TCRLA_Public/041018.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

          Monday, October 18, 2004, Vol. 5, Issue 206



AGRUPEV S.A.: Enters Bankruptcy on Court Orders
BANCO BISEL: Local S&P Maintains Bonds' `raD' Ratings
BANCO SUQUIA: S&P Maintains `raD' Ratings on $36M Worth of Bonds
CHACRAS DE PILARCHICO: Court Revises Insolvency Dates
CLINICA PRIVADA: Undergoes Reorganization

HOSANTEL S.A.: Bankruptcy Process Begins By Court Order
PAN AMERICAN ENERGY: S&P Issues Rating Update
PITRIZZA S.A.: Files Petition to Reorganize
TRIOMPHE S.A.: Secures Reorganization Approval From Court
VIZA CONSTRUCCIONES: Court Issues Bankruptcy Ruling

ZOOMP S.A.: Court Declares Company Bankrupt
* ARGENTINA: Dismisses ICSID Claims


FOSTER WHEELER: Board Member Resigns


VASP: Workers Seek Help From Government

D O M I N I C A N   R E P U B L I C

AES DOMINICANA: To Get $5M Fuel Payment From Energy Commission
* DOMINICAN REPUBLIC: Negotiates $250M Loan With Spain


AEROMEXICO: Fitch Affirms Senior Unsecured Ratings
SATMEX: Satmex 5 Now Back in Position
TFM: S&P Issues Update on Kansas City Southern's Rating


LANPERU: Suspends All Flights On Court Order


PARMALAT URUGUAY: Dutch Bank Sues Parent in US
PARMALAT: Administrator Accepts Nextra Settlement Plan


CITGO: Commences Cash Tender Offer for 11% Senior Notes
HAMACA: Crude-Upgrading Facility Undergoing Start-up Procedures
SIDOR: To Vote on New Offer

     -  -  -  -  -  -  -  -


AGRUPEV S.A.: Enters Bankruptcy on Court Orders
Court appointed trustee Luis Kuklis is set to close the
verification of creditors' claims for the Agruprev S.A.
bankruptcy case on November 12.

Once all forwarded claims have been verified, the trustee will
submit these claims as individual reports in court on December
27. The trustee is also scheduled to submit a general report of
the case on March 9 next year.

Court no. 19 of Buenos Aires' civil and commercial tribunal
handles this case with the assistance of Clerk no. 38.

CONTACT: Agruprev S.A.
         Vidt 2047
         Buenos Aires

         Mr. Luis Kuklis, Trustee
         Lavalle 1619
         Buenos Aires

BANCO BISEL: Local S&P Maintains Bonds' `raD' Ratings
Standard & Poor's International Ratings, Ltd. Sucursal Argentina
maintained the `raD' rating assigned to corporate bonds issued
by Banco Bisel, the Comision Nacional de Valores (CNV) reports.

The bonds include:

- US$54 million worth of "Obligaciones Negociables Subordinadas"
issued under Series and/or Class that matured on July 20, 2000;

- US$300 million worth of "Programa de EmisiŤn de Tştulos de
Deuda a Mediano Plazo" issued under Program that also matured on
July 20, 2000

The rating action was taken based on Banco Bisel's financial
health as of June 30, 2004.

According to S&P, an obligation is rated `raD' when it is in
payment default, or the obligor has filed for bankruptcy. The
rating is used when interest or principal payment are not made
on the date due even if the applicable grace period has not
expired, unless the ratings agency believes that such payments
will be made during such grace period.

BANCO SUQUIA: S&P Maintains `raD' Ratings on $36M Worth of Bonds
Standard & Poor's International Ratings, Ltd. Sucursal Argentina
maintains a default rating on US$36 million worth of corporate
bonds issued by Banco Suquia S.A., says Argentine securities
regulator, the CNV.

The action, which was taken based on the bank's financial status
as of June 30, 2004, affected the following bonds issued under
Simple Issue:

- US$23 million worth of "Obligaciones Negociables subordinadas,
autorizadas por AGO de fecha 19.12.97" due on November 7, 2005;

- US$13 million worth of "Obligaciones Negociables subordinadas
convertibles, autorizadas por AGE de fecha 19.9.97" due on May

CHACRAS DE PILARCHICO: Court Revises Insolvency Dates
Court no. 15 of Buenos Aires' civil and commercial tribunal
changed the schedule of key events in the Chacras de Pilarchico
S.A. reorganization case to these dates:

1. Claims Verifications Deadline - November 26, 2004
2. Submission of Individual Reports - February 8, 2005
3. Submission of the General Report - March 22, 2005
4. Informative Assembly - August 23, 2005

Mr. Luis Hugo Di Cesare serves as trustee on this case.

CONTACT: Mr. Luis Hugo Di Cesare, Trustee
         Viamonte 1336
         Buenos Aires

CLINICA PRIVADA: Undergoes Reorganization
Clinica Privada Bartolome Mitre S.R.L., a company operating in
Mar del Plata, secured approval to undergo reorganization from
court no. 9 of the city's civil and commercial tribunal. The
ruling allows the company to prepare a settlement plan for its
creditors in order to avoid a straight liquidation.

