TCRLA_Public/050103.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, January 3, 2005, Vol. 6, Issue 1



COMPLEJO JAI ALAI: Court Declares Company Bankrupt
CRESUD: Convertible Notes Holder Exchanges Debt for Equity
IRSA: Note Conversion Reduces Indebtedness
JOYERIA RICCIARDI: Files Petition to Reorganize
MORON METALES: Court Rules for Liquidation

PEOPLE S NETWORK: Bankruptcy Initiated via Court Order
TOM DISTRIBUIDORA: Liquidates Assets to Pay Debts


C&W BARBADOS: Forecasts Negative Impact if FTC Nixes Application


BANCO SANTOS: Discloses Restructuring Plan
BNDES: S&P Releases Report on Ratings
UNIBANCO: Board OKs Stock Dividend Payment


CORPORACION DURANGO: Creditors Approve Reorganization Plan
SATMEX: Misses $188M Debt Payment to Government


PARMALAT FINANZIARIA: Citigroup Seeks Approval to Sue LatAm Arms


UTE: Demand For First Trust Deed Issue Exceeds Expectations
UTE: Calls for Brazilian Bids for 2-Month Power Supply


PDVSA: Reaches New Collective Labor Accord With Unions
PDVSA: Invests $3.7B on Public Projects

     - - - - - - - - - -


COMPLEJO JAI ALAI: Court Declares Company Bankrupt
Judge Carrega of the civil and commercial tribunal court of
Buenos Aires declared local company Complejo Jai Alai S.R.L.
"Quiebra", relates local daily La Nacion. The court approved the
bankruptcy petition filed by Mr. Hector Nordheim, to whom the
company failed to pay debts amounting to US$31,829.31.

The Company will undergo the bankruptcy process with Mr.
Francisco Cano as its trustee. Creditors are required to present
their proofs of claim to the trustee for verification before
March 18, 2005. Creditors who fail to have their claims
authenticated by the date specified will be disqualified from
the payments that will be made after the Company's assets are
liquidated at the end of the bankruptcy process.

Clerk No. 8 assists the court on the case.

CONTACT: Complejo Jai Alai S.R.L.
         Avda Teniente General Donato Alvarez 750
         Buenos Aires

CRESUD: Convertible Notes Holder Exchanges Debt for Equity
Cresud S.A.C.I.F. y A. (Nasdaq: CRESY - News; BCBA: CRES), a
leading Argentine producer of agricultural products, informed
the Bolsa de Comercio de Buenos Aires and the Comision Nacional
de Valores that a holder of Company's Convertible Notes
exercised its conversion rights. Hence, the financial
indebtedness of the Company shall be reduced in US$363,974 and
an increase of 716,766 ordinary shares face value pesos 1 (V$N
1) each was made. The conversion was performed according to
terms and conditions established in the prospectus of issuance
at the conversion rate of 1.96928 shares, face value pesos 1 per
Convertible Note of face value US$1. As a result of that
conversion the amount of shares of the Company goes from
152,788,284 to 153,505,050. On the other hand, the amount of
registered Convertible Notes is US$41,875,863.

CONTACT: Mr. Gabriel Blasi - CFO
         Phone: +011-54-11-4323-7449
         Web Site:

IRSA: Note Conversion Reduces Indebtedness
Inversiones y Representaciones Sociedad Anonima informed the
Bolsa de Comercio de Buenos Aires and the Comision Nacional de
Valores that a holder of the Company's Convertible Notes has
exercised its conversion right. Hence, the financial
indebtedness of the Company shall be reduced in US$ 135,884 and
an increase of 249,328 ordinary shares face value pesos 1 (V$N
1) each was made. The conversion was performed according to
terms and conditions established in the prospectus of issuance
at the conversion rate of 1.83486 shares, face value pesos 1 per
Convertible Note of face value US$ 1. As a result the Company's
outstanding shares will go from 259,628,044 to 259,877,372.
Concurrently, the amount of registered Convertible Notes is US$

CONTACT: IRSA Inversiones y Representaciones S.A.
         Phone: 541-342-7555
         Bolivar 108
         Buenos Aires

JOYERIA RICCIARDI: Files Petition to Reorganize
Joyeria Ricciardi SACIyA filed a "Concurso Preventivo" motion,
reports La Nacion. The Company is seeking to reorganize its
finances following cessation of debt payments since Oct. 14,
2004. The Company's case is pending before Court No. 6, under
Judge Cirulli, who is assisted by Clerk No. 12 Dr. Davila.

CONTACT: Joyeria Ricciardi SACIyA
         Marcelo Torcuato de Alvear 512
         Buenos Aires

MORON METALES: Court Rules for Liquidation
Buenos Aires Court No. 24 ordered the liquidation of Moron
Metales S.A.C.I.M.M. after the company defaulted on its
obligations, Infobae reveals. The liquidation pronouncement will
effectively place the company's affairs as well as its assets
under the control of Mr. Eduardo Miguel Echaide, the court-
appointed trustee.

Mr. Echaide will verify creditors' proofs of claim until Feb.
25, 2005. The verified claims will serve as basis for the
individual reports to be submitted in court on April 8, 2005.
The submission of the general report follows on May 20, 2005.

Clerk No. 47 assists the court on this case, which will end with
the disposal of the company's assets in favor of its creditors.

