TCRLA_Public/050906.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

          Tuesday, September 6, 2005, Vol. 6, Issue 176

                            Headlines


A R G E N T I N A

AGUAS ARGENTINAS: Concession Agreement Expected This Week
CONEMAR S.R.L.: Trustee to Submit General Report Sep. 7
ESEPE CONSTRUCTORA: General Report Filing Due
REPSOL YPF: Chairman Recommends Fuel Price Hike
SALUD TOTAL: Settlement Details Expected at Information Meeting

SIEMAR S.A.C. Y C.: General Report Deadline Approaches
TALLERES NAVALES: Judge Approves Bankruptcy
TGA S.A.: Halts Debt Payments, Seeks to Reorganize
VELOCIDAD TIEMPO: Settlement Plan Presentation Set


B E R M U D A

ING GLOBAL: Appoints Robin J Mayor as Liquidator
LORAL SPACE: Judge Denies Fraudulent Conveyance Action
RAPCO (BERMUDA): Company to be Wound Up Voluntarily


B O L I V I A

AGUAS DEL ILLIMANI: Govt. Narrows List of Audit Candidates


B R A Z I L

BANCO RURAL: Cooperates With Investigators
BANESPA: Moody's Assigns Ba2 Rating to $300M Securities
CELG: Moves to Enhance Distribution Network Quality
ELETROPAULO METROPOLITANA: Releases Debt Issue Details
UNIBANCO: Ratings Unaffected By Global Offering

VARIG: 2Q Net Loss Shrinks Despite Losing Market Share  
VARIG: Willis Lease Seeks to Repossess Engines


C O L O M B I A

FGM: University Audits Asset Valuation Process
* COLOMBIA: Reaches Mission-level Agreement with IMF


D O M I N I C A N   R E P U B L I C

EDENORTE/EDESUR: Foreigners Hired to Administer Companies


E C U A D O R

PETROECUADOR: Oil Production Recovers, Foreign Exports Resume


E L   S A L V A D O R

BANCO AMERICANO: Negotiations Proceed With Potential Investor

G U A T E M A L A

* GUATEMALA: S&P Releases Ratings Analysis


H O N D U R A S

* HONDURAS: IMF Says Inflation Stabilized


M E X I C O

ASARCO: Granted Restricted Use of Mitsui Cash Collateral
ASARCO: Seeks Authority to Pay DIP Financing Costs
GRUPO MEXICO: Workers Delay Strike Deadline to Vote on Proposal
SICARTSA: Workers Reject Grupo Villacero's Proposal

P E R U

SIDERPERU: A&A Sees High Default Risk on Bonds


V E N E Z U E L A

PDVSA: Cardon Cracker Restarts, Puerto La Cruz Plant Shuts Down


     - - - - - - - - - -


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

AGUAS ARGENTINAS: Concession Agreement Expected This Week
----------------------------------------------------------
Suez executives are confident that the French controller of
Buenos Aires water utility Aguas Argentinas will sign this week
a letter of understanding with the Argentine government
regarding a renewed concession. Business News Americas reports
that meetings between Aguas executives and members of the
government's contract renegotiation unit (Uniren) are taking
place almost daily in an air of great cordiality.

The previously heated discussions between the parties have now
cooled down following a decision to leave the water utility's
US$600-million debt out of the talks and acceptance that it will
not receive a subsidy in place of rates increases.

According to Business News Americas, the main differences
between the two sides are now related to the increases in
tariffs for next year. Aguas wants to hike rates by 20% twice,
while the government prefers two 16% increases as an absolute
maximum.

Some of the money collected from the increased rates would be
put into a fund for investments in expanding the system, and the
Company would be able to pay off some of its debt with its cash
flow.


CONEMAR S.R.L.: Trustee to Submit General Report Sep. 7
-------------------------------------------------------
Mr. Miguel Daniel Pellejero Herrero, the trustee assigned to
supervise the liquidation of Conemar S.R.L., will submit the
general report of the case tomorrow, Sep. 7, 2005.

On July 25, 2005, the validated individual claims were submitted
in court for approval. The said reports explained the basis for
the accepted and rejected claims.

Court No. 20 of Buenos Aires' civil and commercial tribunal
handles the Company's case. The city's Clerk No. 39 assists the
court with the proceedings.

CONTACT: Mr. Miguel Daniel Pellejero Herrero, Trustee
         Raul Scalabrini Ortiz 2835
         Buenos Aires


ESEPE CONSTRUCTORA: General Report Filing Due
---------------------------------------------
The deadline of the general report on the liquidation of local
company Esepe Constructora S.R.L. will be tomorrow, Sep. 7,
2005. The report's filing follows the presentation of individual
reports on July 6, 2005. The individual reports contained the
forwarded claims of the Company's creditors. The claims were
validated until May 9, 2005.
  
Buenos Aires civil and commercial Court No. 24 holds
jurisdiction over the Company's case. Clerk No. 14 assists the
court with the proceedings. Accountant Jorge Roberto Dolinko was
appointed as trustee.

CONTACT: Mr. Jorge Roberto Dolinko, Trustee
         Tucuman 1657
         Buenos Aires


REPSOL YPF: Chairman Recommends Fuel Price Hike
-----------------------------------------------
Spain-based Repsol-YPF S.A. (REP) chairman Antonio Brufau
advised during a visit in Argentina last week that gasoline and
diesel prices be raised, Dow Jones Newswires reports. Global oil
prices continue to soar but pump prices in Argentina remain
unchanged since a financial crisis three-and-a-half years ago.

"Prices in Argentina, little by little, will have to adjust to
reality, accompanying the growth of the economy," Mr. Brufau
suggested.

Warning that consumption is rising as reserves dwindle, Mr.
Brufau suggestged increasing prices would restore balance and
help avoid an oil shortage that would mean importing more than
the country exports. Pressed by reporters for details, however,
Mr. Brufau said there is no timeline for price increases.

Despite Mr. Brufau's suggestion, few analysts and industry
officials expect any pump price hikes before congressional
elections in late October.

Consultant and former energy secretary Jorge Lapena said that
there is an economic measure in the market today, which includes
the export taxes and the government policy of confrontation,
making the companies think twice before they raise prices.

According to analysts and industry officials, the government
will punish companies by launching boycotts or further raising
export taxes on crude oil and gasoline if they raise prices.
This scenario is similar to the one experienced by Royal Dutch
Shell PLC (RDSB.LN) and Exxon Mobile Corp. (XOM) in March when
President Nestor Kirchner called on citizens to boycott Shell
for raising pump prices, a move Esso followed. The boycott cut
into the companies' profits, persuading them to drop their price
hikes.

Since the Shell boycott, gasoline retailers have been waiting
for Repsol, which publicly remains friendly with the Kirchner
government, to take the next step. Meanwhile, Mr. Brufau's
comment last week drew plenty of attention.


