TCRLA_Public/060124.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, January 24, 2006, Vol. 7, Issue 17

                            Headlines

A R G E N T I N A

ACEROS ZAPLA: Resuming Labor Talks in February
AES CORP.: Names Victoria Harker as Chief Financial Officer
AOL LATIN AMERICA: Non-Debtor Subsidiaries to Be Liquidated
* BUENOS AIRES: Completes $2.7 Billion Debt Swap


B O L I V I A

ANDINA: Gov't May File Suit Over Oil Smuggling, False Papers
* Urged to Join Natural Gas Pipeline Project


B R A Z I L

ACESITA: Anti-trust Agency Okays Sale of Shares to Arcelor
BANCO DO BRASIL: Previ Divesting 59% of Stock by 2012
BANCO PACTUAL: Considering IPO to Fund Expansion Plans
CAMARGO CORREA: Cade Balks at Trade Covenant with Votorantim
CELG: Goias Will be Paying Senago's US$431 Million Debt

CEMIG: Limiting Investments to Control Debt & Guarantee Payments
ELETROPAULO METROPOLITANA: Funding Expansion with BRL110 Million
LIGHT SERVICOS: Parent Company Hires Citigroup to Aid Stake Sale
NATIONAL STEEL: Fitch Rates Perpetual Bond Issuance at 'BB-'
VARIG S.A.: Placing Nine More Aircraft in Operation


C A Y M A N   I S L A N D S

BALESTRA LIMITED: To Present Liquidation Account on February 9
BLUE STAR: Schedules Final Meeting on February 9
DRAYTON LTD.: To Explain Wind Up Process to Members on Feb. 9
FEILUNG COMPANY: Sets Final Meeting on February 9
GUIAGUVIC INVESTMENTS: Disclosing Wind Up Process on February 9


C H I L E

AMERICAN INTERNATIONAL: Chilean Unit Aims For Top Spot by 2007
CELCO: Can Start Building Nueva Aldea's Emissions Outlet


C U B A

* 2005 Results Places China as Second-Largest Trading Partner


E L   S A L V A D O R

MILLICOM: Reviews Strategic Options after Unsolicited Approaches


H O N D U R A S

HONDUTEL: International Rates Slashed 40%
* Wants WTO Ruling on Banana Dispute with European Union


M E X I C O

BALLY TOTAL: Closes Crunch Fitness Sale
TELMEX: Loses Most Heavily Weighted Stock Position


P U E R T O   R I C O

GUILLERMO VAELLO: Court Sets May 15 as General Claims Bar Date
GUILLERMO VAELLO: U.S. Trustee Will Meet Creditors on Feb. 13
MUSICLAND HOLDING: Gets Court Okay on $60 Mil. of DIP Financing


S U R I N A M E

* Fitch Affirms B Rating on Foreign Currency IDR


U R U G U A Y

* Urged to Join Natural Gas Pipeline Project

     -  -  -  -  -  -  -  -

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


ACEROS ZAPLA: Resuming Labor Talks in February
----------------------------------------------
Argentine steel producer Aceros Zapla will resume negotiations
in February with its labor union to discuss the terms of a new
collective bargaining agreement, according to Business News
Americas.

"We started negotiations in November but they got bogged down
over the wage issue," Union Secretary Alfredo Hoyos told
Business News.  Other issues related to working conditions and
social benefits were agreed upon.

                         10% Stake

One of the issues that the February meeting will include is the
workers' concerns about receiving a stake in the company -- as
stipulated under a deal signed after Altos Hornos Zapla was
privatized in 1992, renaming it Aceros Zapla. Under the 1992
agreement, the workers were to receive a 10% stake in the
company, but it never came to fruition.

"It's been more than 13 years since privatization and we still
haven't managed to get the share transfer program implemented,"
Mr. Hoyos told Business News.

Mr. Hoyos is hopeful that the workers will recover benefits
including lunch, bonuses and health benefits among other things,
after the negotiation next month.  Workers are also demanding a
30% wage increase.

If the negotiation in February faild, Mr. Hoyos told Business
News that workers are ready to go on strike.

Aceros Zapla is in the town of Palpala in Jujuy province and
produces hot-rolled long steel primarily for the oil and
automobile industries, as well as for machinery and equipment
manufacturers.


AES CORP.: Names Victoria Harker as Chief Financial Officer
-----------------------------------------------------------
The AES Corporation announced Friday that Victoria Harker will
become its Chief Financial Officer and an Executive Vice
President, effective Jan. 23.

