaudited financial statements for the quarters ended
March 31 and June 30, 2001, and its audited financial statements
for the fiscal year ended December 31, 2000.

A Special Committee of the Company's Board of Directors is
conducting an investigation of accounting issues with respect to
revenue recognition by two of the company's Mexican subsidiaries,
AdNet S.A. de C.V. and StarMedia Mexico, S.A. de C.V. The Special
Committee has retained outside counsel to assist in the
investigation, which has led the Company to a preliminary
conclusion that revenues aggregating approximately $10 million
were improperly recognized by those subsidiaries during the
period from October 1, 2000 through June 30, 2001. At the present
time, the financial statements for those periods should not be
relied on.

The Company is working to conclude its investigation
expeditiously, and will file its Quarterly Report on Form 10-Q
for the quarter ended September 30, 2001, as well as the restated
reports, promptly after its investigation is completed. StarMedia
does not intend to provide further information with respect to
these matters prior to the completion of its investigation.

Separately, the Company also announced as follows:

*  Steven J. Heller has resigned as Chief Financial Officer of
StarMedia Network, effective November 15, 2001, on terms and
conditions previously agreed with StarMedia Network.

*  The company terminated the employment of Justin Macedonia as
General Counsel of the company earlier this month.  In September
2001, Mr. Macedonia had filed a notice of intention to arbitrate
against the company asserting that the company was obligated to
makes tax indemnity payments to him in the amount of $1,740,588.  
The company denies any obligation to make such payments, intends
to vigorously defend against such claims and has pursued
counterclaims against Mr. Macedonia.

*  In connection with its April 2000 acquisition of AdNet,
StarMedia Network was obligated under its agreements with respect
to such acquisition to pay additional consideration in the form
of the Company's common stock over a five-year period from the
acquisition date, subject to AdNet meeting certain specified
performance targets. In November 2001, the Company, AdNet and the
former stockholders of AdNet entered into a Termination Agreement
pursuant to which the Company agreed to issue to the stockholders
of AdNet 8,000,000 shares of the Company's common stock, in full
satisfaction of the Company's obligations under the stock
purchase agreement and certain other related agreements between
the Company and the former stockholders of AdNet.

About StarMedia Network, Inc.

StarMedia Network is the leading integrated Internet media and
solutions company for Spanish- and Portuguese-speaking audiences,
providing technology and services that enable consumers and
businesses to take full advantage of the Internet. The company
has operations in Argentina, Brazil, Chile, Colombia, Mexico,
Puerto Rico, Spain, Uruguay, Venezuela, and throughout the United
States.

CONTACT:  Press and Investor Inquiries:
          Romi Schutzer, Senior Vice President,
          Corporate Communications of StarMedia Network,
          +1-212-905-8269, or
          romi.schutzer@starmedia.net


STARMEDIA NETWORK: Susan Segal Apponinted Acting Chairman
---------------------------------------------------------
The Board of Directors of StarMedia Network, the leading
integrated Internet media and solutions company targeting
Spanish- and Portuguese-speaking audiences, announced Monday that
Susan Segal has been appointed to serve as acting Chairman of the
Board. She succeeds Fernando Espuelas, co-founder and former
Chief Executive Officer of the Company, who, pursuant to his
August 2001 agreement with the Company, resigned on November 15
as Chairman of the Board of Directors. Mr. Espuelas will continue
to serve as a Director on the Company's Board.


STARMEDIA NETWORK: Nasdaq Halts Trading, Requests More Info
-----------------------------------------------------------
The Nasdaq Stock Market(SM) announced that trading was halted in
StarMedia Network, Inc. (Nasdaq: STRM) November 19 at 7:57 a.m.,
Eastern Time, for "additional information requested" from the
company at a last price of 0.38 cents. Trading will remain halted
until StarMedia Network has fully satisfied Nasdaq's request for
additional information.