SALUD TOTAL: Settlement Details Expected at Information Meeting
---------------------------------------------------------------
Mendoza-based Salud Total S.A. will meet its creditors in an
informative assembly scheduled for tomorrow, Sep. 7, 2005,
following the submission of the general report on May 2, 2005.
During the assembly, the creditors will vote on the settlement
plan proposed by the Company.

Mr. Carlos Piatelli oversees the reorganization proceedings as
the court-appointed trustee. Court No. 1 handles the case with
the assistance of Clerk No. 1.

CONTACT: Salud Total S.A.
         Colon 277
         Mendoza

         Mr. Carlos Piatelli, Trustee
         Capitan de Fragata Moyano 53
         Mendoza


SIEMAR S.A.C. Y C.: General Report Deadline Approaches
------------------------------------------------------
The general report on the liquidation of Buenos Aires-based
Siemar S.A.C. y C. will be submitted tomorrow, Sep. 7, 2005. The
report shall contain the summary of the Company's financial
status as well as relevant events pertaining to the bankruptcy.

On July 26, the individual claims of the Company's creditors
were presented to court for approval. The claims underwent
verification phase, which lasted until May 30, 2005.

Siemar S.A.C. y C. began liquidating its assets following the
bankruptcy pronouncement issued by Court No. 22 of the city's
civil and commercial tribunal. The bankruptcy ruling placed the
Company under the supervision of Alberto A. Vilela, the court-
appointed trustee.

CONTACT: Mr. Alberto A. Vilela, Trustee
         Rodriguez Pena 431
         Buenos Aires


TALLERES NAVALES: Judge Approves Bankruptcy
-------------------------------------------
Talleres Navales Servinter S.R.L. was declared bankrupt after
Court No. 13 of Buenos Aires' civil and commercial tribunal
endorsed the petition of Obra Social de Empleados de la Marina
Mercante for the Company's liquidation, Argentine daily La
Nacion reports. The court assigned Salvador Lamarchina to
supervise the liquidation process as trustee.

The city's Clerk No. 26 assists the court in resolving this
case.

CONTACT: Talleres Navales Servinter S.R.L.
         Avenida Paseo Colon 588
         Buenos Aires

         Mr. Salvador Lamarchina, Trustee
         Esmeralda 847
         Buenos Aires


TGA S.A.: Halts Debt Payments, Seeks to Reorganize
--------------------------------------------------
Court No. 19 of Buenos Aires' civil and commercial tribunal is
reviewing the merits of TGA S.A. petition to reorganize. La
Nacion recalls that the Company filed the petition following
cessation of debt payments. Reorganization will allow TGA S.A.
to avoid bankruptcy by negotiating a settlement with its
creditors.

The Company ceased paying its creditors on Aug. 29, 2005. Clerk
No. 37 is assisting the court on the Company's case.

CONTACT: TGA S.A.
         Avenida Corrientes 1814
         Buenos Aires


VELOCIDAD TIEMPO: Settlement Plan Presentation Set
---------------------------------------------------
Velocidad Tiempo Cero S.A., a Company operating in Mendoza, will
announce a completed settlement plan to its creditors tomorrow,
September 7, 2005.

The process is being administered by Trustee Erik Fernandez
during the course of its debt restructuring. Court No. 1 of the
city's civil and commercial tribunal has jurisdiction over this
case.

CONTACT: Mr. Erik Fernandez, Trustee
         Pasaje Vargas 567
         Mendoza



=============
B E R M U D A
=============

ING GLOBAL: Appoints Robin J Mayor as Liquidator
------------------------------------------------
           IN THE MATTER OF THE COMPANIES ACT 1981

                             And

       IN THE MATTER OF ING Global Reinsurance Limited

The Sole Member of ING Global Reinsurance Limited, acting by
written consent without a meeting on August 26, 2005 passed the
following resolutions:

1) THAT the Company be wound up voluntarily, pursuant to the
provisions of the Companies Act 1981; and

2) THAT Robin J Mayor be and is hereby appointed Liquidator for
the purposes of such winding-up, such appointment to be
effective forthwith.

The Liquidator informs that:

- Creditors of ING Global Reinsurance Limited, which is being
voluntarily wound up, are required, on or before September 16,
2005, to send their full Christian and Surnames, their addresses
and descriptions, full particulars of their debts or claims, and
the names and addresses of their lawyers (if any) to Robin J
Mayor, the Liquidator of the Company, and if so required by
notice in writing from the said Liquidator, and personally or by
their lawyers, to come in and prove their debts or claims at
such time and place as shall be specified in such notice, or in
default thereof they will be excluded from the benefit of any
distribution made before such debts are proved.

- A final general meeting of the Sole Member of ING Global
Reinsurance Limited will be held at the offices of Messrs.
Conyers Dill & Pearman, Clarendon House, Church Street,
Hamilton, Bermuda on October 7, 2005 at 9:30 a.m., or as soon as
possible thereafter, for the purposes of:

1) receiving an account laid before them showing the manner in
which the winding-up of the Company has been conducted and its
property disposed of and of hearing any explanation that may be
given by the Liquidator;

2) by resolution determining the manner in which the books,
accounts and documents of the Company and of the Liquidator
shall be disposed of; and

3) by resolution dissolving the Company.

CONTACT: Mr. Robin Mayor, Liquidator
         Messrs. Conyers Dill & Pearman
         Clarendon House
         Church Street
         Hamilton
         HM DX
         Bermuda


LORAL SPACE: Judge Denies Fraudulent Conveyance Action
------------------------------------------------------
The Hon. Robert D. Drain of the U.S. Bankruptcy Court for the
Southern District of New York denied the request of the Official
Committee of Equity Security Holders of Loral Space &
Communications, Ltd., and its debtor-affiliates to pursue
fraudulent conveyance causes of action resulting from a guaranty
extended by Loral Space for certain public-debt obligations owed
by its wholly-owned subsidiary Loral Orion, Inc.

                    Orion's Unsecured Debt

Prior to its acquisition by Loral Space, Orion had issued two
series of unsecured notes:
  
     a) the 11.25% Senior Notes, due 2006, in the principal
        amount of $443 million; and

     b) the 12.5% Senior Discount Notes, due 2007, in the
        principal amount of $484 million.

Mounting financial difficulties led Orion to refinance these
debts through an exchange offer in 2001.  The exchange offer
gave note holders the chance to trade their old notes for new
10% senior notes due in 2006 plus warrants to purchase common
shares of Loral Space.  Loral Space served as guarantor for the
new 10% senior notes issued.

Not all noteholders tendered their notes and approximately $37
million of the senior notes and $49 million of the discount
notes remained outstanding when the exchange offer closed.  As
of the petition date, the Debtors owed approximately $90 million
from the outstanding old notes and $643 million from the new 10%
senior notes.

