TCRLA_Public/011206.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

            Thursday, December 6, 2001, Vol. 2, Issue 238



AREGENTINE BANKS: S&P Downgrades Four Large Banks Again
ARGENTINE BANKS: Moody's Cuts Ratings, Expects Deterioration


CEMIG: To Issue Debentures To Fund Businesses
BANCO ECONOMICO: Acominas Auction Draws Little Interest
BELL CANADA: S&P Affirms Corp Credit, Sr. Unsecured Debt Ratings
BELL CANADA: Shares Down On Debt Restructuring Plan Announcement
EMBRATEL: Taking 4Q Charges; Ups Reserves, Cuts 2002 CapEx

ENRON: Petrobras Expects Bargains On Brazilian Assets
ENRON: Government Hopes Local Partners To Assume Investments
TRANSBRASIL: Halts Flights After Running Out Of Money, Fuel
TRANSBRASIL: May Seek Federal Intervention To Prevent Bankruptcy


DISPUTADA MINE: Codelco Aims To Offer Highest Bid


VALORES BAVARIA: Former CTC Chairman Becomes New President


BANCRECER: Banorte Concludes Purchase
EMPRESAS ICA: Moody's Drops Ratings; Maintains Negative Outlook
ENRON DE MEXICO: Ceases Risk Management Operations Indefinitely
SANLUIS CORPORACION: Denies Bankruptcy Rumors, Sees Way Out
SANLUIS CORPORACION: Money Market Debts May Be Reason For Woes
SIDEK: To Supply Auction Winners With Details About Sold Assets
STARMEDIA NETWORKS: Schiffrin & Barroway, LLP Files Lawsuit


ANTELCO: Government To Pay Workers US$75M In Severance Package
ANTELCO: Macchi Signs Decree Transferring Assets To Copaco

     - - - - - - - - - - -


AREGENTINE BANKS: S&P Downgrades Four Large Banks Again
Standard & Poor's lowered Monday its counterparty credit ratings
on several Argentine banks to Selective Default ("SD"), following
measures announced over the weekend imposing limitations on cash
withdrawals of bank deposits, reports Business News Americas.

CDs were downgraded to single-"D" from triple-"C"-plus,
indicating that, according to S&P's methodology, banks have
failed to return deposits under the conditions originally
contracted. At the same time, the ratings on all outstanding debt
issues were downgraded to double-"C" from triple-"C"-plus.

The deposit withdrawals accelerated into a run last week,
especially on November 30. Faced with a possible breakdown of the
financial system, the government decided to impose restrictions
on deposit withdrawals, announcing that those limitations would
be effective until the finalization of the second phase of the
sovereign debt
exchange-estimated in 90-days.


Banco Rio de la Plata S.A.
Counterparty credit ratings SD CCC+/C Senior secured debt CC CCC+
Senior unsecured debt CC

Banco de Galicia y Buenos Aires S.A.
Counterparty credit ratings SD
CCC+/C Senior unsecured debt CC CCC+ CDs D CCC+/C

Banco General de Negocios S.A.
Counterparty credit ratings SD CCC+/C CDs D

BBVA Banco Frances S.A.
Counterparty credit ratings SD CCC+/C

ARGENTINE BANKS: Moody's Cuts Ratings, Expects Deterioration
Moody's Investors Service lowered the bank financial strength
ratings (BFSRs) of the following banks:

  - Banco Rio de la Plata, S.A.: to E+ from D-; with stable

  - BBVA Banco Franc‚s: Bank Financial Strength Rating to E+ from
    D-; with stable outlook

  - Banco de Galicia y Buenos Aires, S.A.: to E+ from D-; with
    stable outlook

  - Banco Hipotecario, S.A.: to E+ from D-; with stable outlook

  - HSBC Bank Argentina, S.A.: to E+ from D-; with stable outlook

  - Scotiabank Quilmes, S.A.: to E+ from D-; with stable outlook

  - Banco Bansud, S.A.: to E from E+; with stable outlook

  - Banco de la Provincia de Buenos Aires: to E from E+; with
    stable outlook

  - Banco de la Nacion Argentina: to E from E+; with stable

  - Banco de la Ciudad de Buenos Aires: to E from E+, with stable

The downgrades of the BFSRs reflect Moody's expectation that the
intrinsic creditworthiness of the Argentine banks will
deteriorate due to sharply reduced profitability and asset
quality, resulting in possible capital erosion, particularly in
light of the government's recent measures to establish partial
foreign exchange controls and to restrict the use of depositor