Infobae reports that Mr. Julio Cesar Alvarez will supervise the
proceedings as the court-appointed trustee. He will be reviewing
creditors' proof of claims until November 12, 2004. Next, the
trustee will submit the validated claims as individual reports
on December 28. The trustee will also provide the court with an
audit of the Company's accounting and business records on March
14, 2005.

The completed settlement plan will be presented to the Company's
creditors on August 5, 2005.

The city's clerk no. 8 assists the court on this case.

CONTACT: Clinica Privada Bartolome Mitre S.R.L.
         Avda Luro 4634/36/38
         Mar del Plata

         Mr. Julio Cesar Alvarez, Trustee
         Diagonal Juan Bautista Alberdi 2377
         Mar del Plata

HOSANTEL S.A.: Bankruptcy Process Begins By Court Order
Court no. 25 of Buenos Aires' civil and commercial tribunal
declared local company Hosantel S.A. "Quiebra," reports Infobae.
The declaration signals the Company's ability to proceed with
the bankruptcy process that will close with the liquidation of
its assets.

The court, assisted by clerk no. 49, appointed Mr. Carlos F.
Pisa Barros Garcia, as trustee who will authenticate proofs of
claim until November 22, 2004. Afterwards, the trustee will
prepare the individual reports based on the results of the
authentication and then submit these reports in court on
February 3, 2005. After these results are processed in court,
the trustee will then submit the general report on March 17,

CONTACT: Mr. Carlos F. Pisa Barros Garcia, Trustee
         Avda Corrientes 3150
         Buenos Aires

PAN AMERICAN ENERGY: S&P Issues Rating Update

The ratings on Argentina-based oil and gas producer Pan American
Energy LLC (PAE) (B/Stable/--) reflect its heavy concentration
in the Republic of Argentina, exposing the company to the risks
of operating under a highly uncertain and rapidly changing
economic and regulatory environment and a significant need for
capital expenditures to develop its large reserve base. The
ratings also incorporate the company's relatively large reserve
base, low operating costs, moderate financial policy, and a very
sound financial performance despite the Argentine crisis since

PAE's reserve base is large compared to that of other domestic
and international peers, with total proven reserves of 1,471
million barrels of oil equivalents (boe) (total certified
reserves amount to 3,557 million boe) located in Argentina and
Bolivia and 62% derived from natural gas as of December 2003.
The company has reported very competitive finding, development,
and acquisitions costs and very high production replacement
ratios. In the 2001-2003 period, the replacement ratio reached
426%, at a competitive cost of $1.62 per boe. Standard & Poor's
expects replacement costs to increase somewhat in the next few
years, as regional expansion increases bidding and acquisition
costs; replacement costs should nonetheless remain below the $5-
per-boe worldwide average for non-OPEC countries.

The company has a relatively long-lived reserve base, with
proved reserves representing about 21 years of production at
2003 levels. Production of 70 million boe in 2003, derived
mostly from Argentina and approximately 52% driven by oil
production, is relatively constrained by the economics of
natural gas projects, the country's gas pipeline, and storage
capacity. Standard & Poor's expects the company's capital
expenditures to be directed mostly toward developing the current
reserve base and increasing production levels. Additionally,
while Argentina will remain the core of the company's South
American operations, expansion throughout the southern cone
region is expected.

Standard & Poor's considers the regulatory and institutional
environment in Argentina, Bolivia, and Uruguay, the countries
where the company operates, as a major risk for PAE's business
position. Nevertheless, Standard & Poor's considers that the
strong financial profile, competitive cost structure, sound
management, and very important reserve base, which the company
has been bringing into production despite the challenging
conditions of the past few years, compensate those weaknesses at
the current rating category.

The hydrocarbon sector in Argentina is conditioned by political
decisions that might affect the sustainability of the industry's
profitability in the medium to long term. So far in 2004, the
Kirchner Administration has:

-- Modified many regulations jeopardizing the credit quality of
   the companies,

-- Curtailed natural gas exports to Chile (for political rather
   than technical reasons),

-- Proposed the creation of a new state-owned energy company
   ("Enarsa") that will operate in the hydrocarbon industry and
   increases uncertainties about the Government's willingness to
   interfere in the sector,

-- Pressured producers to invest in Infrastructure Projects
   (mostly pipelines), and

-- Pressured producers and refiners not to increase the price of
   retail refined products.