                     Fraudulent Conveyance

In its motion to commence an adversary proceeding, the Equity
Committee told Judge Drain that the guaranty issuance was a
fraudulent conveyance because it exposed Loral Space to added
substantial liabilities without receiving any equivalent benefit
for its creditors and equity holders.

The Equity Committee says that Loral Space proceeded to
guarantee the new notes despite knowledge of Orion's insolvency
at the time of the exchange offer.  By making the guarantee, the
Equity Committee claims that the Debtors had misallocated the
collective equity value of their other operating subsidiaries.  

The Equity Committee claims that the guarantee spreads Orion's
obligations to the creditors and equity holders of Loral Space
and its subsidiaries.  Because Orion was insolvent at the time
of the exchange offer and had little chance of paying its debts,
the Equity Committee alleges that Loral Space had, in effect,
assumed all the obligations under the 10% notes.  The Equity
Committee says the added debt burden precipitated Loral Space's
own insolvency.

                Debtors & Creditors Committee
                    Refuse to Take Action

The Equity Committee states that the Debtor and the Official
Committee of Unsecured Creditors' refusal to pursue the probable
fraudulent conveyance claim is unjustifiable because a favorable
judgment presents substantial benefit to the Debtors' estates by
reducing hundreds of millions of dollars in claims against Loral
Space.

Pursuant to the Bankruptcy Court's order disallowing the
proposed fraudulent conveyance causes of action, the Equity
Committees' complaint (Adversary Proceeding No. 05-02309) is
also dismissed with prejudice.  The Bankruptcy Court previously
allowed the Equity Committee to file the complaint solely for
the purpose of preserving the statute of limitations imposed by
section 546(a) of the Bankruptcy Code.

The confidential transcripts of several hearings held in
relation to the Equity Committee's motion are available for
viewing, during regular court hours, at:

           U.S. Bankruptcy Court
           Southern District of New York
           One Bowling Green, Room 511
           New York, New York 10004-1408

Copies of these transcripts may also be purchased from:

           Veritext, LLC
           200 Old Country Road, Suite 260
           Mineola, New York 11501
           Phone: (212) 867-8228 and (212) 374-1138

Loral Space & Communications -- http://www.loral.com/-- is a  
satellite communications company.  It owns and operates a fleet
of telecommunications satellites used to broadcast video
entertainment programming, distribute broadband data, and
provide access to Internet services and other value-added
communications services.  Loral also is a world-class leader in
the design and manufacture of satellites and satellite systems
for commercial and government applications including direct-to-
home television, broadband communications, wireless telephony,
weather monitoring and air traffic management.

The Company and various affiliates filed for chapter 11
protection (Bankr. S.D.N.Y. Case No. 03-41710) on July 15, 2003.  
Stephen Karotkin, Esq., and Lori R. Fife, Esq., at Weil, Gotshal
& Manges LLP, represent the Debtors in their restructuring
efforts.  When the company filed for bankruptcy, it listed total
assets of $2,654,000,000 and total debts of $3,061,000,000.
(Troubled Company Reporter, Monday, Sep. 5, 2005, Vol. 9, No.
210)


RAPCO (BERMUDA): Company to be Wound Up Voluntarily
---------------------------------------------------
          IN THE MATTER OF THE COMPANIES ACT 1981

                          And

         IN THE MATTER OF Rapco (Bermuda) Limited

The Members of Rapco (Bermuda) Limited, acting by written
consent without a meeting on August 30, 2005, passed the
following resolutions:

1) THAT the Company be wound up voluntarily, pursuant to the
provisions of the Companies Act 1981; and

2) THAT Robin J Mayor be and is hereby appointed Liquidator for
the purposes of such winding-up, such appointment to be
effective forthwith.

The Liquidator informs that:

- Creditors of Rapco (Bermuda) Limited, which is being
voluntarily wound up, are required, on or before September 16,
2005, to send their full Christian and Surnames, their addresses
and descriptions, full particulars of their debts or claims, and
the names and addresses of their solicitors (if any) to Robin J
Mayor, the Liquidator of the Company, and if so required by
notice in writing from the said Liquidator, and personally or by
their solicitors, to come in and prove their debts or claims at
such time and place as shall be specified in such notice, or in
default thereof they will be excluded from the benefit of any
distribution made before such debts are proved.

- A final general meeting of the Member(s) of Rapco (Bermuda)
Limited will be held at the offices of Messrs. Conyers Dill &
Pearman, Clarendon House, Church Street, Hamilton, Bermuda on
October 7, 2005 at 9:30 a.m., or as soon as possible thereafter,
for the purposes of:

1) receiving an account laid before them showing the manner in
which the winding-up of the Company has been conducted and its
property disposed of and of hearing any explanation that may be
given by the Liquidator;

2) by resolution determining the manner in which the books,
accounts and documents of the Company and of the Liquidator
shall be disposed of; and

3) by resolution dissolving the Company.

CONTACT: Mr. Robin J Mayor, Liquidator
         Messrs. Conyers Dill & Pearman
         Clarendon House
         Church Street
         Hamilton
         HM DX
         Bermuda



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

AGUAS DEL ILLIMANI: Govt. Narrows List of Audit Candidates
----------------------------------------------------------
Bolivian authorities have shortlisted seven firms to carry out
an audit on capital La Paz water concessionaire Aguas del
Illimani (AISA), reveals Business News Americas. Regulator
Sisab, which is responsible for supervising the operation of the
concession, is preparing the terms of reference. The terms will
be available to the firms by a process known as direct
invitation. The direct invitation process was established under
a special decree by [former] President Carlos Mesa.

Sisab expects to complete the selection by the end of the month,
a source from the regulator said, adding, Sisab will pay for the
audit from its budget but perhaps with some government
contribution.

The government has said a transition team will be appointed to
audit AISA's books and inspect the condition of the potable
water and sanitation infrastructure and service to determine
levels of investment.

The regulator wants the audit to cover the whole period of the
concession because it is important to establish the source of
funds used in infrastructure investment to ensure they did not
come from water charges revenues. But AISA has been resisting
the probe claiming that the period 1997-2001 has already been
covered by a previous audit.

AISA has been in handover talks with Sisab and basic services
ministry (VSB) officials since the government ordered the
rescission of its 30-year concession in response to residents'
protests over AISA's allegedly poor service.



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

BANCO RURAL: Cooperates With Investigators
------------------------------------------
Banco Rural, whose loans to the governing Workers' Party are
under investigation by congress, said it surrendered all
documents to federal police who raided the bank's headquarters,
relates Bloomberg. At the same time, the bank created a special
group of 70 employees solely dedicated to assisting authorities.

"Timely cooperation and transparency are demands bank directors
have adopted as parameters for its relationship with
authorities," the Belo Horizonte, Brazil-based bank said in a
statement.

The raid was part of an investigation by federal police, central
bank regulators and lawmakers into Rural's alleged involvement
in a scheme by President Luiz Inacio Lula da Silva's Workers'
Party to pay bribes to lawmakers.