CONTACT:  Wayne Lee of The Nasdaq Stock Market, +1-202-728-8067


TELEFONICA CTC: Entel Warns Of Legal Action On Tarriff Revision
---------------------------------------------------------------
Empresa Nacional de Telecomunicaciones SA (Entel) threatened to
commence a legal action should the decree governing Cia de
Telecommunicaciones de Chile SA's tariff system be revised, AFX-
Europe reported Monday.

"Whatever change to the tariff decree in question is going to
imply legal actions on the part of Entel in the country and on
the part of foreign investors in the company under the mechanisms
which protect foreign investments," said Richard Buchi, general
manager of Entel.

The warning came in reaction to a report that Transport and
Telecommunications Minister Carlos Cruz and Economy Minister
Jorge Rodriquez have formally requested that the decree governing
CTC's tariff system until May 2004 should be "revised in
accordance with technical, economic and legal considerations."

The move reportedly followed a presentation at the end of last
month by Telefonica CTC general manger Claudio Munoz to Cruz and
Rodriquez seeking a series of amendments to fixed-rate charges,
access fees to Telefonica's network and taxes.



===============
C O L O M B I A
===============

BANCAFE: Privatization Expected In 2002
---------------------------------------
The privatization of Colombian state bank will probably have to
wait until next year pending the Colombian cabinet's approval
whereby a base price will be established, Portafolio reported.

The last cabinet meeting reached an agreement to postpone a
decision yet again as doubts begin to grow about the government's
desire to sell in the current economic situation.

The delay in the privatization means that the government will
have to pay 370 billion pesos in January 1, 2002. The bank
currently has a Fogafin loan - guaranteed capital to the tune of
250 billion pesos - that prevents it from growing until the
government injects fresh capital substituting the loan.

To liquidate Bancafe, with its book value is 455 billion pesos,
would be very costly the report said. The Colombian government
will take on the pensions deficit so that any buyer would be
acquiring a healthy bank.  



===================================
D O M I N I C A N   R E P U B L I C
===================================

DOMINICANA AIRLINES: Auction Winner Fails To Fulfill Obligations
----------------------------------------------------------------
Consorcio Santo Domingo 2001, which won the auction to privatize
Dominicana Airlines, has not paid the deposit required to close
the tender operation, DR1 Daily News reported Monday.

As a result, the sub-commission in charge of the privatization
process urged the Commission for the Reform of Public Enterprise
to nullify the tender or grant a new deadline to receive the
deposit.

Consorcio Santo Domingo 2001 is owned by Venezuelan airline
Aeropostal.

The move to grant Dominicana to Aeropostal has been riddled with
criticisms locally on grounds that the company is not that
financially sound to position Dominicana as a competitive
airline.



=============
E C U A D O R
=============

INMOBILIARIA BIANCA: Ecuadorian Government To Auction Asset
-----------------------------------------------------------
The Ecuadorian government was scheduled to auction November 15
the land and building owned by Inmobiliaria Bianca, El Universo
revealed in a report.

The asset, which the power company Emelec used as its
headquarters, will be sold at a minimum price of US$4.704
million. No interested parties have been identified so far.

Inmobiliaria Bianca reportedly has debts of US$8 million with the
Banco del Progreso bank.



===========
M E X I C O
===========

AHMSA: Modernization Program Brings World-Class Recognition
-----------------------------------------------------------
Francisco Orduna, communications manager at Altos Hornos de
Mexico SA (AHMSA), announced that the Mexican steel company
registered world-class productivity levels in its production
systems due to the modernization program at its plants, Business
News Americas reported.

In hot-rolled sheet steel, AHMSA ranks first place in world
productivity at 1.17 man-hours to produce one tonne of product,
beating French-based Usinor, Australian-Anglo BHP Billiton Steel
and Spain's Aceralia.

Moreover, the company ranks among the world's most efficient
steel producers in other categories.

Orduna predicted that Ahmsa would be able to lift the suspension
on debt repayments early next year once the appropriate financial
statements are presented to and passed by the US Securities and
Exchange Commission.

The protection from payments has frustrated creditors' and
suppliers' attempts to settle accounts with AHMSA, which has
debts of US$1.85 billion.