Moody's believes that while recent measures have helped to stem
temporarily the outflow of deposits from the Argentine banking
system, that the system will experience further balance sheet
contraction and asset value depreciation as a result both of the
liquidity squeeze and pricing distortions that could result from
the controls. This, in Moody's view, also calls into question the
stand alone solvency of even the strongest banks in the system.

New York
Jeanne Del Casino
Vice President - Senior Analyst
Financial Institutions Group
Moody's Investors Service

New York
Gregory W. Bauer
Managing Director
Financial Institutions Group
Moody's Investors Service


CEMIG: To Issue Debentures To Fund Businesses
Companhia Energetica de Minas Gerais (Cemig) announced a plan to
issue 625 million reais ($255 million) in debentures to finance
its power generation and distribution businesses, says Reuters.

Accordingly, the Brazilian power utility will issue the
debentures in two series of 312.5 million reais each. The first
series will carry a maturity of eight years and the second will
mature in 10 years, the Company said in a statement.

BANCO ECONOMICO: Acominas Auction Draws Little Interest
So far, the only company openly expressing interest in the
December 7 auction of a 17.67-percent stake in Minas Gerais-based
steel producer Acominas is Belgo-Mineira, informed liquidator
Natalicio Pegorini, in a Business News Americas report.

However, Pegorini expects to receive last-minute offers from
other companies in addition to the Belo Horizonte-based long
products maker.

"And there may be others, including foreign steel companies,
because this is an open auction, for foreign companies just as
much as Brazilian," Pegorini said. Belgo has submitted what he
described as an application of formal interest.

Pegorini is acting on behalf of Brazil's Central Bank, which
holds the 17.67 percent stake in Acominas following the 1997
collapse of Banco Economico, whose assets included the

A sale attempt in October with a minimum price of 489 million
reais failed to attract any bidders. As a result, the opening
price was lowered to 426 million reais.

BELL CANADA: S&P Affirms Corp Credit, Sr. Unsecured Debt Ratings
Standard & Poor's affirmed Tuesday its double-'B'-minus corporate
credit and senior unsecured debt ratings on Bell Canada
International Inc. (Toronto:BI.TO - news) (BCI). The outlook is

The affirmation follows the company's announced recapitalization
plan effective Feb. 15, 2002, which will allow the company to
meet commitments totaling about C$1.3 billion to April 30, 2002.
BCI also announced the reorganization of 41.7%-owned subsidiary
Telecom Americas Ltd. (unrated) into a pure-play Brazilian mobile
company, subject to regulatory approvals and third-party

The ratings continue to reflect the diversity and potential value
of BCI's investments and its role as Bell Canada Enterprises'
(BCE) investment vehicle in Latin America. BCE's 74% ownership of
BCI is positive but lends limited support to the ratings due to
the exclusion of guarantees or other forms of direct financial
support. BCI is a holding company with investments in the
wireless and broadband segments of the telecommunications
industry in Latin America. As a holding company, BCI is dependent
on external financing or asset sales to meet its debt-servicing

BCI has rationalized its operations by divesting itself of all of
its Asian telecommunications assets to focus on its core assets
in Latin America and to enhance its financial position. After the
restructuring, the company's major asset remains its 41.7% equity
investment in Telecom Americas Ltd., a joint venture with
Mexico's America Movil S.A. de C.V. (45.5%) and Texas-based

SBC Communications Inc. (12.8%). America Movil is Latin America's
largest cellular communications provider with more than 11
million subscribers.