Rural's image has taken a hefty beating from the accusations as
evidenced in the BRL130-million loss in the first six months of
the year. The bank also saw its deposit base shrivel to BRL2.4
billion at the end of June from BRL4.5 billion at the same time
last year.

The troubled bank has started an aggressive restructuring plan
in a bid to survive the fallout from this major crisis. The
restructuring plan includes closing some 30 of its 79 branches
and significantly cutting its 1,800-strong staff through a
voluntary retirement program. Rural has hired two former central
bank directors and one former central bank president to help it
with the restructuring process.


BANESPA: Moody's Assigns Ba2 Rating to $300M Securities
-------------------------------------------------------
Moody's Investors Service assigned a Ba2 rating to Banco do
Estado de Sao Paulo S.A.- Cayman Islands Branch's US$300 million
perpetual non-cumulative junior-subordinated securities. The Ba2
rating is the result of joint probabilities of default that are
incorporated into Banespa's credit risk rating, which is
indicated by its A3 global local currency rating, and by
Brazil's B1 foreign currency ceiling for bonds and notes. The
outlook on the rating is positive.

Moody's noted that the subordination was taken into
consideration in the assignment of the bond rating. However, at
high rating levels on the global local currency scale, the
notching that would usually be applied to subordinated issues
does not affect the final rating outcome.

Banco do Estado de Sao Paulo is the Brazilian subsidiary of
Santander Central Hispano, of Spain, The combined assets of the
Brazilian operation, which includes Banco Santander Brasil and
Banco Santander Meridional, were approximately US$32 billion as
of June 2005. As a group, Santander Banespa is highly
complementary, both geographically and commercially, with
comprehensive coverage of its targeted segments, which provides
strategic diversification and a broader presence in the
Brazilian banking sector. The Brazilian operation also provides
the group access to roughly 4% of the system's deposit market
and it is the most important holding of SCH in Latin America.

Banco do Estado de Sao Paulo is headquartered in Sao Paulo,
Brazil.

The following rating was assigned:

Banco do Estado de Sao Paulo - Cayman Islands Branch's US$300
million perpetual non-cumulative junior- subordinated securities
-- Ba2 long-term foreign currency subordinated bond rating,
positive outlook.


CELG: Moves to Enhance Distribution Network Quality
---------------------------------------------------
Power company Companhia Energetica De Goias (CELG) bought two
mobile substations from Swiss equipment maker ABB for BRL4.2
million and 11 transformers from Germany's Siemens for BRL13
million. The purchases, according to a Business News Americas
report, is part of CELG's efforts to improve the quality of its
distribution network.

The Company, which is controlled by the Goias state government,
plans to use these equipment to carry out maintenance work on
its 69kV and 34.5kV distribution network and meet service
quality requirements from power regulator Aneel.

CELG recently concluded a BRL6-million, 5km, 138kV transmission
system in Goias to strengthen the transmission network. The new
system includes the Independencia substation.

CONTACT:  Companhia Energetica De Goias - CELG
          Rua 2, Qd A - 37 S/N
          Jardim Goias, 74805-180 Goiania - GO 74043-011
          BRAZIL  
          +55 62 243-1041
          +55 62 243-1070  
          URL: http://www.CELG.com.br/


ELETROPAULO METROPOLITANA: Releases Debt Issue Details
------------------------------------------------------
Power distribution outfit Eletropaulo Metropolitana Eletricidade
de Sao Paulo SA unveiled Friday the details of a planned BRL800-
million (US$341-million) non-convertible debenture issuance. Dow
Jones Newswires reports that the debentures will mature in
August 2010 and will pay an annual interest rate of 2.9
percentage points over the local interbank rate.

The Brazilian Securities and Exchange Commission is yet to give
Eletropaulo an authorization to initiate the operation, which
will be coordinated by Itau BBA, Unibanco and Banco Pactual.

Eletropaulo expects to use BRL720 million of the issue to pay
part of its existing BRL1.5 billion debt. It will use the
remaining balance for its investment program and to strengthen
its cash reserves.

Eletropaulo defaulted on over US$2 billion in debts in 2002 but
resumed payments in 2004 after extended negotiations with
creditors in Brazil and abroad. At the time, the Company said it
did not need to raise more money in financial markets but would
consider opportunities that led to lower financial costs.

Eletropaulo is controlled by US power company AES (NYSE: AES)
through a 50% stake in holding company Brasiliana, in which one
of the Company's largest creditors, national development bank
BNDES, has the other 50%.

CONTACT: Eletropaulo Metropolitana Eletricidade de Sao Paulo S/A
         Investor Relations Manager
         Ms. Clarice Silva Assis
         E-mail: clarice.assis@aes.com
         Phone:(55 11) 2195-2229
         Fax:(55 11) 2195-2503


UNIBANCO: Ratings Unaffected By Global Offering
-----------------------------------------------
Unibanco-Uniao de Bancos Brasileiros S.A. (Unibanco, rated Local
Currency: BB/Stable/B; Foreign Currency: BB-/Stable/B) and
Unibanco Holdings S.A. (Unibanco Holdings, not rated) announced
yesterday that in agreement with Caixa Geral de Depositos S.A.
(CGD, rated A+/Stable/A-1), Unibanco will file registration
statements for a global public offering of the equity interests
in Unibanco and Unibanco Holdings (about 12.3% of Unibanco's
total capital) held by Caixa Brasil SGPS S.A., a 100% owned
subsidiary of CGD. The decision is also the result of the
January 2005 adoption of new International Financial Reporting
Standards/International Accounting Standards by European banks
requiring that investment stakes of less than 20% have to be
booked at cost and recognized as income from dividends and/or as
interest on equity capital. Regardless of this change,
Unibanco's controlling shareholder, the Moreira Salles family,
will maintain its majority voting interest on Unibanco Holdings,
which has 97% of Unibanco's common shares. In our opinion, there
is no impact on Unibanco's ratings, since CGD's participation in
Unibanco was viewed as a financial investment and the ratings
did not benefit from this participation. In addition, this
change in the shareholder structure does not affect Unibanco's
operational strategy, and the bank is expected to maintain its
good business and financial profile.

Primary Credit Analyst: Tamara Berenholc, Sao Paulo (55) 11-
5501-8950; tamara_berenholc@standardandpoors.com

Secondary Credit Analyst: Milena Zaniboni, Sao Paulo (55) 11-
5501-8945; milena_zaniboni@standardandpoors.com


VARIG: 2Q Net Loss Shrinks Despite Losing Market Share  
------------------------------------------------------
VARIG, S.A., reported a BRL342.4 million net loss for the second
quarter of the year 2005, down 13% from BRL393.9 million a year
earlier. Market share fell to 26.5% at the end of the quarter
from 31.2% a year ago, even though passenger numbers rose around
10% both on flights inside the country and abroad as Brazilians
started to travel more, encouraged by a stronger economy.