Standard & Poor's considers political interference as
significantly increasing the credit risk of companies in the
sector and a potential threat to the business profile of the
company in the short term. After the devaluation in 2002,
Standard & Poor's considered the performance of oil & gas
producers as linked to the international price of the crude oil
even after the government introduced a 20% export duty in the
context of increasing WTI prices since 2000. Nevertheless, the
developments seen in 2004--particularly the increase in export
duties to a variable percentage that could go up to 48%--have
resulted in a de facto delinkage of the domestic crude oil
market from the international market, which prevents the sector
from benefiting from the current momentum of the industry.
Furthermore, it is unlikely that duties will be lowered from the
current minimum of 20% in a lower WTI environment, which could
seriously affect the realization prices received by Argentine

However, even in this context, PAE has been able to show a
strong financial performance (helped by unusually high crude oil
prices), increase production, and maintain a moderate capital
structure with EBITDA interest coverage at a strong 16.4x for
fiscal 2003 (24.5x in the first half of 2004) from approximately
2.4x in fiscal 1998. Standard & Poor's expects PAE's coverage
ratios to remain strong, with funds from operations to total
debt above 20%, and EBITDA interest coverage of 4x throughout a
normal price cycle. The debt-to-capitalization ratio, at 16.0%
as of June 2004, is expected to remain at moderate levels, in
the range of 20%-30%.


PAE's liquidity position is strong for the rating category. As
of June 2004, short-term debt amounted to $276 million, while
cash and short-term investments accounted for $240 million.
Although PAE's financial flexibility is reduced by current
market conditions, its strong cash-flow generating ability (with
funds from operations covering 47.5% of total debt only in the
first half of 2004), boosted by the unusually high crude oil
price since March 2002, should help maintain liquidity in the
short to medium term. Nevertheless, Standard & Poor's expects
PAE to maintain an adequate level of liquidity in a scenario of
lower crude oil prices. As is common in most Latin American
countries, the company does not have committed credit lines.

Because the company can pace the development of its reserves,
Standard & Poor's does not expect PAE's liquidity position to be
significantly affected by the large capital expenditure
requirements. Accordingly, in a lower crude oil price scenario
and with uncertainties regarding natural gas realization prices,
Standard & Poor's expects PAE to reduce its investments,
resulting in lower growth rates. Nevertheless, at 2003
production levels, and considering its performance through the
cycle, PAE should be able to meet its financial obligations. In
the less likely scenario that the company decides to continue
investing heavily despite lower prices, its conservative
financial profile provides some room to finance increasing
indebtedness and still maintain an adequate financial profile.


The stable outlook reflects Standard & Poor's expectations that
PAE will maintain strong coverage ratios during the next few
years, even with lower crude oil prices in the international
markets. In addition, the current outlook incorporates some
additional intervention from the government, which nevertheless
does not completely jeopardize the profitability and cash flow
generation ability of the company.

PRIMARY CREDIT ANALYST: Pablo Lutereau, Buenos Aires (54) 114-

PITRIZZA S.A.: Files Petition to Reorganize
Pitrizza S.A. filed a "Concurso Preventivo" motion, reports
Infobae. The Company is seeking to reorganize its finances after
defaulting on its debt payments.

If approved by the Court, reorganization will allow the company
to formulate a settlement plan for its creditors in order to
avoid a straight liquidation.

The Company's case is pending before court no. 9 of Buenos
Aires' civil and commercial tribunal. Clerk no. 18 assists the
court on this case.

CONTACT: Pitrizza S.A.
         Florida 121
         Buenos Aires

TRIOMPHE S.A.: Secures Reorganization Approval From Court
Court no. 17 of Buenos Aires' civil and commercial tribunal
issued a resolution opening the reorganization of Triomphe S.A.,
says Infobae.

Mr. Jorge Juan Gerchkovich will supervise the reorganization
proceedings as trustee. He will accept creditors' proofs of
claims for validation until November 8.

After claims verification, the trustee will submit individual
reports for court approval on December 7. These reports will
serve as basis for the official list of creditors qualified to
receive post-liquidation distributions. The trustee will also
submit a general report in court on February 8 next year.

On May 2 next year, the Company will present a completed
settlement plan for the approval of its creditors.

CONTACT: Mr. Jorge Juan Gerchkovich, Trustee
         Lavalle 1882
         Buenos Aires

VIZA CONSTRUCCIONES: Court Issues Bankruptcy Ruling
Buenos Aires-based Viza Construcciones S.R.L. will now enter
bankruptcy after court no. 19 of the city's civil and commercial
tribunal declared it "Quiebra," says Infobae.

With assistance from clerk no. 38, the court named Ms. Irma
Aguilera as trustee. She will verify creditors' claims until
October 26, 2004.

Following claims verification, the trustee will submit the
individual reports, which were prepared based on the
verification results, in court on December 7, 2004. The general
report is due for submission on February 21, 2005.

The Company's bankruptcy case will close with the liquidation of
its assets to pay its creditors.

CONTACT: Viza Construcciones S.R.L.
         Estomba 3920
         Buenos Aires

         Ms. Irma Aguilera, Trustee
         Luis Saenz Pena 1690
         Buenos Aires

ZOOMP S.A.: Court Declares Company Bankrupt
Zoomp S.A. of Buenos Aires entered bankruptcy on orders from
court no. 9 of Buenos Aires' civil and commercial tribunal,
reveals Infobae.