CONTACT: Mr. Eduardo Miguel Echaide
         Sanchez de Loria 155
         Buenos Aires

PEOPLE S NETWORK: Bankruptcy Initiated via Court Order
People S Network Argentina S.A. will enter bankruptcy protection
after Buenos Aires Court No. 9, with the assistance of Clerk No.
18, ordered the company's liquidation. The bankruptcy order
effectively transfers control of the company's assets to the
court-appointed trustee who will supervise the liquidation

Infobae reports that the court selected Mr. Pedro Luis Santa
Maria as trustee. He will be verifying creditors' proofs of
claim until March 4, 2005.

Argentine bankruptcy law requires the trustee to provide the
court with individual reports on the forwarded claims and a
general report containing an audit of the company's accounting
and business records. The individual reports will be submitted
on April 15, 2005 followed by the general report, which is due
on May 30, 2005.

CONTACT: Mr. Pedro Luis Santa Maria, Trustee
         Viamonte 1785
         Buenos Aires

TOM DISTRIBUIDORA: Liquidates Assets to Pay Debts
Tom Distribuidora S.R.L. will begin liquidating its assets
following the pronouncement of the city's Court No. 1 that the
company is bankrupt, Infobae reports.

The bankruptcy ruling places the company under the supervision
of court-appointed trustee, Sara Rey de Lavople. The trustee
will verify creditors' proofs of claim until Feb. 25, 2005. The
validated claims will be presented in court as individual
reports on April 11, 2005.

Ms. De Lavolpe will also submit a general report, containing a
summary of the company's financial status as well as relevant
events pertaining to the bankruptcy, on May 23, 2005.

The bankruptcy process will end with the disposal company assets
in favor of its creditors.

CONTACT: Ms. Sara Rey de Lavolpe, Trustee
         Cerrito 1136
         Buenos Aires


C&W BARBADOS: Forecasts Negative Impact if FTC Nixes Application
Cable and Wireless (Barbados Limited) warned that the country
could lose out on significant inflows of direct foreign
investment if the Fair Trading Commission (FTC) again refuses to
grant its application for rate adjustment, The Barbados Advocate

According to the company, the denial has the potential to delay
the liberalization of the telecommunications market in Barbados;

"It will hinder and delay new market entrants who may wish to
compete in the Barbados telecommunications sector;

"Such delay is potentially detrimental to the country and to

"It will unfairly deny the applicant the right to make a fair
return on its investment in the domestic market; and

"It will act as a disincentive to investment in the domestic
network by both Cable and Wireless and new market entrants.

Cable and Wireless earlier applied to the FTC for a rate
adjustment to the domestic line rate for business and
residential customers. It also sought the introduction of flat
rate charging plans and usage-based rates for domestic calls
made from fixed lines, and such further or other relief. It was
also proposed that the rate adjustment be made in two phases,
six months apart.

But the FTC subsequently ruled against the application, citing
lack of sufficient information, inadequate documentation to
support certain aspects of the company's case, and saying that
its Enhanced Allocation Model (EAM) designed to ascertain was
not useful.

The regulators also said that no alternative rate structure was

Cable and Wireless appealed the decision and has subsequently
submitted a 158-page review, which deals with all the issues

FTC is expected to give its verdict in a matter of weeks or even


BANCO SANTOS: Discloses Restructuring Plan
Brazil's Banco Santos, which was intervened by the Central Bank
on Nov. 14, presented a proposal to reopen for business under
government supervision and asked creditors and depositors to
keep funds in the bank.

The bank's owner, Edemar Cid Ferreira, wants the central bank to
hand over control of the bank to a special management team that
could then negotiate a "market solution" with creditors. The
owner has hired consulting firm Valora Participacoes SA to
prepare the restructuring process.

The plan would also require customers to agree to leave their
money untouched in the bank for 180 days, after which the
special management team would take over.

The Central Bank froze all Banco Santos accounts after the
intervention, but authorized customers last week to withdraw up
to BRL20,000 ($1=BRL 2.69).

A central bank spokesman said the monetary authority will
analyze the proposal and any decision would be taken in
conjunction with the Banco Santos's owner.

A creditor group of Banco Santos showed a positive reaction to
the restructuring plan.

"One should support any initiative to reach an agreement because
a liquidation process would be draw-out and painful," said Jairo
Saddi, a lawyer representing a group of creditors.

Saddi said that the creditors are willing to make sacrifices to
reach an agreement that avoids liquidation but a condition for
such an agreement is that Edemar Cid Ferreira also makes a
sacrifice and uses his own money to compensate creditors.

BNDES: S&P Releases Report on Ratings

  Local currency                             BB/Stable/--
  Foreign currency                           BB-/Stable/--

Counterparty Credit
  Local currency                             BB/Stable
Counterparty Credit
  Foreign currency                           BB-/Stable
  Senior unsecured
    Foreign currency                         BB-

Major Rating Factors

    * The Federative Republic of Brazil's direct, full ownership
    * The bank's key public-policy role in Brazil
    * A steady liquidity inflow and a favorable liability

    * The rating is constrained by Brazil's sovereign risk
    * Potential asset quality risk due to concentration

The ratings on Banco Nacional de Desenvolvimento Economico e
Social (BNDES) reflect the demonstrated support of the
government of the Federative Republic of Brazil (LC:
BB/Stable/B; FC: BB-/Stable/B), underpinned by its direct
ownership of 100% of BNDES' share capital. Although there is no
timely government guarantee on BNDES' obligations, strong
sovereign support is demonstrated by government funding and
capitalization policies-including periodic capital increases and
stable, constitutionally mandated funding.