The Company's fuel costs in the first six months of the year
jumped 24%. VARIG closed June with a fleet of 88 aircraft, down
from 92 a year earlier.

VARIG said it benefited from exchange-rate variations, as the
real appreciated about 14% during the quarter. Analysts say it
needs a cash injection urgently to keep flying.

Headquartered in Rio de Janeiro, Brazil, VARIG S.A. is Brazil's
largest air carrier and the largest air carrier in Latin
America. VARIG's principal business is the transportation of
passengers and cargo by air on domestic routes within Brazil and
on international routes between Brazil and North and South
America, Europe and Asia.  VARIG carries approximately 13
million passengers annually and employs approximately 11,456
full-time employees, of which approximately 133 are employed in
the United States.

The Company, along with two affiliates, filed for a judicial
reorganization proceeding under the New Bankruptcy and
Restructuring Law of Brazil on June 17, 2005, due to a
competitive landscape, high fuel costs, cash flow deficit, and
high operating leverage. The Debtors may be the first case under
the new law, which took effect on June 9, 2005.  Similar to a
chapter 11 debtor-in-possession under the U.S. Bankruptcy Code,
the Debtors remain in possession and control of their estate
pending the Judicial Reorganization.  Sergio Bermudes, Esq., at
Escritorio de Advocacia Sergio Bermudes, represents the carrier
in Brazil.

Each of the Debtors' Boards of Directors authorized Vicente
Cervo as foreign representative. In this capacity, Mr. Cervo
filed a Sec. 304 petition on June 17, 2005 (Bankr. S.D.N.Y. Case
Nos. 05-14400 and 05-14402). Rick B. Antonoff, Esq., at
Pillsbury Winthrop Shaw Pittman LLP represents Mr. Cervo in the
United States. As of March 31, 2005, the Debtors reported
BRL2,979,309,000 in total assets and BRL9,474,930,000 in total
debts.(VARIG Bankruptcy News, Issue No. 6; Bankruptcy Creditors'
Service, Inc., 215/945-7000)


VARIG: Willis Lease Seeks to Repossess Engines
----------------------------------------------
Willis Lease Finance Corporation asks the U.S. Bankruptcy Court
for the Southern District of New York to modify the Preliminary
Injunction so it can repossess eight engines leased to Varig
S.A.

Willis Lease Finance Corporation leases the engines to VARIG,
S.A., and its affiliate Rio-Sul Linhas Aereas, S.A. All the
Leases are short-term leases, and six of them will expire by
September 30, 2005, at the latest. The monthly rent on the eight
Willis Engines aggregates $446,812.

David A. Rosenzweig, Esq., at Fulbright & Jaworski, LLP, in New
York, relates that one lease has already expired, but the engine
has not been returned and is believed to be in VARIG's service.
As of August 22, 2005, rent and maintenance reserve arrears
under the Willis Lease aggregated $904,766.

Mr. Rosenzweig recounts that when the Bankruptcy Court entered
the preliminary injunction on June 27, 2005, the Order provided
that aircraft lessors could initiate a hearing on "an emergency
basis" if VARIG were to remain in payment default five days
after notice. VARIG has not cured defaults on the Willis
Engines.

According to Mr. Rosenzweig, the market for spare engines is
strong, in part because many airlines like VARIG are financially
incapable of repairing engines and therefore resort to leasing
spare engines instead. Willis, therefore, believes that it can
return the VARIG engines to service with a more credit-worthy
operator quickly after recovering possession.

VARIG had previously assured the Court that cash flow from
current operations would produce liquidity sufficient to service
aircraft lease payments coming due after the reorganization
cases were begun on June 17, 2005. VARIG's prediction has proven
untrue, Mr. Rosenzweig says. The nature of VARIG's problems
implies that it is incapable of curing its aircraft payment
defaults immediately.

Mr. Rosenzweig notes that Brazilian law does not relieve VARIG
from liens placed on its accounts receivable or credit card
income in Brazil and probably in Europe. Accordingly, VARIG's
incoming cash flow has been compromised. Likewise, Brazilian law
does not afford VARIG protection from the claims of its
employees, in distinction to U.S. law. The two factors in
combination with dramatically rising fuel prices have rendered
VARIG incapable of paying for its aircraft and spare engines.

Mr. Rosenzweig states that VARIG maintained having arranged an
asset sale of receivables in lieu of its $88 million DIP
financing. About one-third of the funds are earmarked to cure
defaults under aircraft and spare engine operating leases.
However, the possibility remains that VARIG may be compelled
under Brazilian law to apply the funds to claims other than from
aircraft finance and leasing parties.

Accordingly, Willis has no assurance that the past due amounts
will be paid. As of the close of business on August 18, 2005, a
letter of intent describing VARIG's proposal was unsigned. Yet,
if the Letter of Intent is signed, approval of the Brazilian
court is required. Thus, the transactions will not close and
funds will not become available for three or four more weeks.
This means that Willis's engines will continue to be used
without payment of maintenance reserves. Even so, VARIG cannot
provide assurance that it will resume regular payments after
September.(VARIG Bankruptcy News, Issue No. 6; Bankruptcy
Creditors' Service, Inc., 215/945-7000)



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

FGM: University Audits Asset Valuation Process
----------------------------------------------
Colombia's national university is conducting an audit on the
asset valuation process of Frontino Gold Mines (FGM), the local
miner currently under administration, reports Business News
Americas. The audit, which is expected to be concluded in
roughly three weeks, is an important step towards the
certification of the valuation procedures.

After the university certifies the valuation procedures, FGM
will then submit the certification to the country's regulator,
who will decide on the liquidation of FGM.

The liquidation process may involve transforming FGM from a
publicly listed corporation to a limited partnership, where
ownership would be divided among workers and retired staff.

But "it all depends on valuation of assets and seeing the
possibility of payment in kind," said FGM liquidator Jose David
Castellanos.

FGM, with reserves enough to last 20 years, operates in the
municipality of Segovia on the border of Antioquia and Bolivar
departments.


* COLOMBIA: Reaches Mission-level Agreement with IMF
----------------------------------------------------
The International Monetary Fund (IMF) Staff mission reached
mission-level agreement with the authorities toward completing
the first review under the Fund-supported program approved in
April 2005.

The following statement was released on September 1 in Bogota by
an International Monetary Fund (IMF) Staff mission:

"The IMF team that has been in Bogota over the past 10 days has
reached mission-level agreement with the authorities toward
completing the first review under the Fund-supported program
approved in April 2005.

"The economy has continued to perform very well in 2005, with
improving confidence, increasing international reserves, strong
growth in real investment, and robust exports, and with
inflation well under control. Through June, fiscal policy was
significantly stronger than expected. Among structural reforms,
congress approved the new securities market law and the pension
reform but not the revised budget code.