Upon reorganization, Telecom Americas will own interests in four
Brazilian B-Band mobile operations serving four million
subscribers in licensed territories with a population of 60
million. These include interests in Algar Telecom Leste S.A.,
Tess S.A., Americel S.A., and Telet S.A. As a part of the Telecom
Americas reorganization, BCI will receive a 75.6% interest in
Canbras Communications Corp. and an interest in Genesis Telecom
C.A. At the same time, Telecom Americas will transfer 60%-owned
Techtel-LMDS Communicaciones Interativas S.A. and 77.1%-owned
Comcel S.A. to America Movil in return for cash and a 41%
interest in Algar Telecom. Over the next three years, BCI has
guaranteed obligations of Telecom Americas in the amount of C$538

BCI's financial risk profile is aggressive, characterized by high
debt levels, lower consolidated revenue guidance for 2001, and
uncertainty related to the sale of noncore assets as a result of
challenging market conditions. Nevertheless, the restructuring
plan is expected to provide support to BCI's credit profile,
which has been under pressure, and offset exposure to material
near-term commitments. BCI's total obligations to April 2002
include C$400 million in convertible debentures; a C$78 million
loan from BCE; and a C$178 million American International Group
Inc. put option, which will be settled through the issuance of
BCI common shares. Commitments also include a C$400 million bank
loan and C$186 million in promissory notes to Telecom Americas in
the form of a Tess guarantee. Proceeds from the C$440 million
rights offering will be used to pay down its credit facility
(which will be extended to March 2003 in the reduced amount of
C$230 million), to fund an April 2002 obligation related to Tess,
and for general corporate purposes. A backstop provision by
parent, BCE Inc., related to the rights offering and antidilutive
provisions ensuring BCE's majority ownership in BCI provides
additional cushion to the rating.


The key aspect of the rating on BCI in the future will be the
ongoing performance of Telecom Americas and BCI's success in
completing noncore asset sales. The company's funding of near-
term requirements, and the enhanced business and financial risk
profile of Telecom Americas through a focus on the high-growth
Brazilian wireless market, should improve BCI's credit profile
over time.

BELL CANADA: Shares Down On Debt Restructuring Plan Announcement
Shares of Bell Canada International on Tuesday fell 41 Canadian
cents, or 14 percent, at C$2.43 on the Toronto Stock Exchange and
were off 18 cents at $1.60 on Nasdaq, reports Reuters.

The drop on the Company's shares came in the wake of the
disclosure of its C$1.3 billion ($828 million) debt restructuring

The recently-unveiled restructuring plan includes a C$440 million
rights offering and share issue, which analysts said would
significantly dilute existing shareholders.

"We believe that investors should remain extremely cautious
regarding BCI shares," predicted Goldman Sachs analyst Jonathan

Mr. Dorfman said two key components of the new plan, the rights
offering at a 49 percent discount and the issue of C$656 million
of common shares in exchange for debt, could result in dilution
of current public equity holders to below 15 percent ownership.

Dorfman currently has a "market performer" rating on BCI's stock.
The shares have slumped from a 52-week high of C$32 as faltering
South American economies and telecom markets severely eroded the
Company's finances.

CONTACT:  Bell Canada International Inc.
          Peter Burn (Media), 514/392-2357
          Bell Canada International Inc.
          Brian Quick (Investors), 514/392-2369

EMBRATEL: Taking 4Q Charges; Ups Reserves, Cuts 2002 CapEx
In an official press release, Embratel Participacoes S.A.
(Embratel Participacoes or the "Company") (NYSE: EMT) (BOVESPA:
EBTP3 EBTP4), the Company that holds 98.8 percent of Empresa
Brasileira de Telecomunicacoes S.A. ("Embratel"), announced
Tuesday that it will book pre-tax adjustments of $R605 million in
the fourth quarter of 2001 to write down obsolete switching
assets and to increase its receivable reserves. These adjustments
are related to Embratel's evolution to a fully independent
provider of long distance services.

Long Distance Billing and "Per Call" Environment Proved to be a

"In 1998 when the Brazilian government sold Telebras in pieces,
it left Embratel with the daunting task of evolving from a long-
distance and data 'transport' unit to a self-sufficient 'business
entity,' states President Jorge Rodriguez. Prior to the break-up,
all customer billing, credit control, and call blocking was
performed by the local service companies and Embratel received a
share of revenue for handling the transport portion. The
transition, coupled with the mandate of 'per call' carrier
selection proved to be a formidable task."