As Brazil's largest development bank, BNDES has a key public
policy role in the execution of the government's economic
policy. It marshals domestic and multilateral funds into
productive long-term investments; and provides key sectors,
underdeveloped regions, and exporters with low-cost financing.
The bank's key public-policy role has been underscored by
various policy decisions, such as providing interim financing to
utility companies following the 2000 electricity crisis, and
extending trade credit as international trade lines dried up in

BNDES enjoys a steady liquidity inflow and a favorable liability
structure. About 60% of BNDES' funding is constitutionally
mandated and derived from two public-worker insurance funds.
Most of BNDES' funding is long-term, including a high portion of
nondated liabilities.

The ratings on BNDES, however, are constrained by Brazil's
sovereign risk. BNDES relies upon public financing and is
governed by public policy. BNDES' risk-weighted capital ratio
was 17% in June 2004, above the 11% statutory minimum and in
line with the top-tier commercial banks in the system.
Nevertheless, given BNDES' riskier business, long-term lending,
and equity investments, maintaining a higher capital base
reflects prudent management.

The stable outlook on the long-term foreign currency
counterparty credit rating on BNDES is based on that on the
Federative Republic of Brazil. All things being equal, the
ratings on the bank are expected to move in tandem with those on
the sovereign. BNDES' high economic and public-policy importance
makes the risk of default on its obligations equal to the risk
of sovereign default.

Established in 1952 as a federal agency, BNDES became a
government-owned enterprise subject to private company law with
its own share capital in 1971. Although there are other
development banks in Brazil, BNDES is the largest supplier of
long-term debt and equity financing to Brazilian private- and
public-sector enterprises. The bank is key in implementing the
government's economic strategy, which places particular emphasis
on private-sector investment projects and public-sector
infrastructure projects. BNDES provides below-market borrowing
rates for priority industries and impoverished regions.

BNDES' lending strategy aims to increase private-sector
production and competitiveness in the Brazilian economy. An
update of the bank's strategic plan that comes into effect in
2005 is underway. BNDES has highlighted the following key areas
for investment:

    * Infrastructure: transportation, energy,
    * Exports;
    * Modernization of production sectors;
    * National technology;
    * Small and midsize enterprises, especially those oriented
      toward exports;
    * Reduction of economic regional imbalances via small
      businesses; and
    * Continental integration in South America.

The bank's policy is to promote private investment in Brazil;
the share of final lending/debentures that goes to the private
sector surpasses 85%. Most funds lent to the public sector have
private enterprise as their final beneficiary or are aimed at
restructuring a private-sector entity. To enhance the risk
profile through diversification of its loan portfolio, BNDES
provides finance for projects undertaken by foreign companies
and Brazilian subsidiaries.

BNDES' funding base is stable and derives from domestic sources.
About 80% of the bank's funding is from domestic sources, with
two-thirds of total funding from two government programs, PIS-
PASEP and FAT, as mandated by Brazil's constitution. The PIS-
PASEP fund consists of payroll contributions made before 1988,
and funds redeemable in cases of employee retirement,
disability, or death. The bank manages 90% of PIS-PASEP's
invested resources. While PIS-PASEP has received no new
resources from contributions since 1988, its account with BNDES
continues to grow, as investment returns outweigh payments of
obligations. PIS-PASEP funds are projected to be depleted in 18

FAT succeeded PIS-PASEP and is funded by payroll contributions
as per the 1988 constitution. FAT is an unemployment insurance
and supplementary income fund for low-wage earners that is
managed by the Ministry of Finance. As constitutionally
mandated, BNDES receives 40% of FAT's annual contributions in
the form of an undated, remunerated loan. There are no
established dates for repaying the principal invested by BNDES.
FAT also extends "surplus" funds to BNDES intended for special
lending programs. These funds, from the remaining 60% of FAT
funds used by the Ministry of Labor to fund unemployment
insurance, have a fixed term for repayment of principal, usually
about eight to 10 years. These additional FAT borrowings account
for 18% of the Brazilian reais (BrR) 66 billion FAT funds
disbursed to BNDES at December 2003, and 20% of BrR74.4 billion
in FAT funds as of June 2004.

The stable, low-cost, and long-dated sources of public financing
provided by PIS-PASEP and FAT bolster BNDES' local currency
liquidity profile. BNDES expects the contribution from FAT
resources and international borrowings (traditionally a
complementary source of funding) to increase steadily.

Most, but not all, of BNDES' lending to financial intermediaries
occurs through FINAME. FINAME lends funds to financial
institutions operating in Brazil, which onlends funds to firms
for purchases of equipment and machinery (in line with its
mission to promote the development and modernization of Brazil's
capital goods sector) and for export financing. In recent years,
100% of FINAME financing has been to the private sector. FINAME
financing reaches large as well as small and midsize firms in
sectors ranging from utilities, steel, mining, and agro-industry
to the transportation/infrastructure sector.

FINAME works with more than 189 financial intermediaries-
including regional development, commercial, and investment banks
and credit, finance, and investment companies-to reach a wide
borrower base. FINAME assumes the direct credit risk of the
intermediary in the domestic market, rather than that of the
ultimate borrower. In certain cases of intermediary insolvency,
however, BNDES has direct recourse to the ultimate assets of the

BNDES' investments are executed through BNDESPAR, whose
objective is to improve Brazil's capital markets. BNDESPAR
focuses on companies in the high-technology and infrastructure
sectors, and those with the potential to modernize and expand
trade and productive industrial capacity. BNDESPAR aims to
strengthen companies' equity and financial structures via share
participation, bonds, and convertible/exchangeable debentures.