"The near-term outlook remains very favorable, allowing economic
policy to be strengthened further so as to lock in the benefits
from the current benign external environment for Colombia. Real
GDP is expected to rise by 4 percent for the year as a whole,
while inflation during 2005 is likely to amount to 5 percent, as
targeted. The external current account deficit should be much
lower than targeted, at about 1.0 percent of GDP, reflecting the
strength of world commodity prices, especially for oil, as well
as strong growth in non-traditional exports. Net capital inflows
are expected to remain strong, resulting in part from a
significant pick up in foreign direct investment, especially
oil, coal and telecommunications.

"Given the strength of the economy, the government has proposed
to advance fiscal consolidation more rapidly, which will
accelerate the decline in public debt and further reduce
vulnerabilities. Thus, the 2005 target for the combined public
sector (CPS) deficit is being lowered to a range of 1.5 percent
to 2 percent of GDP, compared with 2.5 percent of GDP that was
originally expected. Gains in tax administration are bolstering
revenues, while the government sees no need for a supplementary
budget this year. This lower fiscal target already includes the
effects of higher oil prices, and will not be reduced further.
For 2006, the target for the CPS deficit will remain at 2.0
percent of GDP, assuming a conservative export price of oil.

"The Banco de la Republica remains fully committed to achieving
its inflation target for 2005 and to reducing annual inflation
further to the range of 2 to 4 percent over the medium term.

"Structural reforms will continue to advance. The government
intends to implement as many provisions as possible of the
revised budget code through decree or other actions that do not
require legislation. Financial supervision will continue to
strengthen, especially with the process of selling Granahorrar
and the development of a framework for corporate governance of
public banks.

"The next step is for management to review the revised program
in Washington in the coming days, with the Executive Board of
the Fund expected to discuss the first review most likely in
October 2005."

CONTACT: International Monetary Fund - IMF
         External Relations Department
         Public Affairs
         Phone: 202-623-7300
         Fax: 202-623-6278

         Media Relations
         Phone: 202-623-7100
         Fax: 202-623-6772



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

EDENORTE/EDESUR: Foreigners Hired to Administer Companies
---------------------------------------------------------
Beginning Sep. 16, foreigners will be administering Dominican
Republic's electricity distributors Edenorte and Edesur, Diario
Libre Online reports. Radhames Segura, administrator of state
power company CDEEE, revealed that Peruvian Manuel Suarez will
be replacing Fernando Rosa as the general manager of Edenorte.

At Edesur, Ruben Bichara will remain as general manager.
However, Chilean Alejandro Paul Gonzalez will now oversee
Edesur's distribution and commercialization department while
Peruvian Ricardo Jose Arrese will oversee the Company's
resources area.

The new people were hired to help Edesur and Edenorte increase
collections by between 70% and 80%. Currently, 47% of users do
not pay for energy, prompting the government to subsidize these
companies. The DR hired these foreigners on recommendation from
the World Bank, which agreed to guarantee the financial
feasibility of the energy distribution companies.



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

PETROECUADOR: Oil Production Recovers, Foreign Exports Resume
-------------------------------------------------------------
Petroecuador has recovered its oil production to about 195,000
barrels a day (b/d), two weeks after violent protests in the
oil-rich Amazon provinces of Sucumbios and Orellana forced the
state oil firm to halt production. The Company also said Friday
that it had resumed foreign exports of crude, with the first
shipment of 360,000 barrels heading to the United States.

President Alfredo Palacio froze state exports of crude on Aug.
18 to guarantee reserves for internal demand after hundreds of
protesters seized facilities and sabotaged pipelines and wells,
demanding a greater share of oil proceeds.

An agreement reached last week will bring a series of benefits
to the jungle provinces, including repair of 160 miles of
regional highways and construction of public infrastructure by
the 10 foreign oil companies operating there.

Petroecuador said its facilities incurred between US$25 million
and US$30 million of damage from the protests. The Company
normally produces about 201,000b/d. It is still not known when
production might reach the full pre-protest level. According to
company source, it could be a matter of weeks as work repairing
the wells and pipelines damaged during the protests continues.



=====================
E L   S A L V A D O R
=====================

BANCO AMERICANO: Negotiations Proceed With Potential Investor
-------------------------------------------------------------
Banco Americano chairman, Mr. Ronal Lacayo, confirmed that talks
with a Central American financial institution interested in
taking a majority stake in the niche bank are in advanced
stages, relates Business News Americas.

Mr. Lacayo earlier said that his bank needs a strategic investor
with deep pockets in order to stay competitive in a banking
industry that is increasingly dominated by big local and
international players like Banco Agricola and Grupo Cuscatlan.

Banco Americano received several offers from seven Central
American and international banking groups. These offers range
from the acquisition of 100% of the bank's shares to the
purchase of a minority stake.

The bank's assets fell 35% year-over-year to US$71.6 million at
June 30, while deposits plunged nearly 50% to US$21.6 million.
First half profits totaled US$17,478.

In June, Fitch Ratings cut the bank's national scale long-term
ratings to B- from B, citing its shallow funding base and the
significant loss of deposits during the first quarter.



=================
G U A T E M A L A
=================

* GUATEMALA: S&P Releases Ratings Analysis
------------------------------------------
Credit Ratings

Local currency:  BB/Stable/B
Foreign currency:  BB-/Stable/B

Major Rating Factors

Strengths:

    - Long track record of conservative fiscal policies.

    - Progress made by the current government in controlling
      corruption and improving the efficiency of the public
      administration.

    - Diminished gross external financing requirements,
      supported by a large flow of family remittances and a
      strong international reserves position.

    - Improved economic prospects as a result of the Central
      America Free Trade Agreement (CAFTA).

Weaknesses:

    - Highly polarized political environment.

    - Very limited fiscal flexibility because of the inability
      to increase tax revenue.

    - The persistence of external imbalances.

Rationale

The administration of President Oscar Berger implemented a
series of difficult policies and drastic actions to cope with
the elimination of the Impuesto a Empresas Mercantiles y
Agricolas (IEMA) tax at the end of 2003. These measures include
an unprecedented reduction in the size of the armed forces by
about one-third and a 20% reduction in the civil service. At the
same time, Congress passed a watered-down version of the
government's tax package, reducing its potential fiscal impact.
In addition, an improvement in the efficiency of the public
administration, in particular in the tax superintendence,
contributed to tax revenue of 10.3% of GDP at the end of 2004,
unchanged from 2003. The general government deficit was 1% in
2004 and is expected to reach 1.5% of GDP in 2005, a
considerable improvement from the 2.5% recorded in 2003 and in
line with the government's public investment program and its
policy of keeping the fiscal deficit at less than 2%.