Ms. Harker joins AES from MCI where she served as Senior Vice
President and Treasurer.  Ms. Harker served as Chief Financial
Officer of the $15 billion MCI Group, a publicly traded unit of
WorldCom Inc., from 1998 to 2000, and oversaw a variety of
finance, information technology and operations responsibilities
during her fifteen-year tenure at MCI.

"Victoria brings a solid set of financial management skills that
will enable her to lead our finance organization as we continue
to focus on improving our businesses and begin to build our
development pipeline," said Paul Hanrahan, AES President and
Chief Executive Officer.  "Victoria's impressive and diverse
experience will make her a valued member of our leadership
team."

AES Corporation -- http://www.aes.com/-- is a leading global  
power company, with 2004 revenues of $9.5 billion.  AES operates
in 27 countries, generating 44,000 megawatts of electricity
through 124 power facilities and delivers electricity through 15
distribution companies.  AES Corp.'s 30,000 people are committed
to operational excellence and meeting the world's growing power
needs.

                        *    *    *

As reported in the Troubled Company Reporter on Jan. 11, 2006,
Moody's affirmed the ratings of The AES Corporation, including
its Ba3 Corporate Family Rating and the B1 rating on its senior
unsecured debt.  The rating outlook remains stable.

As reported in the Troubled Company Reporter on June 23, 2005,
Fitch Ratings upgraded and removed the ratings of AES
Corporation from Rating Watch Positive, where it was initially
placed on Jan. 18, 2005, pending review of the company's year-
end financial results.  Fitch said the Rating Outlook is Stable.


AOL LATIN AMERICA: Non-Debtor Subsidiaries to Be Liquidated
-----------------------------------------------------------
America Online Latin America, Inc., entered into a letter
agreement with AOL S. de R.L. de C.V. aka AOL Mexico, AOL Brazil
Ltda., America Online, Inc., Time Warner, Inc., Aspen
Investments LLC and Atlantis Investments LLC on Jan. 17, 2006.

The letter agreement was entered in connection with the joint
filing by AOLA and its wholly owned subsidiaries, AOL Puerto
Rico Management Services, Inc., America Online Caribbean Basin,
Inc., and AOL Latin America Management LLC, of a proposed joint
plan of reorganization and liquidation and related disclosure
statement in their jointly administered chapter 11 bankruptcy
cases.  The letter agreement provides for the payment of certain
wind-down costs by AOL Mexico and AOL Brazil to America Online.  
The letter agreement stated:

The purpose of this letter is to confirm the understandings and
agreements relating to the payment of certain post-petition
costs and expenses associated with the wind-down of America
Online Latin America, Inc., and its subsidiaries.
     
As you know, AOLA and certain of its subsidiaries are debtors in
a jointly administered chapter 11 case pending in the United
States Bankruptcy Court for the District of Delaware.  On or
about January 17, 2006, the debtors intend to file a joint plan
of reorganization and liquidation, which will provide for the
implementation of the wind-down.  Pursuant to the wind-down,
certain of AOLA's non-debtor subsidiaries, including AOL S. de
R.L. de C.V. and AOL Brasil Ltda. will be liquidated and/or
dissolved in accordance with applicable local laws. America
Online, Inc. is expected to incur actual out-of-pocket costs and
expenses in assisting AOLA, AOL Mexico and AOL Brazil in their
efforts to terminate service, discontinue customers, and shut
down operations in connection with the wind-down of AOL Mexico
and AOL Brazil, as set forth in an estimate delivered by AOL to
AOLA.  The parties hereto have agreed that AOL will be
reimbursed for the wind-down costs in a manner consistent with
the following terms and conditions.  Capitalized terms used
herein and not defined herein shall have the meanings ascribed
to such terms in the Plan.

-  All payments made by AOL Mexico and/or AOL Brazil to AOL
hereunder shall be made free and clear of, and without deduction
or withholding for or on account of, any taxes, levies, imposts,
duties, charges, fees, deductions or withholdings, now or
hereafter imposed, levied, collected, withheld or assessed by
any governmental authority, excluding any Taxes imposed by the
jurisdiction in which AOL is organized or is located, or in
which its principal executive office is located or by reason of
any connection between the jurisdiction imposing such Tax and
AOL other than in connection with AOL having executed, delivered
or performed its obligations hereunder or performed activities
described herein; provided , that if any such non-excluded taxes
are required to be withheld from, or otherwise deducted from,
any amounts payable to AOL hereunder, the amounts so payable
shall be increased as necessary so that after making all
required deductions for non-excluded taxes -- including
deductions applicable to additional sums payable under this
paragraph -- AOL receives an amount equal to the sum it would
have received had no such deductions been made.