Ownership and Legal Status
BNDES is wholly and directly owned by the Federal Republic of
Brazil, with the government owning 100% of its share capital.
Since 1999, the bank has been under the supervision of the
Ministry of Development, Industry, and Foreign Trade, and it is
subject to the budget, accounting, and disciplinary regulations
of the National Monetary Council.

According to Brazilian corporate law, the government is
responsible for the solvency of public enterprises. The
government, however, does not guarantee all of BNDES'
liabilities, including the debt rated by Standard & Poor's
Ratings Services. Since BNDES' economic and public-policy
importance is high relative to that of other public financial
institutions, the risk of default on its obligations nearly
equals that of the sovereign.

The ratings on BNDES incorporate the absence of a timely
government guarantee on its obligations. Brazilian law prohibits
bankruptcy proceedings against BNDES as long as the federal
government remains its controlling shareholder. Although the law
allows creditors to seek payment from the government after
obtaining a final judgment against BNDES, the litigation process
could significantly delay payments to creditors.

Asset Quality
BNDES' strategy is to foster economic development, while its
commercial interests play an auxiliary role. Unlike other
Brazilian public banks, including Banco do Nordeste do Brasil
S.A. (LC: BB/Stable/B; FC: BB-/Stable/B), BNDES has no retail
outlets. Its lending is mostly long-term, usually up to 10
years, with about 85% of outstanding loans extended to the
private sector.

BNDES' assets reached BrR165.3 billion at June 2004, from
BrR152.1 billion at December 2003; this is up sharply from
BrR112.7 billion at year-end 2001. Asset growth since the late
1990s can be attributed to loan growth underpinned by FAT funds
and the devaluation of the real (since about BrR41 billion, or
33% of total loans are attributable to foreign currency loans).
Loans as a share of BNDES' assets usually represent around 75%
of total assets.

BNDES' credit policy aims to limit excessive exposure to
individual borrowers and sectors, and to establish controls to
ensure that these limits are observed. Accordingly, it has set
up adequate limits for concentration to economic groups and
public exposure. BNDES is capable of financing large projects of
national importance. In general, there is a 60% limit for BNDES
funds provided to any investment project. Exceptions include
vital social projects, and the financing of exports,
agriculture, and small business. For example, an 80% limit
applies to micro-, small-, and midsize companies in all regions
and to midsize export companies in certain regions of Brazil,
including the Northeast.

BNDES' loan portfolio concentration is high. Loans to financial
intermediaries have represented about 40% of the gross loan
portfolio during the past several years; infrastructure loans
around 25%; and machinery and equipment about 17%. The 10
largest borrowers account for one-third of the gross loan
portfolio and around 300% of reported equity. Five of these top-
10 borrowers are financial intermediaries, who in turn onlend
BNDES funds to final borrowers. BNDES assumes the credit risk
for these financial intermediaries.

BNDES' credit procedures generally limit lending to companies
classified from 'AA' to 'B-' on the internal scale, which
generally corresponds to the same categories on the Brazilian
system-wide regulatory scale (credits are classified according
to nine categories ranging from 'AA' to 'H'). Some exceptions
are made for loans that serve an important development
objective, such as loans to strategic regions including the

Nonperforming loans (NPLs; loans classified in the categories
'E' to 'H' as per Brazilian regulations) were 4.6% of gross
loans at June 2004, versus 6.4% at December 2003 and 6.7% at
December 2002. BNDES' NPLs are in line with the ratios for the
largest retail banks in Brazil, which stood at 5% to 6% in the
same period. The higher level of NPLs in 2002-2003 reflects the
problematic loan to the AES Group.

At the end of 2003, BNDES and AES completed the restructuring of
the $1.2 billion (approximately BrR3.5 billion) debt-which
originated from the Eletropaulo acquisition by AES. The $1.2
billion debt was split in two AES subsidiaries used to acquire
Eletropaulo: AES Elpa and AES Transg s, which were in default
with BNDES during 2003. The terms and conditions established in
the agreement were the following:

    * $600 million (about BrR1.7 billion) of BNDES credits were
used to create Brasiliana Energia S.A., a new holding company to
control Eletropaulo, AES Tietˆ, and Uruguaiana. BNDES owns 100%
of the preferred shares and 49.99% of the voting shares. AES
management in Brazil controls Eletropaulo's. Nevertheless, if
Brasiliana defaults in any amount regarding the debentures
described below, the amount is automatically converted into
capital, which would give to BNDES the majority control of the
group (Eletropaulo, AES Tietˆ, and AES Uruguaiana).

    * AES Corp. paid $90 million (approximately BrR260 million)
in January 2004.

    * $510 million (BrR1.5 billion) debt was kept as a debt, but
in a different structure. This debt portion is a convertible
debenture totally held by BNDES, with an 11-year tenor, and
starting principal amortization in December 2007.

BNDES' provisions are made in line with system-wide regulations
that classify performing and nonperforming loans according to
their level of risk. The central bank requires that any
additional provisioning (beyond the system-wide regulations)
must be authorized by BNDES' Administrative Council and
accounted for as a Reserve in the Shareholder's Equity.

BNDESPAR's assets include equity stakes in around 160 companies
with a book value of BrR14.2 billion at June 2004. Holdings
Eletrobr s, Petrobr s, Valepar (the holding company for
Companhia Vale do Rio Doce), and Brasiliana Energia, represented
BNDESPAR's four largest investments, accounting for 50% of
BNDESPAR's portfolio. Shares in Eletrobr s and Petrobr s were
part of the government's initial capitalization of BNDES.
BNDESPAR plans to sell the remaining strategic shares in
favorable market conditions. As part of the restructuring the
default by AES Group with BNDES, Brasiliana Energia was created
from all AES businesses; via BNDESPAR, BNDES converted part of
AES' debt to capital in 2003. In addition, in 2003, BNDES
purchased a share in Valepar.