Working with clerk no. 17, the court assigned Mr. Atilio Ruben
Mossi as trustee. He is to verify creditors' claims until
December 15, 2004. Creditors who fail to have their claims
validated before the deadline will be disqualified from
receiving any payments to be made after the Company's assets are

The individual reports, which are due on March 16, 2005, are to
be prepared upon completion of the verification process. The
court also requires the trustee to prepare a general report and
file it on May 10, 2005. This report contains a summary of the
results in the individual reports.

CONTACT: Mr. Atilio Ruben Mossi, Trustee
         Montevideo 527
         Buenos Aires

* ARGENTINA: Dismisses ICSID Claims
Argentina rejected Thursday the more than 30 claims filed
against it by mostly foreign-owned utility companies in the
World Bank's international arbitration tribunal (ICSID), reports
Dow Jones Newswires.

The claims stem from the government's 2002 decision to convert
utility rates from dollars into devalued pesos and freeze them.

"The attitude assumed by the claimant companies [is]. more
contradictory since, at signing their respective concession
contracts, they expressly agreed to the jurisdiction of the
Argentine justice system, renouncing [any] other forum in a
supposed conflict," the Economy Ministry said in its statement.

Dow Jones reports that the government is currently renegotiating
more than 60 public service contracts, a process whose original
deadline was year-end but is expected to extend into 2005.
Officials have signed a handful of bridge agreements with
certain sectors, including telecommunications and water. Under
these temporary accords, companies have agreed to suspend ICSID
claims, committed to specific investment levels and accepted a
continued freeze in rates until long-term contracts are reached.

The Economy Ministry's statement comes amid concerns, reported
in local media in recent weeks, that the bottleneck of
Argentina-related cases in the World Bank tribunal is prompting
officials to re-think the system.


FOSTER WHEELER: Board Member Resigns
Foster Wheeler Ltd. (OTCBB: FWLRF) announced that, effective
Thursday, Harry P. Rekas has resigned from the Company's board
of directors for personal reasons.

"The board and I were looking forward to working with Harry and
regret that he will be unable to serve with us," said Raymond J.
Milchovich, chairman, president and CEO. "We wish him the best
going forward."

Foster Wheeler Ltd. is a global company offering, through its
subsidiaries, a broad range of design, engineering,
construction, manufacturing, project development and management,
research and plant operation services. Foster Wheeler serves the
refining, upstream oil and gas, LNG and gas-to-liquids,
petrochemical, chemicals, power, pharmaceuticals, biotechnology
and healthcare industries. The corporation is based in Hamilton,
Bermuda, and its operational headquarters are in Clinton, New
Jersey, USA.

CONTACT: Foster Wheeler Ltd.
         Mr. Maureen Bingert
         Phone: 908-730-4444
         Other Inquiries
         Phone: 908-730-4000

         Web Site:


VASP: Workers Seek Help From Government
In an attempt to rescue Brazilian airline Vasp, which is now on
the verge of a collapse, employees of the country's fourth-
largest airline appealed to the government for help.

According to an Airline Industry Information report, the
employees went to the country's presidential palace in Brasilia
to present a petition demanding that the government reorganize
debt with the state airport authority Infraero and the state
controlled oil company Petrobras which supplies the airline's

The petition, the employees claimed, was signed by 7,000 of the
airline's 9,000 workers.

Vasp's operating license was put into jeopardy when Infraero
demanded that the airline clear its debt by 13 October 2004. But
it now appears that the airline has bought itself more time by
paying off a fraction of the debt.

The carrier hasn't divulged the amount of its debt, but analysts
believe the figure is about BRL2 billion (US$714 million).

Early this month, two Brazilian subsidiaries of General Electric
Co. that provide maintenance to Vasp called for the company's
bankruptcy. GE Celma and GE Varig Engine Service petitioned a
local bankruptcy judge to declare Vasp insolvent.

A court ruling in favor of the GE subsidiaries, owed about
US$3.2 million, could lead to the liquidation of Vasp and
distribution of assets to creditors.

Vasp, which was privatized in 1990, recently announced it is
firing 380 workers from its 5,100-employee work force.

D O M I N I C A N   R E P U B L I C

AES DOMINICANA: To Get $5M Fuel Payment From Energy Commission
National Energy Commission agreed to pay AES-Dominicana US$5
million in order for them to purchase fuel for their generators
in Boca Chica, DR1 Daily News reports, citing National Energy
Commission chief Ruben Montas.

The payment, which was to be given on Oct 15, was agreed upon
after a meeting between officials of AES-Dominicana and the
National Energy Commission, together with Finance Minister
Vicente Bengoa.

AES-Dominicana President, Julian Nebreda, is hopeful that there
will be a more permanent arrangement to keep the generator
supplied with fuel.

* DOMINICAN REPUBLIC: Negotiates $250M Loan With Spain
High-ranking Dominican Republic government officials are in
Madrid to negotiate with the Spanish government a US$250-million
bridge loan, DR1 Daily News reports, citing Mr. Franco Uccelli,
who covers the Dominican Republic for the Bear Stearns brokerage

According to Uccelli, the loan would be used to offset part of
the US$400 million in external debt service obligations it must
confront before year-end.