- If any applicable law requires AOL Mexico and/or AOL Brazil to
withhold or deduct any amounts from any wind-down costs paid to
AOL hereunder, AOL Mexico and/or AOL Brazil shall effect such
withholding, remit such amounts to the appropriate governmental
authorities and deliver to AOL, within 30 days of payment of
such amounts to the governmental authorities, the original or a
certified copy of a tax receipt issued by such governmental
authority evidencing the payment of any such amounts.

- AOL Mexico and AOL Brazil shall indemnify AOL, within 10 days
after written demand therefore, for the full amount of any Non-
Excluded Taxes paid by or with respect to AOL on or with respect
to any payment by or on account of any obligation of AOL
hereunder -- including non-excluded taxes imposed or asserted on
or attributable to amounts payable under this paragraph -- and
any penalties, interest and reasonable expenses arising
therefrom or with respect thereto, whether or not such Non-
Excluded Taxes were correctly or legally imposed or asserted by
the relevant governmental authority; provided , that AOL shall
cooperate with AOL Mexico and AOL Brazil to contest such non-
excluded taxes at the reasonable request of AOL Mexico and/or
AOL Brazil.

- If AOL receives a refund in respect of any amounts paid by AOL
Mexico or AOL Brazil hereunder, which refund in the sole
discretion of AOL is allocable to such payment, AOL shall
promptly notify AOLA of such refund and shall, within 15 days
after receipt, repay such refund and any interest with respect
thereto -- net of any Taxes payable thereon, taking into account
any offsetting deductions, with respect to such refund and
interest received with respect thereto -- to AOLA net of all
out-of-pocket expenses of AOL; provided , that AOLA, upon the
request of AOL, agrees to repay the amount paid over to AOLA to
AOL in the event that AOL is required to repay such refund
and/or interest.
      
- Upon reasonable request by AOLA, AOL Mexico or AOL Brazil, and
as permitted by applicable law, AOL shall deliver to such party
properly completed and executed documentation so as to
effectuate the terms of this letter and to permit any payments
made hereunder to be made without withholding of taxes or at a
reduced rate.

- AOL Mexico agrees, and AOLA agrees to cause AOL Mexico, to
reimburse AOL in an amount up to $300,000 for wind-down costs
incurred by AOL in connection with the shut-down of AOL Mexico.  
AOL will be reimbursed for any AOL Mexico Wind-Down Costs -- up
to the $300,000 cap -- as and when services resulting in AOL
Mexico Wind-Down Costs are performed and billed to AOL Mexico.  
AOL and AOLA agree to cooperate to produce a separate agreement
between AOL and AOL Mexico and all other documentation
reasonably required to ensure optimal externalization of funds
in respect of the payment of the AOL Mexico wind-down costs.  
AOL agrees to take reasonable commercial efforts to minimize the
amount of the AOL Mexico wind-down costs and only to charge AOL
Mexico for actual out-of-pocket costs and expenses incurred in
connection with the shutdown of AOL Mexico.
      
- AOL Brazil agrees, and AOLA agrees to cause AOL Brazil, to
reimburse AOL in an amount up to $1,004,000 for wind-down costs
incurred by AOL in connection with the shutdown of AOL Brazil.
AOL will be reimbursed for any AOL Brazil wind-down costs -- up
to the $1,004,000 cap -- as and when services resulting in AOL
Brazil Wind-Down Costs are performed and billed to AOL Brazil.  
AOL and AOLA agree to cooperate to produce a separate agreement
between AOL and AOL Brazil and all other documentation
reasonably required to ensure optimal externalization of funds
in respect of the payment of the AOL Brazil wind-down costs.  
AOL agrees to take reasonable commercial efforts to minimize the
amount of the AOL Brazil wind-down costs and to only charge AOL
Brazil for actual out-of-pocket costs and expenses incurred in
connection with the shut-down of AOL Brazil and, to the extent
AOL's actual out-of-pocket costs and expenses depend upon
negotiations with third parties, to take reasonable commercial
efforts to minimize the amount of such costs.
      
- To the extent that any payments hereunder have not been paid
as and when required by either AOL Mexico or AOL Brazil, AOLA
shall pay the amount of the Unpaid Costs to AOL from available
cash --after payment or reservation of amounts necessary to pay
distributions on account of the series A-1 beneficial interests
and the series A-2 beneficial interests, if the LLC option is
elected -- on a par with amounts payable on account of the
series C beneficial interests, at the rate of 50% of such
available cash to AOL, on the one hand, and 50% of such
available cash to the holders of the series C beneficial
interests, on the other hand, until any such unpaid costs are
paid in full.
      