Stock market fluctuations have a significant effect on the
market value and strategy of BNDESPAR's investments, since
divestments are made according to market conditions. BNDESPAR
increased its equity investment in part during 2003 owing to
favorable prices on the Brazilian stock exchange.

BNDES' profitability is adequate. The bank's developmental
targets are a higher priority than its profit objectives.
Nevertheless, the bank has been consistently profitable and has
been supporting its profit margins by maintaining low
administrative overhead.

Nevertheless, profitability has historically been below that of
Brazil's top-three commercial banks. BNDES' return on average
assets (RoAA), at 1% or less during the several previous years,
is lower than the average presented by the top Brazilian private
banks-basically due to its development objective and higher NPLs
in 2002-2003. The top banks' RoAA is generally about 1.5%-3%.

BNDES' noninterest expenses were 21% and 23% of revenues at June
2004 and December 2003, respectively. The generally lower
noninterest expenses at BNDES reflect much lower personnel costs
to revenues-at about one-third that of private-sector banks.
BNDES' wholesale nature and lack of a distribution network help
keep personnel costs low.

The underlying cost of funds for BNDES loans is usually, but not
always, the TJLP, the long-term interest rate set quarterly by
the central bank at levels generally below market rates (9.75%
as of October 2004). For loans funded from domestic sources, the
applicable rate is generally the TJLP; however, up to 50% of
loans funded from FAT funds can be for goods where there is a
recognized international demand. These loans, however, are
denominated in U.S. dollars, with a cost of funds of LIBOR plus
the U.S. dollar exchange rate variation. For loans funded from
other foreign currencies, the cost of funds is based on a basket
of interest rates and currencies.

In addition to the cost of funds, BNDES' lending rates include a
basic spread and a credit risk spread. The basic spread varies
according to the priority of the sector, type and location of
investment and size of the company; it ranges from 1% to 4%. In
March 2004, BNDES changed its policy on the size of the credit
risk spread. This spread is 1.5% for all loans, aimed to cover
the historical level of NPLs, instead of ranging from 0.5% to
4.6% depending on the bank's assessment of the creditworthiness
of the borrower. The cost of borrowing by domestic or foreign
companies is the same.

Asset-Liability Management
BNDES aims to match its asset and liability structure as
efficiently as possible. Improving asset-liability management is
a medium-term priority. The bank's policy is to minimize the
interest rate gap on real-denominated assets and liabilities and
any foreign exchange mismatch by indexing corresponding assets
to a basket of currencies. BNDES also manages its currency risk
with cross-currency swaps. At times, BNDES decides to bear
market risk in exchange for a spread that should compensate for
this risk. BNDES' established limits on risk follow an overall
risk management strategy that is based on a proprietary model
for measuring market risk, Value at Risk (VaR); the bank's
policy limits market VaR to a maximum of 3% of shareholder's
equity. Increasing the share of debentures while reducing direct
equity holdings is also part of the bank's asset-liability
management strategy.

Given the undated nature of a significant portion of its funding
(FAT/PIS-PASEP), BNDES liabilities are longer-dated than its
assets. The bank has significant flexibility on interest
payments on its liabilities. While BNDES is required to
remunerate FAT funds received (except for special loans) at the
TJLP, it must only remit funds to FAT semiannually at the rate
of 6% (per year)-historically below the TJLP; revenues in excess
of 6% are capitalized and added to the outstanding principal
amount of BNDES' FAT funding base. We do not expect demand for
loans priced off TJLP, below most market rates, to diminish.

BNDES' funding base is deemed broadly stable, long-dated, and
liquid. Domestic constitutionally mandated funding (FAT and PIS-
PASEP) and multilateral financing comprise almost 70% of BNDES'
funding. Funding derived from PIS-PASEP and FAT resources
increased to BrR95 billion at June 2004, from BrR86.7 billion at
December 2003 and BrR82.6 billion at year-end 2002. These funds
account for two-thirds of the funding base.

BNDES bears the risk for managing PIS-PASEP-funded lending for
transactions executed after 1982 (which is above 85% of the PIS-
PASEP portfolio) and the risk for managing all FAT-funded
lending. Up to 50% of FAT funds can be lent to finance the
production of goods with international demand; such loans are
indexed to the U.S. dollar.

The total amount of foreign currency liabilities was BrR26.1
billion at June 2004, or 18% of BNDES' funding base (this
excludes FAT Cambial-foreign exchanged referenced- funding).
After the federal government, BNDES is the largest recipient of
multilateral funds in Brazil. Loans from the Inter-American
Development Bank (IADB) are the cheapest source of funding for
BNDES after the FAT funds; BNDES and the IADB are discussing $1
billion to support micro, small- and midsize firms and
investments in exporting companies. International bond financing
has been on hold since 2001.

While BNDES' lending is primarily real denominated,
approximately 32% of BNDES loans were indexed to foreign
currencies-primarily the U.S. dollar. The bank aims to match its
assets and liabilities, minimizing exposure to the variation in
the TJLP, LIBOR, or the real/U.S. dollar exchange rate.

Following losses to BNDES' balance sheet in 1999 with the
devaluation and float of the Brazilian real, BNDES established a
new policy to limit losses associated with mismatched assets and
liabilities. Since 2001, each new loan given has had a portion
indexed to the basket of currency.