In addition to negotiating a bridge loan from Spain, the
Dominican government will continue to pursue a restructuring of
its commercial debt, making specific reference to the country's
global bonds, says Uccelli.

"Bottom line: We believe that successfully negotiating a US$250-
million credit from Spain would not reduce the likelihood of the
DR doing a debt restructuring with bondholders. Indeed, the
opposite may be true if Spain chooses to use a bond
restructuring as a quid pro quo to extend the DR the requested
bridge loan."


AEROMEXICO: Fitch Affirms Senior Unsecured Ratings
Fitch Ratings has affirmed the senior unsecured local currency
and foreign currency ratings of Aerovias de Mexico, S.A. de C.V.
(Aeromexico) at 'B+'. The Ratings Outlook is Stable.

The ratings are supported by the company's solid business
position in both domestic and international routes, strong
liquidity, and low refinancing risk. The ratings are constrained
by high operating leverage and industry-related risks, including
revenue volatility, high fixed costs, fuel price volatility, and
competitive threats.

Aeromexico's revenues and profitability have recovered over the
past several months as a result of increased traffic in
international, as well as in domestic routes. Passenger load
factors have improved despite capacity expansions. For the first
six months of 2004, total revenues increased by 13.7%. Despite
historically high fuel prices, costs increased only 3.5%. With
fuel costs accounting for more than 20% of operating expenses,
high jet fuel prices have offset part of the margin gains, but
the company has handled a portion of the increased fuel costs
through increased passenger fares and jet fuel surcharges.

For the first six months of 2004, EBITDA remained below
breakeven levels as it has been over the past three calendar
years. With expected continued increases in passenger demand for
the second half of 2004, EBITDA should be at or slightly above
breakeven levels for 2004. The ratio of EBITDAR to interest
expense plus rents was 0.7 times (x) during the first six months
of 2004, compared with 0.5 times (x) for 2003.

Aeromexico is in the process of modernizing its aircraft fleet.
During 2004, the company has continued to replace its fleet of
DC-9 aircraft, which has an average age of 25 years, with 15 new
Boeing 737s financed with a combination of sale-leasebacks and
operating leases. The aircraft renewal plan will help the
company lower fuel consumption and will not affect on-balance-
sheet debt levels. During 2004, capacity will increase by
approximately 7% in international routes (driven by the
introduction of new routes to Europe and South America) and in
domestic routes by approximately 5%. The company's staggered
lease expiration schedule provides flexibility to adjust
capacity in the event of further demand shocks. Despite
increases in capacity, profitability will improve in 2004,
driven by continued operating costs-cuts, higher load factors,
and fuel efficiency gains on new planes, which should allow
Aeromexico to reach an EBITDAR to interest expense plus rents of
1 times (x) by the end of 2004.

Aeromexico's liquidity is solid relative to its peers, which
provides a strong cushion against potential demand or fuel price
shocks. The company had an unrestricted cash position of
approximately US$125 million at June 30, 2004. This compares
with on-balance sheet debt of US$120 million for the same
period, comprising US$57 million of capital leases and US$63
million of bank loans, of which US$20 million are related to
sales and leaseback transactions from fleet renewal. Refinancing
needs over the next year are US$51 million. The company intends
to repay US$20 million in short-term debt with proceeds from
sale and leaseback transactions related to aircraft acquisition.

Aeromexico is a full service carrier and an operating subsidiary
of Cintra, S.A. de C.V. (Cintra). Cintra, which is 88% owned by
IPAB, a government institution, was formed in 1996 following the
financial restructuring of Mexicana de Aviacion S.A. (Mexicana)
and Aeromexico to consolidate the equity holdings of the two
airlines. In the domestic passenger market, Aeromexico is the
leader with a 38% market share, where it competes primarily with
two other carries carriers. In international routes, Aeromexico
has the second-largest market share, with 16% of the market
after Mexicana. Aeromexico offers passenger service to 32
destinations within Mexico and 19 international destinations
with a fleet of 70 aircraft. The company is a member of the
SkyTeam alliance and maintains code-share agreements with
several airlines including Delta Airlines, Continental Airlines,
Air France, Alitalia, Northwest, and KLM.

SATMEX: Satmex 5 Now Back in Position
Satmex 5, the satellite operated by Mexico's Satelites Mexicanos
that suffered positioning problems Wednesday, is now back in
full service, reports Business News Americas.

The Satmex 5 satellite, located at 116.8 degrees west, fell out
of position early Wednesday, cutting connectivity for TV
broadcasters, radio stations and direct to home internet
networks. But the problem was resolved by Wednesday night,
Satmex said, without giving any assurance that the same event
would not happen again.

No financial services or telecoms operators were affected by the
event, according to Lauro Gonz lez, general director of Satmex.

"It is necessary to [clarify] that the satellite did not cease
operating, did not leave orbit and only degraded its service.
Its components and operating capacity remain intact," Gonz lez
was reported as saying.