In 2000, when Embratel began its own billing and account
management, the company found that it lacked many of the tools
required to manage the per call environment. "When you have no
ability to pre-enroll your subscribers, you find that you must
create massive call blocking, fraud detection, data base
management, and customer call center capabilities," noted Jorge
Rodriguez. "None of these tasks are simple and we found that in
some cases, equipment needed to be replaced to achieve the
revenue assurance levels required by the company." This has now
been accomplished.

During the second half of 2001, Embratel completed many of these
initiatives and now has significant fraud detection and call
blocking capabilities as well as a comprehensive customer data
base, billing operation and customer service centers. Creating
these capabilities required the replacement of several network
switching centers and constitute the bulk of the R$85 million
write down anticipated for the fourth quarter of 2001.

"Now that we have all the tools in place, we are also in a better
position to judge the adequacy of our reserves and we are
electing to increase the allowance by R$520 million," explains
Finance Vice President Jose Maria Zubiria. "At the same time, we
have gained confidence in the new tools and procedures and thus
are not electing to increase the rate of reserve beyond the 8-9
percent net revenue (6.5 percent of gross revenue) level that we
have used throughout 2001." Embratel views that the newly
acquired call blocking capabilities coupled with some additional
enhancements in the first half of 2002 will create a call control
environment that is consistent with an 8-9 percent reserve level.
In March of 2001, an accumulated total of 30 thousand non-paying
customers had been blocked. At the end of September, the blocking
reached a level of 500 thousand. As of today, 1.3 million
accounts have been blocked. As long as the economic conditions
remain consistent, we should see improvement in collections in
the second half of 2002.

A further enhancement to Embratel's capabilities will be co-
billing. We expect to reach an agreement in short-order with some
of the local operators. With regards to other operators, Embratel
expects Anatel to intervene enforcing equal treatment to all long
distance carriers as established by regulation
(Telecommunications' Law, Concession Contracts and
Interconnection Contracts). We expect Anatel to ensure Embratel
is not discriminated against by local operators in violation of
the law.

Local Entry Viewed to be a Profitable Extension of Embratel

Embratel is pleased with the recent rulings by Anatel that allow
local service entry on a competitive basis. This will allow
Embratel to first focus on customers to which the company already
has interconnection, thus minimizing capital expenditures, at
this time. "We have the brand, the reputation, the relationship,
and the systems and connections," explains Purificacion
Carpinteyro, Local Services Vice President. "The only additional
investment will be local switching expansions. Local service
entry will strengthen Embratel's position in the marketplace,
particularly for corporate customers."

Embratel is convinced that its entry into full wireline service
will be much smoother than the long distance transformation.
"This program is essentially a logical extension of our existing
network and is eagerly awaited by many of our customers," states
Jorge Rodriguez. "We already have the last mile installed for
over 21,000 premises of major businesses in Brazil to support our
current data and long distance services. These customers know
Embratel and its quality standards. Many of them are anxious to
give Embratel a chance at the full service provision role."

Recent studies show that Embratel enjoys a stellar reputation in
the data and long distance arena. A study by Interbrand (Gazeta
Mercantil - May 8, 2001) showed that Embratel was the only
telecom company to rank among Brazil's most valuable brands. "We
knew Embratel's brand was highly regarded among customers, this
was why we kept the company's name after privatization," said
Eduardo Levy, Marketing Vice President. "We have since enhanced
the attributes of our brand delivering reliable/quality services
to clients."

Embratel is confident that Anatel will enforce and improve the
unbundling rules, thus making possible for new entrants to break
into the local telephony monopoly.

"The local wireline market in Brazil constitutes a full one-third
of the potential telecom revenues in the country," states
Strategic Planning and Development Vice President, Shamim Khan.
"The fact that we can begin to tap this area with only a 5
percent increase in our deployed capital explains our enthusiasm.
Embratel is famous for high quality, mission critical service.
Why not extend our offering to local?"