BNDES' capital adequacy is adequate. The government has
demonstrated its commitment to the bank. The change in
accounting treatment of BNDES' loan portfolio under the central
bank's Resolution 2.682/99 makes it easier to compare BNDES with
private-sector banks, but its special development role still
complicates comparison.

Central bank resolutions in 2001-2002 for the banking system
imply that BNDES includes constitutional FAT funding as Tier 2
capital (limited to 50% of Tier I capital). Along with a change
in 2003 on how to calculate exchange-rate exposure, implied that
in December 2003 BNDES' risk-weighted capital ratio was 16%; at
June 2004 the ratio was 17.4%. This is above the 11% statutory
minimum and compares with the top-tier commercial banks in the
system, whose capital ratios range from 15% to 19%.
Nevertheless, given BNDES' riskier business, long-term lending,
and equity investments, maintaining a higher capital base
reflects prudent management.

In recent years the market value of BNDES' equity investments
has exceeded its book value. At BrR29.7 billion at December
2003, the market value of BNDES' investments was more than twice
as large as its book value of BrR14.4 billion. The Brazilian
equity market's fluctuations render the bank's capital
vulnerable to swings in equity prices. Therefore, the bank's
medium-term strategy has continued to be to reduce the equity
share in its capital and replace it mostly with debentures.

Default History
Between 1983 and 1989, the government imposed defaults on some
of BNDES' international bank borrowings. The government
restricted debt servicing by domestic private and public
entities by limiting access to foreign currency and prohibiting
remittances abroad. An estimated total amount of $859 million
was subject to debt-servicing suspension. These debts were
assumed at the federal level for restructuring, and eventually
became part of Brazil's Brady debt. BNDES was exempt from the
1989 Collar Plan, which froze deposits. Unlike the rest of the
financial system, BNDES did not default on its local currency

Primary Credit Analyst: Daniel Araujo, Sao Paulo (55) 11-5501-

Secondary Credit Analyst: Lisa M Schineller, New York (1) 212-

UNIBANCO: Board OKs Stock Dividend Payment
The Boards of Directors of UNIBANCO - UNIAO DE BANCOS
("Unibanco Holdings") approved Wednesday, as proposed by the
respective Boards of Executive Officers on December 17, 2004:

I. The payment of interest on capital stock, in the gross total
amount of R$258,823,689.75 and R$127,383,724.64, and net total
amount of R$220,000,136.28 and R$108,276,165.94, respectively,
to be made from January 31, 2005 on.

This payment shall be considered as part of the mandatory
dividend corresponding to the fiscal year of 2004, in accordance
with the provisions of article 9th paragraph 7th of Federal Law
9,249/95, article 44 paragraph 8th of the by-laws of Unibanco
and article 35 sole paragraph of the by-laws of Unibanco

Pursuant to the approved proposals, Unibanco's and Unibanco
Holdings' shareholders are entitled to receive interest on
capital stock in the gross and net amounts set forth below. Such
values correspond to one (1) share, one (1) Share Deposit
Certificate ("Unit")*, or one (1) Global Depositary Share
("GDS")**, as the case may be. An income tax rate of fifteen
percent (15%) will be withheld from such gross amounts,
resulting in the net values set forth below:

In R$       UBB-ON   UBB-PN   HOL-ON   HOL-PN   UNIT   GDS
            UBBR3    UBBR4    UBHD3    UBHD6    UBBR11  NYSE-UBB
  Value     0.1773   0.1950   0.1535   0.1535  0.3485  1.7423
  Value     0.1507   0.1657   0.1305   0.1305  0.2962  1.4810

(*) Each UNIT represents one preferred share of Unibanco and one
preferred share of Unibanco Holdings.
(**) Each GDS listed on the New York Stock Exchange (NYSE: UBB)
is equivalent to 5 Units.

The payment of the due amounts, pursuant to the table above,
shall be made according to the procedures and places set forth

1. GDSs' holders:
The payment shall be made directly to the foreign depositary
bank - Bank of New York - which will forward it to the entitled

2. Other shareholders:

2.1. Shareholders who are Unibanco's account holders:
The payment shall be made by means of credit in the respective
bank accounts.

2.2. Shareholders who hold bank accounts in other banks, who
have already provided to Unibanco, the bank, branch and bank
account numbers:
The payment shall be made by means of eletronic transfer (DOC/
TED), according to the respective amounts.

2.3. Shareholders whose shares are deposited in Stock Exhanges'
The payment will be made directly to the Stock Exchanges, which
shall forward such amounts to the entitled shareholders, by
means of the depositary brokers.

2.4. Shareholders for whom the above mentioned situations are
not applicable:
The payment shall be made in any Unibanco's branch at their

2.5. Shareholders who hold bearer share certificates which still
have not been converted to the book-entry system:
The payment will be made upon delivery of the respective
certificates for mandatory conversion.

2.5.1. Assistance to the conversion will be provided by our
Shareholders Assistance department in the addresses set forth
below, where relevant shareholders shall attend and present the
respective certificates.
Sao Paulo - SP: Rua da Quitanda, 157 - 4th floor
Rio de Janeiro - RJ: Rua Sete de Setembro, 111 mezzanine.

2.5.2. For all other locations, such assistance shall be made at
Unibanco's branches.

Unibanco's and Unibanco Holdings' shares and Units will be
traded in the Brazilian market and in the US market without the
right to receive payment of interest on capital stock (ex-
interest on capital stock) from December 30, 2004 on.