- Each of AOLA, AOL Mexico and AOL Brazil represents and
warrants, severally and not jointly, as to itself and not as to
any other entity, that it is duly authorized to execute and
deliver this letter agreement and that each of its obligations
hereunder are valid, binding and enforceable against it in
accordance with its terms, subject to, in the case of (i) AOLA,
the occurrence of the Effective Date or entry of an order of the
Bankruptcy Court -- which may be the confirmation order --
authorizing this letter agreement, and (ii) AOL Mexico and/or
AOL Brazil, applicable foreign exchange regulations and
bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance and other similar laws of general application
affecting creditors' rights.

Headquartered in Fort Lauderdale, Florida, America Online Latin
America, Inc. -- http://www.aola.com/-- offers AOL-branded  
Internet service in Argentina, Brazil, Mexico, and Puerto Rico,
as well as localized content and online shopping over its
proprietary network.  Principal shareholders in AOLA are
Cisneros Group, one of Latin America's largest media firms,
Brazil's Banco Itau, and Time Warner, through America Online.
The Company and its debtor-affiliates filed for Chapter 11
protection on June 24, 2005 (Bankr. D. Del. Case No. 05-11778).
Pauline K. Morgan, Esq., and Edmon L. Morton, Esq., at Young
Conaway Stargatt & Taylor, LLP and Douglas P. Bartner, Esq., at
Shearman & Sterling LLP represent the Debtors in their
restructuring efforts.  When the Debtors filed for protection
from their creditors, they listed total assets of $28,500,000
and total debts of $181,774,000.


* BUENOS AIRES: Completes $2.7 Billion Debt Swap
------------------------------------------------
Dow Jones reports that Buenos Aires, Argentina, completed a $2.7
billion debt exchange.  The province issued $2.313 billion in
new bonds in a deal that offered creditors about 50 cents on the
dollar.  The deal was finalized Thursday.  

Buenos Aires got 94% support from its bondholders for the debt
offer.  The new bonds are authorized to trade in Buenos Aires
and Luxembourg.

As a result of the deal, Buenos Aires' debt is expected to fall
to 10% from 15% by 2010.  The swap is in accordance with
Argentina's lead in restructuring its debt.  Argentina completed
its $103 billion debt swap last year with 76.15% acceptance,
paying creditors about 35 cents on the dollar.


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

ANDINA: Gov't May File Suit Over Oil Smuggling, False Papers
------------------------------------------------------------
Andina SA is facing a possible lawsuit from the Bolivian
government for oil smuggling and falsifying documents.  

Dow Jones relates that the smuggling charge boils down to a tax
dispute.  Bolivian officials contend that the act of not paying
appropriate taxes on the oil is tantamount to smuggling.

A local news daily reported that Bolivia's customs office found
out that Andina smuggled oil worth $5 million from July to
September 2004, and from December 2004 to April 2005.

Bolivia passed a hydrocarbons law in May 2005 that steeply
raised taxes and royalties on oil and gas output.  The law also
names the Bolivian state as the sole owner of its oil and gas
resources, which in practice will require a re-negotiation of
current production contracts, Dow Jones relates.

Spanish oil company Repsol-YPF holds a 50% in Andina.  Bolivian
pension funds own the remaining stake in Andina.

Repsol, along with foreign oil companies Petroleo Brasileiro SA
of Brazil, France's Total SA (TOT), and BRG Group PLC (BG), have
invested $3.5 billion in Bolivia's oil and gas sector since
1996.


* Urged to Join Natural Gas Pipeline Project
--------------------------------------------
Leaders of Brazil, Argentina and Venezuela invites Bolivia to
join in the construction of a 10,000km natural gas pipeline
network from Venezuela to Argentina across Brazil.

According to reports, the pipeline requires US$17 billion to
US$25 billion in investments and would take six years to finish.  
Once completed, the pipeline will be able to transport 150
million cubic meters of gas per day.

The project was discussed in a meeting on January 19 among
Brazil's President Luiz Inacio Lula da Silva, Venezuela's
President Hugo Chavez and Argentina's President Nestor Kirchner,
together with each country's energy ministers.

"There is talk of including another six countries in the project
[including Bolivia and Uruguay]," a spokesperson told Business
News Americas.  

Bolivia and Uruguay got invited to participate because of the
former's large natural gas reserves and the latter's demand for
gas.

A committee to study the political implications of the pipeline
construction has been formed by the three countries.

The pipeline's primary purpose is to allow Venezuela to increase
its natural gas exports significantly and help meet Brazil's
growing natural gas demand for power generation and other uses.