Satmex is currently trying to reach a debt restructuring
agreement with creditors. In August, a group of investors
proposed buying the company, which is currently carrying over
US$715 million in debt. A US$188-million debt payment to the
Mexican government is due in December.

TFM: S&P Issues Update on Kansas City Southern's Rating

The ratings on Kansas City Southern reflect its aggressive
financial profile and uncertainties related to its strategically
important investment in TFM S.A. de C.V., somewhat offset by the
favorable risk characteristics of the U.S. freight railroad
industry and the company's strategically located (albeit limited
in size) rail network.

Kansas City Southern is a Class 1 (major) railroad, but it is
significantly smaller and less diversified than its peers. Its
core rail operations cover a 10-state region that includes
Missouri, Kansas, Arkansas, Oklahoma, Mississippi, Alabama,
Tennessee, Louisiana, Texas, and Illinois. Because of the
location of its rail network, Kansas City Southern's primary
customers are companies in the chemical, petroleum,
agricultural, mineral, and forest products industries, as well
as electric utilities and automotive/intermodal customers.
Kansas City Southern is currently experiencing solid revenue
growth. It is also benefiting from improved operating efficiency
and service metrics as a result of a new transportation computer
system that is helping the company manage its rail operations
more efficiently. However, the company is also contending with
increased fuel and compensation and benefit costs. As a result,
its operating ratio (operating expenses, including depreciation,
as a percentage of revenues; 87.3% in the second quarter of
2004) remains weaker (higher) than most of the other Class 1
railroads. Funds from operations to debt (adjusted for operating
leases) are currently in the midteen percentage area. Ratings
assume that cash flow protection measures will stay near current
levels over the near to intermediate term.

Since the late 1990s, Kansas City Southern has maintained an
ownership interest in the main privatized Mexican railroad
(TFM). The economic ownership interest in TFM is currently split
as follows: Kansas City Southern, 37.3%; Grupo TMM S.A.
(CC/Negative/--), 38.8%; and the Mexican government, 23.9%. In
April 2003, Kansas City Southern announced a series of
agreements with TMM under which Kansas City Southern was to gain
control of TFM and the Texas Mexican Railway Co. (Tex-Mex; a
short-line railroad owned by TFM that links the TFM system with
Kansas City Southern trackage and the broader U.S. railroad
system). However, TMM's shareholders voted against the
transaction in August 2003, despite the fact that the
controlling shareholder is also the chairman and chief executive
of TMM. The two companies entered into arbitration proceedings
earlier this year. In March 2004, the arbitrator ruled in Kansas
City Southern's favor, finding that the agreement entered into
by TMM and Kansas City Southern remains in force and is binding.
In April 2004, Kansas City Southern and TMM agreed not to move
forward with the second phase of the arbitration proceeding
(which would determine remaining issues, including remedies and
damages due Kansas City Southern). In September 2004, the two
companies announced that they had agreed to extend the previous
deadline under the April 2003 acquisition agreement to June 15,
2005, to provide additional time to complete a transaction. In
October 2004, Mexico's Foreign Investment Commission gave its
approval for the transaction to go forward. The approval will
remain valid until October 2005.

Under the original proposal, TMM Multimodal (a subsidiary of
TMM) was to receive 18 million shares (approximately 22%) of
NAFTA Rail (the name under which the merged companies would
operate), $200 million in cash, and a potential incentive
payment of between $100 million and $180 million, based on the
resolution of certain future contingencies. The contingencies
include TFM's long-running value-added-tax (VAT) dispute with
the Mexican government. The VAT dispute, which dates back to the
privatization of TFM in 1997, could result in a significant
payment to TFM. During 2003, Kansas City Southern completed a
preferred stock issuance that raised $200 million, which the
company planned to use to fund the cash portion of the TFM deal.
In August 2004, Kansas City Southern completed the purchase of
51% of Mexrail Inc. (which owns the Tex-Mex railroad) from TFM.
This deal mirrors a deal that was originally completed in May
2003 but subsequently unwound at TFM's request.


Liquidity is somewhat constrained. At June 30, 2004, Kansas City
Southern had about $156.5 million of cash and nothing
outstanding under its revolving credit facility. The new bank
agreements include limitations on the incurrence of additional
debt, asset sales, mergers, and restricted payments. In
addition, they contain various financial covenants, including
minimum interest expense coverage and leverage ratios.

Adding to financial risk and uncertainty in the near-to-
intermediate term is the Mexican government's right to exercise
a put of its ownership interest in TFM to Grupo TFM (TFM's
holding company). If Grupo TFM does not purchase the
government's interest, TMM and Kansas City Southern would be
obligated to purchase the government's interest. If TMM could
not purchase its pro rata share, Kansas City Southern would be
obligated to pay the total purchase price that, measured as of
June 30, 2004, was about $463.8 million. TMM is currently
experiencing significant liquidity pressures.