January 3, 2005 will be the Record Date for purposes of
compliance with obligations arisen from the GDS program
maintained by the Companies in the United States of America.

II. The proposal of quarterly payment of dividends and/or
interest on capital stock to Unibanco's and/or Unibanco
Holdings' shareholders, to be implemented in the first quarter
of the year 2005.

CONTACT: Unibanco - Uniao de Bancos Brasileiros S.A.
         Investor Relations Area
         Ave. Eus‚bio Matoso, 891 - 15th floor - Sao Paulo, SP
         05423-901- Brazil
         Tel.: (55 11) 3097-1980
         Fax: (55 11) 3097-6182


CORPORACION DURANGO: Creditors Approve Reorganization Plan
Corporacion Durango, S.A. de C.V. (BMV: CODUSA) (the Company or
Corporacion Durango), announced Wednesday that recognized
creditors holding recognized claims of Corporacion Durango in a
principal amount sufficient to confirm a plan of reorganization
under the Mexican business reorganization law have executed an
agreement approving the Company's plan of reorganization. The
Company expects that the Mexican court presiding over the
Company's concurso mercantil proceeding will confirm the
Company's plan of reorganization in early 2005. Once confirmed
by the judge, the plan of reorganization will be binding on all
of the Company's unsecured creditors.

The Company's secured creditors and the non-financial creditors
of the Company's operating subsidiaries, including their
employees, vendors, suppliers and customers, will not be
affected by the plan of reorganization.

Miguel Rincon, Chairman of Corporacion Durango, commented: We
are pleased to be able to announce the signing of our plan of
reorganization. We believe that the terms of the plan of
reorganization are fair and equitable to all our stakeholders.
The plan of reorganization will result in a more adequate and
competitive capital structure for Corporacion Durango and
substantially enhance the financial flexibility of the Company
and its operating subsidiaries.

Under the plan of reorganization, the Company's unsecured
creditors will receive new debt equal to 85% of the outstanding
principal amount of their recognized claims. The Company's
unsecured bank creditors will amend and restate their existing
loans as Series A Loans in an aggregate principal amount of
approximately $116.1 million. The holders of the Company's other
unsecured indebtedness, including the Company's 12 5/8% Senior
Notes due 2003, 13 1/8% Senior Notes due 2006, 13 1/2% Senior
Notes due 2008 and 13 3/4% Senior Notes due 2009, will receive
Series B Notes in an aggregate principal amount of approximately
$433.8 million in exchange for their debt. In addition, all such
creditors will receive an aggregate of 17% of the Company's
capital stock on a fully diluted basis.

The Series A Loans and Series B Notes will be guaranteed by
certain of the Company's subsidiaries, and will be secured
ratably by real estate and other fixed assets of the Company and
certain of the Company's Mexican subsidiaries and the common
shares of two of the Company's subsidiaries.

Corporacion Durango is the largest producer of containerboard in
Mexico through its Grupo Durango division; the largest Mexican
producer of newsprint through its Pipsamex division; the largest
manufacturer of corrugated containers in Mexico through its
Titan division; a leading independent paper and packaging
producer in the U.S. through its McKinley division; and one of
the largest manufacturers in Mexico of uncoated free-sheet and
multi-wall sacks.

CONTACTS: Corporacion Durango, S.A. de C.V.
          Ms. Mayela R. Velasco
          Phone: +52 (618) 829 1008

          Mr. Miguel Antonio R.
          Phone: +52 (618) 829 1070

          The Global Consulting Group
          Mr. Kevin Kirkeby
          Phone: (646) 284-9416

SATMEX: Misses $188M Debt Payment to Government
Mexican satellite operator Satelites Mexicanos SA (STM.YY)
committed its third major debt default in 2004 when it missed a
US$188-million debt payment to the government on Wednesday.

Satmex, which is 49% owned by Loral Space & Communications Ltd
(LRLSQ.OB), has already defaulted on US$525 million in debt and
needs to raise cash to launch the Satmex 6 satellite, which is
seen as key to its survival.

A company spokesman said talks are continuing with creditors and
with the government, with the idea of including the debt to the
government in an overall agreement.

"The matter is being attended to, and there are talks with all
parties involved," the spokesman said.

Satmex has been working on its debt refinancing for about a year
but has failed to reach an agreement with its creditors that
could put the company back on its feet.

Besides tight liquidity, Satmex has faced technical problems
with its satellites that has cut deep into its transmission
capacity and scared potential new clients away.

Despite its problems, the company has caught the eye of some
investors who think the company still has a future and could
return to profitability.

Mexico City-based Constellation Group, which represents at least
four other satellite operators including Spain's Hispasat,
recently presented the government with a proposal to buy Satmex.

Constellation, an investment vehicle created solely for the
takeover effort, has pledged a cash infusion of $120 million and
the assumption of more than $700 in debt to rescue the company.


PARMALAT FINANZIARIA: Citigroup Seeks Approval to Sue LatAm Arms
U.S. bank Citigroup Inc. has asked Bankruptcy judge Robert Drain
for permission to sue Parmalat Finanziaria's Latin American
units over defaulted loans, Reuters says. Citigroup claimed
Parmalat Del Ecuador S.A. and Parmalat Paraguay S.A. have
defaulted loans worth US$6.05 million and US$4.8 million
respectively.  In a motion, the world's largest financial
services group told Judge Drain it intends to recover the amount
through lawsuits in the units' respective locations.  The
financial group is seeking relief from a July 2 preliminary
injunction, which it said blocks such lawsuits.  Citigroup
argued the injunction was not intended to protect operating
Parmalat subsidiaries that are not covered by any insolvency

The injunction prevents Parmalat's creditors, including
Citibank, from suing the group's subsidiaries and entities.
Parmalat's government-appointed administrator, Enrico Bondi,
filed for the injunction in June, six months after the dairy
giant filed for insolvency in Italy and four months after its
U.S. units filed for Chapter 11 bankruptcy protection.