President Chavez proposed building social development centers
along the pipeline route that would include industry,
agriculture and housing construction, Agencia Brasil reported.


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

ACESITA: Anti-trust Agency Okays Sale of Shares to Arcelor
----------------------------------------------------------
Arcelor's move to buy shares in the Brazilian stainless steel
producer Acesita S.A. has been approved, Business News Americas
reports.

A Cade spokesperson said that the anti-trust agency authorized
the process unanimously and with no restrictions.

In October 2005, Previ and Petros, pension funds that held 25%
of Acesita's voting capital, agreed to sell their shares in
Acesita in a deal worth BRL270 million (US$116 million). Earlier
this month, Arcelor announced that it was buying 4.05% of
Acesita's capital from local pension fund Sistel for BRL136
million, a move that would make it Acesita's controller.

The Sistel purchase, in addition to the Previ and Petros
transaction, would give Arcelor 76% of Acesita's common voting
shares and 40% of its total capital, according to a statement
Arcelor made to the Bovespa stock exchange in 2005.

According to the Brazilian law, Arcelor has to launch a tender
offer to acquire the remaining common shares of Acesita for 80%
of the average price paid to Previ, Petros and Sistel.

Arcelor previously stated that it will start a voluntary tender
offer to own up to one-third of Acesita's preference shares in
circulation. Arcelor informed that the target price is BRL36.02
for each preference and ordinary share.

Acesita makes stainless steel, carbon and alloy flat steels and
produces roughly 900,000t/y of liquid steel.


BANCO DO BRASIL: Previ Divesting 59% of Stock by 2012
-----------------------------------------------------
Previ, Banco do Brasil S.A.'s employees pension fund, aims to
divest 8 billion reais (US$3.45 billion) worth of stock holdings
by 2012, the Daily Globe reports.  About 59% of Previ's 71.8
billion real investment portfolio was held in stocks last year.  

Sergio Rosa told reporters that the pension fund decided to
divest its stocks after it determined that it has excess
investments in shares.

Previ, together with local pension fund Petros, already got
permission from Cade, Brazil's antitrust division, to sell their
combined 25% stake in stainless steel producer, Acesita S.A., to
Luxembourg-based steel giant Arcelor.

Mr. Rosa said Previ could next be divesting its 20% stake at
Brazilian aircraft manufacturer Embraer aka Empresa Brasileira
de Aeronautica.

Previ is one of the largest of Brazil's 365 employer sponsored
pension funds.  Banco do Brasil is the largest bank in Brazil in
terms of overall market share.


                        *    *    *

On Jan. 10, 2006, Moody's Investors Service assigned a Ba1
rating to Banco do Brasil S.A.- Grand Cayman Branch's proposed
US$300 million perpetual non-cumulative junior-subordinated
securities.  The Ba1 rating was the result of joint
probabilities of default that are incorporated into Banco do
Brasil's credit risk rating, which was indicated by its A3
global local currency rating, and by Brazil's Ba3 foreign
currency ceiling for bonds and notes.  The outlook on the rating
was stable.

Moody's noted that the subordination and other features of the
proposed securities were taken into consideration in the
assignment of the bond rating.  However, given the A3 global
local currency rating, the grading that would usually be applied
to subordinated issues did not affect the final foreign currency
rating outcome.

In addition, the rating agency noted that the proposed
securities were assigned a basket B on its Debt-Equity Continuum
(A is most debt-like and E is most equity-like).  As such, they
were treated as 25% equity and 75% debt when Moody's applied its
adjustments to Banco do Brasil's credit metrics.  Moody's noted
that upon approval of Tier 1 regulations by the Central Bank of
Brazil, Banco do Brasil may elect to qualify the securities as
Tier 1 capital, at which point Moody's may reassess its basket
treatment.  In determining the basket assignment under its
Hybrid Criteria, Moody's ranked hybrid securities relative to
the features of common equity, including:

   * No Maturity,
   * No Ongoing Payments, and
   * Loss Absorption.

The rankings can be either none, weak, moderate or strong
relative to common equity, with none being the closest to debt
and strong the closest to equity.

Moody's basket B designation considered the features of the
proposed securities, including the perpetual maturity, and
optional, non-cumulative payment deferral mechanism.  The
securities represent the bank's most junior subordinated debt
and rank pari passu with the most senior preferred stock, if any
would be issued (Banco do Brasil currently has no preferred
stock outstanding).  Moreover, there are limited rights to
investors, no material events of default, and the securities do
not cross-default.  As such, the securities would form a loss-
absorbing cushion for senior creditors.