The credit facility, which consists of a $150 million term loan
maturing in 2008 and a $100 million revolving credit facility
maturing in 2007, is rated two notches above the corporate
credit rating, indicating high expectation of full recovery of
principal in the event of default. Amortization of the term loan
during the final year occurs in equal quarterly amounts, subject
to amortization of approximately 1% per year prior to the final
year. The collateral package for the credit facility consists of
all shares of capital stock and intercompany debt of the
borrower and each present and future domestic subsidiary; as
well as all property and assets, real and personal, including
machinery and equipment, inventory, accounts receivable, owned
real estate, leaseholds, intangibles, and cash. The current
value of the collateral pledged to the credit facility is
believed to be higher than the net book value.

Standard & Poor's evaluated the recovery prospects for secured
lenders under a distressed scenario using a discrete asset value
approach. This methodology incorporates downward adjustments to
the values of accounts receivable and inventory, as well as to
property, plant, and equipment, to reflect the stresses inherent
in a default scenario. Property (mostly track) comprises the
bulk of the collateral pool. The bank loan rating incorporates
Standard & Poor's expectation that the collateral package will
retain significant value in the event of a default or bankruptcy
as Kansas City Southern's strategically located track and
facilities would be attractive to potential buyers, and that
there is a high expectation of full recovery of principal
(100%), given the pledged collateral pool.


The outlook is negative. Kansas City Southern's relationship
with its affiliate, TFM, is strained at this time, and the
status of its proposal to take control of TFM is uncertain.
Ratings incorporate room for the company to pay its portion of
the put option or for the company to complete the TFM
transaction as originally proposed. However, if Kansas City
Southern is forced to pay the full amount of the put, or if
financial performance at Kansas City Southern or TFM weakens
from expected levels, or if the TFM deal goes forward under more
onerous terms, ratings could be reviewed for a downgrade.

PRIMARY CREDIT ANALYST: Lisa Jenkins, New York (1) 212-438-7697;


LANPERU: Suspends All Flights On Court Order
Peruvian airline LanPeru SA, a unit of Chile's Lan, said
Thursday it will ground flights from Friday to comply with a
government order.

The order follows a ruling handed down by a judge in the
southern city of Arequipa, Eloy Zamalloa, saying the airline
doesn't meet local ownership regulations.

LanPeru will stop flights to 11 local and 11 international
destinations from Friday, said spokeswoman Monica Verastegui,
adding that the company will appeal the decision.

"We are confident that this decision will be overturned in light
of our arguments and the evidence that we have presented,"
LanPeru's President Emilio Rodriguez-Larrain said at a press

LanPeru, Peru's second largest airline, had earlier offered to
post financial guarantees to allow it to keep flying while it
appealed the suspension.

But the Arequipa-based judge said he wouldn't review his
decision before the government agency published the order
suspending the flights.

Lan told Chile's securities regulator SVS that it expects to
resume operations in five days and said the impact won't be
significant on the company's results.


PARMALAT URUGUAY: Dutch Bank Sues Parent in US
Dutch banking group ABN Amro last week filed a lawsuit in the US
against bankrupt Italian food group Parmalat, seeking repayment
of a US$10-million loan plus interest, reports Europe
Intelligence Wire.

The loan was issued in March 2003 to Parmalat's Uruguay
affiliate, Wishaw Trading, a shell company, and was guaranteed
by Parmalat.

In addition, the bank has also asked the Southern District Court
of New York not to grant Parmalat bankruptcy protection in the
US, which would allow its assets to be protected for use in the
group's restructuring. The bank noted that Wishaw has not been
included in Parmalat's insolvency procedures in Italy.

PARMALAT: Administrator Accepts Nextra Settlement Plan
The Extraordinary Commissioner communicated Thursday, with the
approval of the Minister of Production Activities and with a
favorable opinion received from the Surveillance Committee of
the Administration, that he has accepted the settlement proposal
made on October 6, 2004 by Nextra Investment Management -
societa di gestione del risparmio S.p.A.

The consideration of EUR160 million was received Thursday and
will be divided between the relevant companies, once the
Surveillance Committee's views have been received and in
agreement with the Ministry of Production Activities.


CITGO: Commences Cash Tender Offer for 11% Senior Notes
CITGO Petroleum Corporation announced Thursday that it has
commenced a cash tender offer (the "Offer") for any and all of
its outstanding $550,000,000 11% senior notes due 2011 and a
solicitation of consents (the "Consent Solicitation") to
eliminate certain restrictive covenants from the indenture
governing the 11% notes. The Offer and Consent Solicitation are
being made pursuant to an Offer to Purchase and Consent
Solicitation Statement, dated October 8, 2004.

"In 2004 CITGO's operating performance has been excellent,
producing a very strong cash flow for the company," stated Luis
Marín, CITGO's President and CEO. "Now we are in a position to
reduce our overall debt and the associated interest expense by
initiating this cash tender offer."