Capital Expenditures

In 2002, the Company is looking to reduce its capital
expenditures to approximately R$1.1 billion combined for ongoing
operations including its entry into local services. This drop
aims at balancing the creation of cash from operations without
compromising profitable opportunities of growth.

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 28,868 km of fiber cables
comprising 1,068,657 km of optic fibers.

CONTACT:  Silvia M.R. Pereira, Investor Relations
          55-21-2519-9662, or fax, 55-21-2519-6388, or

          Wallace Borges Grecco, Press Relations
          55-21-2519-7282, or fax, 55-21-2519-8010, or

ENRON: Petrobras Expects Bargains On Brazilian Assets
Petroleo Brasileiro SA (Petrobras), Brazil's state-controlled oil
company, delayed the purchase of Enron Corp.'s 25.4 percent and
33.8 percent stakes in CEG and CEG Rio, respectively, reports

The Brazilian company explained its move, saying that it only
wants to ensure that Enron, which filed for bankruptcy protection
on Sunday, has not used its stakes as a collateral for a bond,
which would prevent Petrobras from taking over the assets.

However, several analysts deemed Petrobras' move as a tactic in
getting Enron's assets at a lower price considering that Enron's
bargaining power is now deteriorating due to financial woes.

Petrobras, Brazil's largest company, agreed in April to buy the
stakes from Enron. Already, the company has won regulatory
approval for the acquisition, said Brazil's electricity regulator

To see Enron's financial statement:

CONTACT:  Mark Palmer of Enron Corp., +1-713-853-4738

ENRON: Government Hopes Local Partners To Assume Investments
Brazil's Mines and Energy Minister Jose Jorge Vasconcelos Lima
said that the government is concerned about the impact Enron
Corp's bankruptcy filing could have on the country's energy
sector, reports AFX.

However, according to Vasconcelos, the government believed it
would not have to intervene to resolve the problems of the local
units of the crippled U.S. energy giant.

"We are concerned about the financial problems of Enron and we
hope that other partners can assume its planned investments in
the energy sector to avoid negative consequences," the minister

The lion's share of Enron's Latin American assets are in Brazil,
but it also has varied gas and other utility holdings in
Argentina, Mexico, Colombia, Venezuela, and Nicaragua.

TRANSBRASIL: Halts Flights After Running Out Of Money, Fuel
Transbrasil SA Linhas Aereas, Brazil's fourth largest airline,
halted flights indefinitely after running out of cash and credit
to buy fuel for its aircraft, reports Bloomberg.

The carrier began transferring its ticketed passengers to other
airlines late Tuesday after announcing that it cannot meet
obligations under a fuel supply with Shell Oil Co. The company
said it hadn't "definitively shut down its operations."

The airline's decision to halt its flights comes after a months-
long battle to overcome a severe cash crunch. Transbrasil's
troubles were further exacerbated by the terrorist attacks on the

Transbrasil has been flying only domestically after transferring
its international routes to other airlines earlier this year.

TRANSBRASIL: May Seek Federal Intervention To Prevent Bankruptcy
A Transbrasil source who asked to remain anonymous revealed that
the Brazilian airline will ask the federal government to take
control of the Company in order to head off a possible
bankruptcy, says Reuters.

According to the source, federal intervention was the only way to
make the government pay 330 million reais (US$136 million) that
Transbrasil asserts the government owes to it.

"The Company doesn't want to declare bankruptcy. It wants the
government to pay what it owes," the source said.


DISPUTADA MINE: Codelco Aims To Offer Highest Bid
An unnamed executive at Codelco said that Chile's biggest copper
producer plans to offer more than $1 billion for Exxon Mobil
Corp.'s Disputada de las Condes copper mine, relates Bloomberg.

State-run Codelco is aiming to make the highest offer on December
20 for the mine in central Chile. However, there is one sticking
point to Codelco's objective -- the limits on its budget must be
approved by the Chilean Finance Ministry.

Codelco's purchase of the Disputada mine would allow it to reduce
costs since the mine is located near Codelco's Andina division in
the Andes Mountains, enabling the two copper mines to share
processing equipment and other expenses.