Banco do Brasil is the largest bank in Brazil, with assets of
approximately US$110 billion as of September 2005.  The bank's
franchise and distribution network, which is geographically and
product-diversified, ensures its dominance over the banking
system's core deposits, with 21% market share.  The increasing
contribution of core revenues to the bank's profits reflects the
strength of its business franchise and the commitment of its
management to align the bank with market standards.

Moody's recently upgraded Banco do Brasil's financial strength
rating to D, in an indication of improved financial metrics
earnings and capital quality, in particular.  Moody's also
assigned an A3 global local currency rating to Banco do Brasil ,
which incorporated the strong likelihood of government support
in the event of a systemic crisis.  This conclusion was based
on:

   * Banco do Brasil's dominant share of the Brazilian deposits
     market;

   * its importance to the Brazilian banking system; and

   * its ownership and history of support.

Banco do Brasil S.A. is headquartered in Brasilia, Brazil, and
it had total assets of approximately US$110 billion as of
September 2005.

This rating was assigned:

Banco do Brasil S.A. Grand Cayman Branch's US$300 million
perpetual non-cumulative junior- subordinated securities -- Ba1
long-term foreign currency subordinated bond rating.

Moody's said the outlook is stable.


BANCO PACTUAL: Considering IPO to Fund Expansion Plans
------------------------------------------------------
Business News reports that Rio de Janeiro-based investment bank
Banco Pactual is considering an initial public offering to
generate cash for its expansion plans.  No other details of the
proposed IPO were provided.

As previously reported, talks to create Goldman Sachs Pactual  
joint venture between Banco Pactual and Goldman Sachs (NYSE: GS)
broke off.  The talks collapsed after Goldman demanded more
control and the parties disagreed over financial statement
policies, and legal and tax issues.

                        *    *    *

On Oct. 18, 2005, Fitch Ratings revised the Banco Pactual's
rating outlook to positive from stable.  

   Banco Pactual:

      -- Long-term foreign currency 'BB-';
      -- Long-term local currency 'BB-'.

   Pactual Overseas Corporation

      -- Long-term foreign currency 'BB-'
      -- Long-term local currency 'BB-'.


CAMARGO CORREA: Cade Balks at Trade Covenant with Votorantim
------------------------------------------------------------
Cade, Brazil's justice ministry's antitrust division,
temporarily halted a white cement buy and sell contract between
the Votorantim Group and Camargo Correa Cimentos S.A., Business
News Americas reports.

Under the agreement, Cimento Rio Banco, a subsidiary of
Votorantim, will:

   * stop its cement production; and
   * commits to exclusively buy white cement from Camargo Correa
     at agreed volumes and predetermined prices.

The deal will make Camargo Correa the sole white cement producer
in Brazil.

The antitrust division believes that the pact will severely
damage Brazil's white cement industry.  Luis Carlos Prado, a
Cade official, issued a statement last week ordering Rio Banco
to reinitiate cement production and avoid sharing information
with Camargo Correa.

A 53,200 real (US$23,000) daily fine will be imposed on the
companies should they ignore the agency's directive.

About Votorantim

Headquartered in Sao Paulo, Brazil, the Votorantim group is one
of the largest private industrial conglomerates in Latin
America, with large-scale production in cement, pulp and paper,
and metals and mining industries.  The group is also actively
engaged in the production of chemicals, frozen concentrated
orange juice, energy, financial services and venture capital
investments.

About Camargo Correa

Camargo Correa Cimentos is a Brazilian cement company that is
directly owned by Camargo Correa S.A., one of the largest
private sector conglomerates in Brazil with annual net revenues
of about BRL 6 bln originated mainly from its engineering &
construction, cement, textiles, footwear, energy, and
transportation businesses. The Camargo Correa group regards
cement as a core business, which represented approximately 11%
and 25% of the group's 2004 total sales and EBITDA,
respectively.

                        *    *    *

Oct 19, 2005, Moody's Investors Service upgraded the foreign
currency rating of Voto - Votorantim Overseas Trading Op. III's
US$300 million senior unsecured guaranteed notes due 2014 to Ba2
from Ba3, and changed the rating outlook to stable from
positive.  The rating action was prompted by Moody's upgrade of
Brazil's long-term foreign currency ceiling for bonds and notes
to Ba3 from B1, while maintaining the positive outlook.

The Ba2 foreign currency note rating reflected the
creditworthiness of the Votorantim group and the operating
company guarantors and the degree of sovereign interference
anticipated in times of stress.  Please refer to Moody's January
2005 Special Comment entitled "Piercing the Country Ceiling: An
Update".