The total consideration will be determined by pricing the 11%
notes using standard market practice to the First Call date at a
fixed spread of 85 basis points over the bid side yield on the
2.625% Treasury Note due November 15, 2006, determined at 2:00
p.m. New York City time on October 20, 2004 (the "Pricing Date")
by reference to the Bloomberg Pricing Monitor. Holders who
tender and deliver their consents to the proposed amendments to
the indenture governing the 11?% notes by 5:00 p.m. New York
City time on October 19, 2004 (the "Consent Date") will be
eligible to receive the total consideration, which includes a
consent payment equal to $30 per $1,000 principal amount of 11?%
notes tendered. Holders who tender after the Consent Date but by
November 5, 2004 (the "Expiration Date") will be eligible to
receive the tender offer consideration, which equals the total
consideration less the consent payment.

The Offer is subject to, and conditioned upon, the receipt by
CITGO of proceeds from an offering of its debt securities under
a new financing. This financing condition is in addition to
other conditions set forth in the Offer to Purchase and Consent
Solicitation Statement.

We expect to pay holders who validly tender their 11% notes by
the Consent Date promptly following the satisfaction of the
financing condition. We expect to pay holders who validly tender
and do not withdraw their 11% notes after the Consent Date, but
by the Expiration Date, promptly following the Expiration Date.

Lehman Brothers Inc. is the Dealer Manager and Solicitation
Agent, and D.F. King & Co., Inc. is the Information Agent, in
connection with the Offer and Consent Solicitation. Requests for
information should be directed to Lehman Brothers Inc. at (212)
528-7581 (call collect) or (800) 438-3242 (toll free). Requests
for documents should be directed to D.F. King & Co., Inc. at
(212) 269-5550 (call collect) or (800) 290-6431 (toll free).

This press release is not an offer to purchase or the
solicitation of an offer to sell with respect to the 11?% notes.
The offers are being made solely by the Offer to Purchase and
Consent Solicitation Statement.

CITGO Petroleum Corporation is a leading refining and marketing
company based in Houston, Texas, with approximately 4,000
employees and annual revenues of approximately $25 billion.
CITGO's ultimate parent is Petroleos de Venezuela, S.A. (PDVSA),
the national oil company of the Bolivarian Republic of Venezuela
and its largest supplier of crude oil.

CITGO operates fuels refineries in Lake Charles, Louisiana,
Corpus Christi, Texas, and Lemont, Illinois, and asphalt
refineries in Paulsboro, New Jersey and Savannah, Georgia. CITGO
has long-term crude oil supply agreements with PDVSA for a
portion of the crude oil requirements at these facilities. CITGO
is also a 41-percent participant in LYONDELL-CITGO Refining LP,
a joint venture fuels refinery located in Houston, Texas.
CITGO's interests in these refineries result in a total crude
oil capacity of approximately 865,000 barrels per day.

Serving nearly 14,000 branded, independently owned and operated
retail locations, CITGO is also one of the five largest branded
gasoline suppliers within the United States.

CONTACT: Investor Relations Contact
         Ms. Kate Robbins
         Public Affairs Manager
         Phone: (832) 486-5764

         Web Site:

HAMACA: Crude-Upgrading Facility Undergoing Start-up Procedures
Hamaca, a heavy crude project in the Orinoco tar belt in Eastern
Venezuela, is currently undergoing start-up procedures for a
crude-upgrading facility, Dow Jones reports, citing a spokesman
for the project.

The spokesman expects the $3.8-billion project to "gradually"
reach its 180,000-barrel-a-day capacity as the unit comes

ChevronTexaco (CVX), which has a 30% stake in Hamaca, said
earlier that the project would ramp up production during the
fourth quarter of this year.

Hamaca, whose other shareholders include ConocoPhillips (40%)
and state oil company PdVSA (30%), currently produces 120,000
b/d of heavy oil, which is blended with lighter grades to make
it marketable.

SIDOR: To Vote on New Offer
Venezuelan iron and steel manufacturer Sidor's workers' union
was scheduled to vote last Friday (Oct. 15) to determine if
employees approve the company's latest offer, Business News
Americas reports, citing a Sidor official.

In September, Sidor announced that it has reached an agreement
with the Suttis workers' union for the last round of collective
bargaining in which all the clauses were discussed and agreed

Agreements reached at the time include 26 months of guaranteed
job stability for the workers, a monthly pay raise of 13,000
bolívares (US$6.70) for the duration of the two-year contract, a
6,500-bolívar signing bonus and a complete retirement plan, with
improvements in the company health system. The agreement also
includes improved pay rates for night shift and overtime.

According to the official, the latest offer maintains the same
proposals as the previous one.

"The company basically didn't negotiate - it only returned to
the same agreements discussed in September," he said.

Sidor is 60%-owned by the Amazonia consortium made up of Mexican
company Hylsamex, the Techint organization, Brazil's Usiminas
and Venezuelan company Sivensa.

The company plants are in Puerto Ordaz city in eastern
Venezuela's Bolívar state.


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 America is a daily newsletter
co-published by Bankruptcy Creditors' Service, Inc., Fairless
Hills, Pennsylvania, USA, and Beard Group, Inc., Frederick,
Maryland USA. John D. Resnick, Edem Psamathe P. Alfeche and
Lucilo Junior M. Pinili, Editors.

Copyright 2004.  All rights reserved.  ISSN 1529-2746.

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