Other companies planning to make an offer for the Disputada mine
include Australia's BHP Billiton Ltd., Brazilian mining company
Cia. Vale do Rio Doce (CVRD), Rio Tinto Ltd., and Anglo American

Exxon Mobil said earlier that it intends to liquidate its assets
in Chile.


VALORES BAVARIA: Former CTC Chairman Becomes New President
Colombia's beleaguered Valores Bavaria conglomerate on Tuesday
named Spanish investment banker and executive Javier Aguirre
Nogues as its new president effective the end of December,
reports Reuters.

The move came less than a week after the resignation of the
group's former head, Leonor Montoya.

Aguirre, who was formerly chairman of Compania de
Telecomunicaciones de Chile SA, will take up his duties in
January, Valores Bavaria said in a statement.

Valores Bavaria, controlled by Colombian businessman Julio Mario
Santo Domingo, has had a rough year and Aguirre may have to
oversee a sizable restructuring.

Valores' share price plunged 75 percent in the last 12 months on
rising losses. Third-quarter losses rose 10-fold to almost 123
billion pesos ($53 million), mainly due to the debt-ridden
airline Avianca SA and the Colombian unit of BellSouth Corp., in
which Valores holds a 34 percent stake.


BANCRECER: Banorte Concludes Purchase
Grupo Financiero Banorte closed its acquisition of Bancrecer on
Tuesday with the payment of the second and final 1.25-billion-
peso (US$139 million) installment for the bank, reports EFE.

Banorte would assume control of Bancrecer in January 2, 2002,
after non-performing loans and assets not included in the sale
are separated from the bank's portfolio.

In September 2000, Banorte agreed to pay a total of 1.650 billion
pesos (US$179 million) for the acquisition of Bancrecer. Banorte
made the first installment, valued at 412 million pesos (US$45.7
million), in early October. The second installment included 15.9
million pesos (US$1.7 million) in interest that had been in

Analysts said the deal would give Banorte, based in the northern
industrial city of Monterrey, greater geographical reach but some
voiced concern the group would lack the access to funding needed
to compete with its foreign-backed rivals.

The new group will have combined assets of 166.28 billion pesos
with a total of 1,207 branches.

EMPRESAS ICA: Moody's Drops Ratings; Maintains Negative Outlook
Moody's Investors Service downgraded the debt ratings of Empresas

Ratings Lowered:

  - US$170 million 5% convertible subordinated debentures
    due 3/15/04 to Caa1, from B3

  - US$350 million global medium term note program
    ($0 outstanding) to B2, from B1

  - Issuer rating to B3, from B2

  - Senior implied rating to B2, from B1

The ratings agency has removed ICA's debt ratings from watchlist
status, but maintained a negative outlook. The downgrades and
negative outlook reflect the Company's continuing difficulties in
generating positive earnings and revenue growth and the nascent
liquidity pressures as the Company relies on asset sales and cash
reserves to pay down maturing short term debt.

Moody's said it will continue to monitor closely ICA's prospects
for business in Mexico and other Latin American countries, its
strategy for restoring growth and for continuing to delever the
balance sheet, and for restructuring its bank facilities and
building liquidity.

New York
Robert N. McCreary
Senior Vice President
Corporate Finance Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

New York
Joseph A. Snider
Vice President - Senior Analyst
Corporate Finance Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

ENRON DE MEXICO: Ceases Risk Management Operations Indefinitely
Officials of Enron de Mexico revealed that the Company will stop
its risk management activity in Mexico indefinitely, reports
Mexico City daily Reforma.

The Company is taking such move because it lacks the credit
quality necessary to operate.

"We have very significant risk management activity, and the sale
of gas is also being withheld indefinitely, because it's an
activity that depends totally on credit quality," said a company

Enron sold contracts and derivatives to protect natural gas users
from volatile prices. However, its financial difficulties,
accompanied by downgrade of its credit quality by ratings agency
Standard & Poor's, led the company to decide to stop its coverage

All of the Company's contracts in Mexico are balanced, revealed
the source.