BANRURAL: To Implement Cost Cutting Measures To Shore Up Losses
---------------------------------------------------------------
So far this year, Banrural had seen its capital plunge over 66%
from 1.531 billion pesos to 419 million pesos with accumulated
losses of 4.995 billion pesos, revealed the National Banks and
Securities Commission (CNBV) in a Mexico City daily El Universal
report.

The bank's credit portfolio in the second quarter this year fell
some 14 billion pesos, to 10.989 billion pesos, from the reported
24.562 billion pesos in the comparable period in the previous
year.

Banrural plans to commence a cost reduction program which would
cut the number of personnel in order to deal with its weak
financial situation. According to the bank's estimates, such cost
cutting measures will reduce spending by 40 percent.


BUFETE INDUSTRIAL: Struggling Without Positive Revenue
------------------------------------------------------
Corporacion has seen no revenue so far, since it took over the
reins of Bufete Industrial, Mexican financial daily El Economista
revealed in a report.

As a result, all of its 700 workers, as well as its debt of over
US$400 million, have not been paid.

The company's hopes are now set on obtaining the contract at the
Pemex Refinacion petrochemical complex Pajaritos for its
modernization, which would keep the construction group occupied
for 18 months.

Meanwhile, Bufete Industrial is hoping to streamline the
workforce further through voluntary resignation.


GRUPO MASECA: To Invest $25M In Consolidation Plans For 2002
------------------------------------------------------------
Jaime Costa Lavin, general director of Grupo Maseco
Latinoamerica, disclosed that the company is going to invest some
$25 million next year for modernization, expansion of operations,
and increased company consolidation, Mexico City daily El
Universal reported.

"The company's plan is to grow in a sure and profitable manner,
investing in those businesses that give us the added value," he
said.

Areas with greater growth potential for the company include corn
flour, wheat, tortillas and corn chips. According to Costa's
estimates U.S. operations by the company are expected to have
grown by some 12 percent for the end of the year.

Gruma recently exited from its bread-making business and sold its
Mexican equipment and Costa Rican operation to Grupo Bimbo SA for
$70 million. Proceeds will be used to pay down debt, which
reportedly has reached $668 million.



=======
P E R U
=======

CONSORCIO TEXTIL: Creditors Approve Restructuring Plan
-------------------------------------------------------
Creditors of Consorcio Textil del Pacifico have approved the
Peruvian textiles company's restructuring plan, Gestion reported.

The plan is geared toward refinancing US$36.1 million in debts
over a 15-year term. With the agreement, the company will focus
its flat fabric production on the Huachipa plant and close down
the top knit plant, ceasing production on one kind of fabric
alltogether.

Consorcio Textil also expects to receive bank credits of US$5
million. The company predicts sales to grow by 5 percent in 2002,
and by between 2.5 percent and 3.5 percent annually as of 2003.

Consorcio Textil posted sales of US$12.9 million for the period
between January and October 2001, a 15-percent decrease in
comparison with the same period of 2000.

Losses of 21.3 million soles between January and September 2001
wer up losses of 13.4 million soles over the same period of 2000.


PESQUERA SANTA ROSA: Delays Restructuring Plan Until Sept 2002
--------------------------------------------------------------
Pesquera Santa Rosa, a Peruvian fishing company, decided in a
creditors' meeting held October to delay for a year its
restructuring plan, according to a report in Gestion.

The report revealed that the fishing company has overall debts of
US$10.2 million, which will be paid over an 11-year term.

Owned by the Bamar group, Pesquera Santa Rosa sells nearly 95
percent of the production extracted from Hayduk's plants.




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
publication in any form (including e-mail forwarding, electronic
re-mailing and photocopying) is strictly prohibited without prior
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Information contained herein is obtained from sources believed to
be reliable, but is not guaranteed.

The TCR Latin America subscription rate is $575 per half-year,
delivered via e-mail.  Additional e-mail subscriptions for
members of the same firm for the term of the initial subscription
or balance thereof are $25 each.  For subscription information,
contact Christopher Beard at 240/629-3300.


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