Another factor supporting the ratings on Guatemala is the
prospects of economic integration with the U.S. through CAFTA,
which was ratified by the U.S. Congress in July 2005. Advances
under the CAFTA framework will provide new economic growth
opportunities as well as an institutional anchor for economic
policy and reform. Real GDP is estimated to grow 3% in 2005 and
3.5% in 2006, bringing per capita growth to 0.4% in 2005 and
0.8% in 2006.

The ratings on Guatemala continue to be constrained by still-
evolving democratic institutions within a highly polarized
political environment divided among social and ethnic lines. The
ability of the Berger administration to maintain the momentum on
the implementation of his government's strategy in the context
of a divided Congress-which continues to challenge both
Guatemala's institutional strength and the government's ability
to implement economic reform-seems key to ensuring economic
progress over the medium term.

A narrow tax base limits the government's capacity to implement
public policy. The issue has become increasingly politicized,
and no major improvement is expected in this regard. A narrow
tax base will continue to constrain Guatemala's fiscal
flexibility and creditworthiness over the medium term.

Continual current account deficits undermine an otherwise sound
macroeconomic framework. Similar imbalances are expected to
continue despite large family remittances and a more vibrant
export sector.

Outlook

The outlook on Guatemala reflects Standard & Poor's Ratings
Services expectation that the Berger administration will
continue to move ahead with the fight against corruption and
with its social and economic development plan, Vamos Guatemala,
within a framework of fiscal discipline. At the same time,
Standard & Poor's expects that the government will be able to
capitalize from CAFTA, using it as an engine to propel economic
growth in the medium term. A political environment more
conducive to implementation of economic policy, combined with
effective fiscal reform that enhances fiscal flexibility, will
certainly improve Guatemala's creditworthiness over the medium
term. In contrast, any increase in political polarization that
further limits the government's ability to apply effective
economic policies could place downward pressure on the ratings.

Primary Credit Analyst: Roberto Sifon Arevalo, New York (1) 212-
438-7358; roberto_sifon-arevalo@standardandpoors.com

Secondary Credit Analyst: Sebastian Briozzo, New York (1) 212-
438-7342; sebastian_briozzo@standardandpoors.com



===============
H O N D U R A S
===============

* HONDURAS: IMF Says Inflation Stabilized
-----------------------------------------
The International Monetary Fund (IMF) staff mission noted in the
third review of the Poverty Reduction and Growth Facility (PRGF)
program that Honduras' inflation has stabilized, after drifting
upward last year mainly because of high oil prices.

The staff mission visited Tegucigalpa, Honduras during August 22
to September 2, 2005 for discussions with the authorities on the
third review of the PRGF. The staff mission said:

"An IMF staff mission visited Tegucigalpa, Honduras during
August 22-September 2, 2005 for discussions with the authorities
on the third review of the Poverty Reduction and Growth Facility
(PRGF) program.

"The mission found the government's economic program is
continuing to deliver results. The strong recovery of 2004 is
moderating somewhat on account of lower agricultural output and
higher oil prices. Inflation has stabilized, after drifting
upward last year mainly because of high oil prices. The external
position strengthened substantially, supported by strong growth
in remittances of over 50 percent through June 2005, raising
international reserves to over US$2 billion.

"The results reflect strong macroeconomic policies and
structural reforms pursued under the government's program. The
fiscal deficit was reduced as expected, as control over the wage
bill and debt relief allowed poverty reducing spending to
increase. All quantitive targets for end-June were met.

"Looking forward, it will be important to maintain the consensus
on the program through the upcoming election period and
transition to a new government. The mission supports the
government's efforts to cushion the impact of high oil prices on
the poor, while maintaining fiscal discipline. It is essential
to maintain continuity in policies to protect gains of higher
growth and social progress.

"Upon its return to Washington, the mission will submit its
report to the IMF's Management. Executive Board consideration of
the PRGF review could take place in mid-October."

CONTACT: International Monetary Fund - IMF
         External Relations Department
         Public Affairs
         Phone: 202-623-7300
         Fax: 202-623-6278

         Media Relations
         Phone: 202-623-7100
         Fax: 202-623-6772



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

ASARCO: Granted Restricted Use of Mitsui Cash Collateral
--------------------------------------------------------
As previously reported in the Troubled Company Reporter on Aug.
15, 2005, Judge Schmidt of the U.S. Bankruptcy Court for the
Southern District of Texas granted ASARCO LLC authority to use
its cash collateral on an interim basis. The Court directs
ASARCO to deposit $1,280,000 of proceeds of Mitsui & Co.
(U.S.A.), Inc.'s collateral in a newly established separate
segregated bank account.

As ASARCO sells its copper inventory, the Debtor is directed to
continue allocating the proceeds to silver inventory in the same
manner that it has done previously.

As proceeds of Mitsui's collateral are received, the Debtor will
promptly deposit into the Mitsui Cash Collateral Account that
portion of the proceeds that the Debtor has allocated to silver
inventory.

In the event that the Debtor determines that it needs to use
funds in the Mitsui Cash Collateral Account, the Debtor may
request an emergency hearing, on at least three business days'
notice to Mitsui and its counsel, before the Court, provided
however, that Mitsui will be entitled to seek further
protection, including adequate protection, at the hearing.

The Court directs the Debtor to provide Mitsui with reports of
the amount of silver inventory on a bi-weekly basis and of the
amount of the Cash Collateral that is segregated in the Mitsui
Cash Collateral Account on a weekly basis pending a final
hearing.

                         Court's Ruling

Judge Schmidt authorizes ASARCO to continue to maintain the
proceeds of Mitsui & Co. (USA), Inc.'s collateral in the
separate segregated bank account.

The Court will convene a final hearing on Sept. 14, 2005, at
2:00 p.m. in Corpus Christi.  Any objection to ASARCO's request
must be filed by Sept. 9, 2005.

Stephen A. Goodwin, Esq., at Carrington, Coleman, Sloman &
Blumenthal, LLP, in Dallas, Texas, represents Mitsui in ASARCO's
Chapter 11 case.

Headquartered in Tucson, Arizona, ASARCO LLC --
http://www.asarco.com/-- is an integrated copper mining,  
smelting and refining company.  Grupo Mexico S.A. de C.V. is
ASARCO's ultimate parent.  The Company filed for chapter 11
protection on Aug. 9, 2005 (Bankr. S.D. Tex. Case No. 05-21207).
James R. Prince, Esq., Jack L. Kinzie, Esq., and Eric A.
Soderlund, Esq., at Baker Botts L.L.P., and Nathaniel Peter
Holzer, Esq., Shelby A. Jordan, Esq., and Harlin C. Womble,
Esq., at Jordan, Hyden, Womble & Culbreth, P.C., represent the
Debtor in its restructuring efforts.  When the Debtor filed for
protection from its creditors, it listed $600 million in total
assets and $1 billion in total debts.