SANLUIS CORPORACION: Denies Bankruptcy Rumors, Sees Way Out
Mexican autoparts maker and mining giant Sanluis Corporacion,
S.A. de C.V. claims it still has a fighting chance to emerge
successfully from its current liquidity problems, denying
insinuations it has no choice but to seek bankruptcy protection.

In an information memorandum obtained by the Troubled Company
Reporter-Latin America the company said the key to its continued
operation would be to reach a debt payment moratorium currently
being negotiating with creditors.

According to the Company, the moratorium is essential to
stabilizing the operations of its autoparts and mining divisions,
whose continued operations would make or break any debt-
restructuring plan.

As a parent company, Sanluis does not generate its own cashflow,
but is guarantor on certain subsidiary debt agreements, making it
very dependent on the operations of the two divisions to pay off
its obligations.

"The recovery of the parent company creditors is contingent upon
the Autoparts Division and the Mining Division continuing to
operate," the memorandum said.

"Sanluis believes that once the situation at the operating
companies is stabilized, Sanluis will be able to turn its full
efforts to a prompt restructuring of the parent company's
operations," the memorandum added.

As of September 30, 2001, the Sanluis Group indicated US$610.8
million of outstanding debt, of which US$344 million are direct
obligations of parent company Sanluis Corporacion.

Last month, personal and corporate banking provider Grupo
Financiero Banamex pronounced the company virtually bankrupt due
to the deterioration of its fiscal structure.

But the company refutes this claim, saying it is due to meet
creditors in January to discuss the mechanics of a debt-
restructuring program.  The company has engaged the services of
PricewaterhouseCoopers to help draft a proposal.

For More Information:

      PHONE NO. 525 202 5108
      FAX: 525 202 6604

      Address: Monte Pelvoux No. 220-8 Piso
               Lomas de Chapultepec
               MEXICO DF CP 11000

SANLUIS CORPORACION: Money Market Debts May Be Reason For Woes
Too much exposure to the European money market may prove to be
the undoing of Mexican conglomerate Sanluis Corporacion, S.A. de
C.V. should it end up being bankrupt.

A copy of the company's information memorandum obtained by the
Troubled Company Reporter-Latin America reveals that its largest
debt is composed of US$200 million in euro-denominated bonds and
US$77.5 million in Euro Commercial Paper.

This exposure in Europe accounts for 45 percent of the US$610.8
million outstanding debt of Sanluis Group.  Add to that other
obligations, parent company Sanluis Corporacion actually owes
directly or is guarantor of US$344 million or 56 percent of the
whole pie.

Timing of the company's expansion efforts appears to be part of
its problem. The autoparts division is regarded as a "Tier 1"
provider but is facing the same economic difficulty of that
industry as a whole. Meanwhile, gold and silver prices are down
making the other primary resource, mining, cash hungry and
unprofitable as well.

In its memorandum, the company explained that the significant
cash trouble started in August when lenders refused to roll over
maturing short-term debts.  The ensuing liquidity difficulty was
compounded by the general economic environment following the
September 11 terrorist attacks.

Accordingly, counterparties to various derivative instruments
began terminating these facilities and liquidated them against
the parent company.  Suppliers also tightened the noose by
demanding cash on delivery for continued supply to its autoparts

The result: A tight financial fix in which the only way out is a
debt payment moratorium and some short-term factoring of

The company says it has already set a January meeting with
creditors for this purpose. Until then, however, it is not clear
how the company will get by.

Already, it has missed interest payment on the US$200 million
eurobond due 2008.  Meanwhile, the short-term Euro Commercial
Paper could strain its finances every 30, 60, 90, or 180 days.

SIDEK: To Supply Auction Winners With Details About Sold Assets
On December 4, Sidek was expected to provide the winners of last
week's auction information relative to the 18 packages sold, says
Mexico City daily Reforma.

Last week's auction yielded Sidek US$183.5 million. Most of the
assets were purchased by Sidek's bank creditors, members of a
consortium led by the Jorge brothers and Jose Martinez Guitron.

The next auction was supposed to take place December 6, but was
postponed until January 22 in order to allow potential interested
parties to obtain authorizations from the Federal Competition
Commission (CFC), headed by Fernando Sanchez Ugarte.