Madlyn Gleich Primoff, a partner at Clifford Chance U.S. LLP,
said in the motion, "Absent the preliminary injunction, Citibank
would not be barred under Italian law or otherwise from
commencing proceedings.

"The preliminary injunction, as currently in effect, thus
provides the foreign debtors with more relief with respect to
Parmalat Paraguay and Parmalat Ecuador than they are entitled to
under Italian law."

Citibank added it was "unfairly prejudiced" by the broad scope
of the injunction, which it claims "flies in the face" of U.S.
Bankruptcy law.

The court will hear the motion on January 27, 2005, 10:00 a.m.
in New York.

Mr. Bondi has sued a number of financial institutions, including
Citigroup and Bank of America for alleged abetting Parmalat's
collapse in December 2003.  The banks, however, claimed they too
were victims of fraud.  Parmalat has also included auditors
Deloitte & Touche and Grant Thornton in the lawsuit.  Bondi has
been trying to recover Parmalat's money before he launches a
debt-for-equity swap, which would pave way for the group

          Legal Seat
          43044 Collecchio (Pr)
          Via Oreste Grassi, 26

          Administrative Seat
          20122 Milan
          Piazza Erculea, 9
          Phone: +39 02 806 8801
          Fax: +39 02 869 3863
          Web site:


UTE: Demand For First Trust Deed Issue Exceeds Expectations
Demand for Uruguayan state power company UTE's first trust deed
issue on the local market exceeded expectations, reports
Business News Americas. UTE had planned to issue up to US$25
million in trust deeds last week but demand swelled to US$86

The deeds, guaranteed by the company's cash flow, are for seven
years with biannual payments and interest at Libor plus 3%, with
a minimum of 6.5% and a maximum of 8%. The deeds were rated AA+
by Fitch Uruguay.

The financial advisor on the issue was Banco Surinvest and the
fiduciary is EF Asset Management Administradora de Fondos de

UTE finance manager Alejandro Peroni said that the company
created a trust fund called UTE 2004 Fideicomiso Financiero to
issue the deeds Wednesday on the Montevideo stock market.

The funds obtained from the issue will be used to finance
investments in transmission and distribution that were postponed
due to Uruguay's 2002 financial crisis.

Despite the financial crisis and energy shortages in recent
years, the company has lowered its debt and has not passed on
higher fuel costs to customers through tariff increases, Scaglia

UTE: Calls for Brazilian Bids for 2-Month Power Supply
UTE opened new bidding for the 2-month supply of 500MW of
interruptible power from Brazil from January 10, reports
Business News Americas. The agreement can be extended for two
more months if the parties agree.

Interested bidders have until Jan. 7, 2:00 pm to present
their bids at the Sao Paulo offices of Brazil's power trading
chamber CCEE. Bidders must offer a price in Brazilian reais/MWh.

Bids will be opened the same day and the contract offered to the
lowest bidder. In the event of equal prices being offered,
bidders will have 48 hours in which to submit a different price.

CCEE said vendors must obtain an export permit from Brazil's
electricity regulator Aneel by Jan. 3.

Contract signing is dependent on Brazil's electricity regulator
Aneel certifying that the vendor meets technical requirements to
sell power, and Brazil's grid operator ONS will coordinate the
dispatch of the power.

The vendor will be responsible for securing all export permits
and for paying duties, and is required to deliver the power at
the Garabi II node on the two countries' border.


PDVSA: Reaches New Collective Labor Accord With Unions
Venezuela's state oil company PDVSA struck a new collective
labor contract with oil unions - Fedepetrol, Sinutrapetrol and
Fetrahidrocarburos - on Tuesday after reaching an agreement on
article 69 regarding hiring practices.

The contract's last clause, defining the way the company is to
hire new workers, was approved under the condition that both the
corporation and the unions create a committee that, within the
next 60 days, is to establish a method to ensure that candidates
applying for positions in PDVSA are treated equally.

The labor agreement benefits 44,000 state and sub-contracted oil
workers that will see daily salary increases of VEB7,000
(US$3.65) to VEB31,000 in the first year of the agreement and
VEB32,000 in the second. The accord would run through 2006.

The deal sees 59% of wages paid in cash and 41% paid as social
benefits, compared to a 69:31 split in the 2002-04 contract. The
agreement includes education grants, housing loans and medical
care contracts. Contractors' monthly pension payments will
double to VEB360,000, while PDVSA workers' pension payments
increase 89% to VEB700,000.

PDVSA: Invests $3.7B on Public Projects
The Venezuela government revealed Tuesday that PDVSA spent
US$3.7 billion toward public projects in 2004, the AP relates.
According to the Energy and Mines Ministry, the funds, a portion
of the revenues collected by the company, went toward a wide
array of projects involving infrastructure, agriculture and
social programs.

Among a long list of projects, the government spent US$54
million to rebuild a rundown sugar mill in the central state of
Barinas, spent US$50 million building a new line to the Caracas
subway and US$50 million toward construction of a commuter train
in the city of Maracaibo, the ministry said.


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 2005.  All rights reserved.  ISSN 1529-2746.

This material is copyrighted and any commercial use, resale or
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Information contained herein is obtained from sources believed
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