The Debtor has five affiliates that filed for chapter 11
protection on April 11, 2005 (Bankr. S.D. Tex. Case Nos. 05-
20521 thru 05-20525).  They are Lac d'Amiante Du Quebec Ltee,
CAPCO Pipe Company, Inc., Cement Asbestos Products Company, Lake
Asbestos Of Quebec, Ltd., and LAQ Canada, Ltd.  Details about
their asbestos-driven chapter 11 filings have appeared in the
Troubled Company Reporter since Apr. 18, 2005.  ASARCO has asked
that the five subsidiary cases be jointly administered with its
chapter 11 case.(ASARCO Bankruptcy News, Issue No. 4; Bankruptcy
Creditors' Service, Inc., 215/945-7000)


ASARCO: Seeks Authority to Pay DIP Financing Costs
--------------------------------------------------
Even before ASARCO LLC filed for bankruptcy, the company had
discussions with potential debtor-in-possession (DIP) lenders to
provide a DIP loan facility during the pendency of the
reorganization. That search has continued postpetition, and
ASARCO has reached the point where potential lenders need to
engage in extensive due diligence as part of finalizing their
lending decisions and terms.

When ASARCO selects a DIP lender, that lender requires
reimbursement for all of their out-of-pocket costs and expenses.
These include reasonable fees and expenses of outside legal
counsel, third party advisors and travel-incurred in connection
with the DIP facility.  ASARCO estimates that, for a DIP
facility in the range of $75 million to $150 million, out-of-
pocket expenses will range from $275,000 to $350,000.  ASARCO
has already received expense reimbursement requests from its
potential DIP lenders.

James R. Prince, Esq., at Baker Botts, LLP, in Dallas, Texas,
asserts that a DIP facility will provide much needed working
capital for the Debtor, and at the same time benefit the
Debtor's estate and creditors.  With the liquidity provided by a
DIP facility, ASARCO will be better positioned to obtain goods
and services in connection with its operations on normal credit
terms, thereby permitting it to generate revenues, pay its
employees, and effectively operate its business.

However, before ASARCO can obtain a DIP facility, a lender must
conduct sufficient due diligence so that it will agree to loan
the money.  Pursuant to Section 363(b) of the Bankruptcy Code,
ASARCO seeks authority from the U.S. Bankruptcy Court for the
Southern District of Texas to pay the out-of-pocket costs and
expenses incurred by third-party lenders in connection with
potential DIP financing agreements in an amount not to exceed
$350,000.  Mr. Prince says these amounts will be funded with
unencumbered cash.(ASARCO Bankruptcy News, Issue No. 4;
Bankruptcy Creditors' Service, Inc., 215/945-7000)


GRUPO MEXICO: Workers Delay Strike Deadline to Vote on Proposal
---------------------------------------------------------------
Workers at Grupo Mexico's La Cananea copper mine have decided to
delay until Tuesday, Sep. 6, a planned strike, reports Dow Jones
Newswires. The group had planned to start a strike Sep. 3, an
extension from Aug. 27, but decided to delay it for a few days
to make way for a vote on Monday on a contract proposal drawn up
in negotiations between company and union officials

The details of the proposal were not revealed but previous
reports have suggested that the most disputed issue in the
current talks over the annual revision of the collective
contract at the mine was the productivity bonus.

Cananea holds Mexico's biggest copper reserves and has the
second-largest operation of refined copper products after La
Caridad. Both Grupo Mexico units are in northern Sonora state.

Grupo Mexico is the world's third-largest copper producer, with
operations in Mexico, Peru and the U.S.

CONTACT:  GRUPO MEXICO S.A. DE C.V.
          Avenida Baja California 200,
          Colonia Roma Sur
          06760 Mexico, D.F., Mexico
          Phone: +52-55-5264-7775
          Fax: +52-55-5264-7769
          Web site: http://www.gmexico.com


SICARTSA: Workers Reject Grupo Villacero's Proposal
---------------------------------------------------
Grupo Villacero failed to convince Sicartsa workers to accept a
proposal aimed at ending a month-old strike at the steel plant
in southern Mexico. According to Business News Americas,
Villacero had proposed a 1-2% wage increase on every thousand
tonnes of steel billets shipped each week. However, during the
September 1 union assembly meeting, 781 representatives voted to
continue striking versus 731 who voted in favor of the latest
proposal.

The union will meet with Villacero again to reopen talks and
continue searching for a solution to the strike, which so far
has cost the Company more than US$87 million in lost production.



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

SIDERPERU: A&A Sees High Default Risk on Bonds
----------------------------------------------
Peruvian ratings agency Apoyo & Asociados (A&A) is maintaining
its Category C rating on Peruvian steelmaker Siderperu's bonds,
reports Business News Americas. A Category C rating implies
there is "a very high risk of not complying with payments."

A&A, which is affiliated with Fitch Ratings, acknowledges
Siderperu's operating improvements, with a favorable outlook for
the industry, relatively high prices and an increase in demand
for Siderperu products.

Nevertheless, the Company's cash flow generation is not
sufficient to pay about US$7.9 million of debts due September
30, a deadline, which creditors have already agreed to postpone
from February 28, 2005, A&A said.

Siderperu creditors agreed on June 30, 2005 that the steelmaker
could pay its obligations due on February 28, 2005 in two
installments on August 31, 2005, (US$163,222) and September 30
(US$7.9 million).

Siderperu has been struggling over recent years to meet payments
for its first bond issue and creditors approved a global
refinancing agreement (AGR) in April 2002 to reprogram the
payments from 2003-2012.

Since then, however, creditors have agreed to three addendums to
reprogram the commitments made in the AGR.

Siderperu, which is controlled by local holding Company Sider,
has a production capacity of 400,000t/y.



=================
V E N E Z U E L A
=================

PDVSA: Cardon Cracker Restarts, Puerto La Cruz Plant Shuts Down
---------------------------------------------------------------
State oil firm Petroleos de Venezuela's (PDVSA) 77,000-barrel-
per-day (bpd) Cardon catalytic cracking unit is now back in
operations after a maintenance shutdown, Latin Petroleum.com
reports. The unit was originally scheduled to undergo
maintenance in October. However, an incident in July caused the
unit to shut down, prompting PDVSA to move forward the scheduled
maintenance work.

The Cardon plant, which holds the unit, is part of the giant
Amuay-Cardon refinery complex, the largest in the Western
hemisphere with a combined capacity of 940,000 bpd.

Meanwhile, PDVSA's Puerto La Cruz oil refinery was shut down
Friday due to a power outage.

According to PDVSA, there has been no damage to the refinery and
no foreign oil shipments have been delayed as a result of the
shut down. Officials were trying to determine the cause of the
blackout.

"The refinery should be up and running again before midnight
tonight," PDVSA said.

The Puerto La Cruz refinery is located about 240 kilometers (148
miles) east of Caracas. It produces roughly 200,000 barrels of
unleaded gasoline and diesel fuel a day.



                            ***********


S U B S C R I P T I O N   I N F O R M A T I O N

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