STARMEDIA NETWORKS: Schiffrin & Barroway, LLP Files Lawsuit
Schiffrin & Barroway, LLP announced Tuesday that it recently
filed lawsuits on behalf of shareholders of StarMedia Networks,
Inc. for violations of the federal securities laws.

If you purchased the securities of Starmedia Networks during the
respective class periods, you may be a member of the class and
have until the date specified to move the court to become the
lead plaintiff.

STARMEDIA NETWORKS, INC. (Nasdaq:STRME) (Class Period: 04/11/00 -
11/19/01) The complaint charges StarMedia Networks, Inc. and
certain of its officers and directors with issuing false and
misleading statements concerning its business and financial
condition. Specifically, the complaint alleges that StarMedia
reported artificially inflated financial results in press
releases and filings made with the SEC by improperly recognizing
revenue in violation of Generally Accepted Accounting Principles
("GAAP"). Specifically, the complaint alleges that two of the
Company's primary subsidiaries, AdNet S.A. de C.V. and StarMedia
Mexico, S.A. de C.V, had engaged in improper accounting practices
which had the effect of materially overstating StarMedia's
reported revenues and earnings by at least $10 million. On
November 19, 2001, as alleged in the complaint, StarMedia issued
a press release announcing that based on the "preliminary"
results of an internal investigation into its accounting
practices, it expects to restate its financial statements for
fiscal year 2000 and the first two quarters of 2001 and that
those financial statements should not be relied upon. The Company
further reported that its Chief Financial Officer had "resigned."
Immediately following the announcement of the restatement, the
Nasdaq Stock Market halted trading in StarMedia stock, pending
the receipt of additional information from the Company. StarMedia
stock last traded at $0.38 per share, which is 98.5% less than
the Class Period high of $25.50, reached on April 11, 2000. The
complaint was filed in the United States District Court for the
Southern District of New York. The lead plaintiff motion must be
filed no later than January 19, 2002.

Schiffrin & Barroway, LLP has prosecuted shareholder class
actions for over fourteen years and has recovered more than $1
billion for investors. If you are a shareholder in any of the
companies listed above and would like to be a lead plaintiff in
one of these securities class actions, please contact Schiffrin &
Barroway at 888-299-7706.

CONTACT:  Schiffrin & Barroway, LLP
          Shareholder Relations Manager
          (888) 299-7706 (toll free) or (610) 822-2221


ANTELCO: Government To Pay Workers US$75M In Severance Package
The Paraguayan government and the union of state-run telecoms
operator Antelco have finally reached an agreement following a
dispute that has dragged on for years, reports Business News

The settlement, which clears the way for Antelco's privatization,
calls for 4,200 employees to receive a US$75-million severance
package. The severance package gives each worker two months
salary for every year of service -- a hefty sum considering the
average time of service at Antelco is 17 years.

According to a source from privatization agency SNRE, the
government will pay off Antelco workers with the proceeds of the
sale, effectively leaving the new owner with zero labor

ANTELCO: Macchi Signs Decree Transferring Assets To Copaco
Paraguay's President Luis Gonzalez Macchi signed a decree Friday
transferring Antelco's assets to shell company Compania Paraguaya
de Comunicaciones (Copaco S.A.), which will go to auction next
March, reports Business News Americas.

Accordingly, the Spanish banking group Santander Centro Hispano
and investment bank Nmas1 are handling the sale process.

Five companies have already applied for pre-qualification status.
These are: Telefonica Internacional (TISA), Brasil Telecom (NYSE:
BRP), Paraguayan mobile operator Telecel (Millicom), Telecom
Argentina (NYSE: TEO) and Compa¤ˇa de Telecomunicaciones, a
consortium of Paraguay's Rieder Group and Germany's Detecon.

A World Bank study prepared in 1999 gave Antelco an equity value
of about US$229 million. A recent audit put the Company's book
value at about US$88 million.

Antelco has approximately 300,000 installed lines and provides
local and long distance telephony. The Company also owns a PCS

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
written permission of the publishers.

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.

* * * End of Transmission * * *