CELG: Goias Will be Paying Senago's US$431 Million Debt
-------------------------------------------------------
The Goias state government agreed to pay its US$431 million debt
to power company, CELG aka Companhia Energetica de Goias,
Business News Americas reports.  

Business News relates that Goias will pay 73% of its debt in
monthly payments over a 25-year period.  The rest of the debt
will be divided into 60 monthly payments.  The payments will be
guaranteed with federal tax transfers to the state as well as
Goias' 41.1% ownership in CELG.

Goias assumed last year the unpaid power bills from water and
sewage treatment company, Senago.


CEMIG: Limiting Investments to Control Debt & Guarantee Payments
----------------------------------------------------------------
Business News Americas relates that Brazilian power company,
Cemig aka Companhia Energetica de Minas Gerais (NYSE: CIG) will
put a cap on its investments in order to receive approximately
2.9 billion reais (US$1.25 billion) in payments from its
controller, the Minas Gerais state government.  

Cemig's investments will be 50% of EBITDA from 2008.  The
investment cap, coupled with a debt cap of 2.5x Ebitda, aims to
control company debt and guarantee payments.  The limits will be
included in company bylaws, which still need to be changed and
ratified, Business News relates.

Under an agreement with the state government, Minas Gerais,
holding 51% stake in the company, will waive 65% of its
dividends.  The government's debt accumulated in the 1990s as it
failed to pay Cemig the so-called CRC accounts.

"The agreement ensures the company doesn't increase its debt,"
ABN Amro analyst Rosangela Ribeiro told Business News.  "The
fact this will be included in the bylaws is an extra guarantee."

The company's 5 billion real budget for 2005-2010 will be
revised as a result of the agreement with the government,
Business News relates.  However, the 2006 and 2007 investment
programs will not be affected by the new guidelines.


ELETROPAULO METROPOLITANA: Funding Expansion with BRL110 Million
----------------------------------------------------------------
Brazilian power company Eletropaulo Metropolitana plans to spend
about BRL110 million (US$48 million) to expand its transmission
network in the western part of the metropolitan region of Sao
Paulo city through 2010, Business News reports.

The Company wants to put up at least two substations and expand
the Company's transmission in at least seven of the 24 towns in
which it operates. On Jan. 19, the Company launched a
substation, the first to be built in the last 2-3 years, worth
BRL19 million.

According to a company spokesman, the transmission expansion
program will be part of the Company's estimated at BRL300
million-investment program for 2006. The details of the 2006
investment budget will be announced in early March, the
spokesperson said.

This year, the Company expects to start projects held over from
2005 because of environmental licensing delays. Eletropaulo's
last budget revision pegged 2005 investment at some BRL330
million. The spokesman revealed that the new program represents
a restart of transmission expansion in the region due to
economic recovery.

"A power company has to invest ahead of demand," the
spokesperson said. "This is a fast-growing region and
Eletropaulo needs to guarantee power supply to industries in the
region."

Eletropaulo is controlled by U.S. power company AES through a
51% stake in the Brasiliana holding company in which Brazil's
national development bank BNDES has 49% stake.

Eletropaulo distributes power in Brazil's industrial hub of Sao
Paulo city and 23 surrounding towns. Power consumption in Sao
Paulo state grew 3.8% in 2005 from 2004, according to data from
Sao Paulo state government.

                        *    *    *

As reported by Troubled Company Reporter on Dec. 15, 2005,
Standard & Poor's Ratings Services raised to 'B+' from 'B'
the local and foreign currency corporate credit ratings assigned
to Brazilian electric utility Eletropaulo Metropolitana
Eletricidade de Sao Paulo S.A. and its US$200 million senior
unsecured and unsubordinated euro bonds.  The corporate credit
rating assigned in the Brazil national scale was also raised to
'brBBB' from 'brBB+'.  S&P said the outlook is stable.


LIGHT SERVICOS: Parent Company Hires Citigroup to Aid Stake Sale
----------------------------------------------------------------
U.S. bank Citigroup will aid investment firm Goldman Sachs in
the sale of a Light Servico stake.

Citigroup has been chosen by French state power Electricite de
France or EDF, the parent company of the Brazilian electric
power utility Light Servicos de Eletricidade S.A., to prepare
and manage the sale of a stake in Light in partnership with
Goldman Sachs.

EDF announced plans to sell up to a controlling stake in Light
earlier in 2005 after concluding negotiations with creditors
of Light's US$1.5-billion debt and launching a new refinancing
plan.

EDF expects to complete the sale of control Light in the first
quarter of 2006.

Light Servicos Electricidade S.A. is a distribution company with
2.8 million customers and an estimated 9 million users in 11,000
square km concession area.


NATIONAL STEEL: Fitch Rates Perpetual Bond Issuance at 'BB-'
------------------------------------------------------------
Fitch Ratings has assigned an international foreign currency
rating of 'BB-' to the proposed US$400 million to US$500 million
perpetual notes to be issued by National Steel S.A.  

National Steel is a holding company that is 100% indirectly
controlled by Brazil's Steinbruch family and whose sole asset
will consist of 100% of the redeemable preferred shares of
Vicunha Acos.  Acos, in turn, is a holding company owning 100%
of Vicunha Siderurgia S.A., a holding company that owns a 42.74%
controlling interest in Brazilian steel producer Companhia
Siderurgica Nacional aka CSN.  The perpetual notes have no fixed
maturity date but will become callable in whole on a quarterly
basis after five years.

The rating of the notes reflects the financial strength of CSN,
Vicunha's sole operating subsidiary, and the expectation that
CSN's future free cash flow available for dividends will be
sufficient to allow National Steel to service its debt
obligations.  Dividend payments by CSN of approximately US$120
million per year should allow National Steel to meet expected
annual debt service obligations of about US$40 million to US$50
million.  CSN distributed dividends totaling US$242 million and
US$278 million in 2004 and in 2003, respectively.  National
Steel's obligations are structurally subordinated to those of
CSN as its only source of income consists of the dividends
received indirectly from CSN.  Thus, the rating of National
Steel's perpetual notes is linked to CSN's 'BBB-' local currency
rating.

National Steel benefits from CSN's solid credit fundamentals.  
In the first nine months of 2005, CSN generated consolidated
operating EBITDA of approximately US$2 billion.  With total debt
of US$4.5 billion and cash of US$2 billion, CSN had a total
debt-to-operating EBITDA ratio of 2.3 times and a net debt-to-
operating EBITDA ratio of 1.3x as of Sept. 30, 2005.  Due to the
company's expected strong cash flow generation, Fitch expects
CSN to maintain a total debt-to-operating EBITDA ratio of less
than 2.0x and a net debt-to-operating EBITDA ratio of less than
1.5x. CSN's free cash flow in 2005 is expected to be about
US$800 million.

The perpetual notes will be directly secured by a pledge from
Vicunha of 17% of the total outstanding common stock of CSN
(approximately 40% of their ownership position).  Based on the
60-day average price of CSN's shares, the collateral currently
has an approximate market value of US$1 billion, or about two
times the perpetual note issuance.  In addition, Acos will
unconditionally and irrevocably guarantee the perpetual notes.
The obligation to guarantee the notes will rank pari passu with
all unsecured and unsubordinated obligations of Acos.  The level
of debt at Acos is de minimis.  While CSN will not financially
guarantee the perpetual notes, a change of control at CSN would
trigger a prepayment of the notes and failure of CSN or any of
its subsidiaries to pay indebtedness of US$25 million or greater
would constitute an event of default.

The terms of the perpetual notes prohibit the issuer (National
Steel), the guarantor (Acos), and Pledgor (Vicunha) from
incurring material additional indebtedness.  The issuer will use
the net proceeds from the issuance to purchase equity redeemable
instruments to be issued by Acos.  Acos will use the net
proceeds to purchase common shares of Vicunha. Vicunha, in turn,
will use the proceeds of this equity contribution from Acos to
repay its BRL1.2 billion in debentures due June 2012.  Debt
service payments on the perpetual notes will be made from the
dividends received by National Steel via Acos and Vicunha from
CSN.

With annual production capacity of 5.6 million tons of crude
steel, CSN ranks as one of the largest steel producers in Latin
America. The company's fully integrated steel operations,
located in the State of Rio de Janeiro in Brazil, produce steel
slabs and hot and cold-rolled coils and sheets for the
automobile, construction, and appliance industries, among
others.  CSN also holds leading market shares in the galvanized
and tin-mill products segments.


VARIG S.A.: Placing Nine More Aircraft in Operation
---------------------------------------------------
VARIG, S.A., will begin operating nine more aircraft after
repairs are completed, Bloomberg News says.

VARIG told Bloomberg in an e-mail that it intends to end the
first half of 2006 with 70 aircraft in service.

The fleet expansion is part of VARIG President and CEO Marcelo
Bottini's plan to boost sales during the travel season in
Brazil, Romina Nicaretta of Bloomberg says.

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 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. 14; Bankruptcy
Creditors' Service, Inc., 215/945-7000)


===========================
C A Y M A N   I S L A N D S
===========================


BALESTRA LIMITED: To Present Liquidation Account on February 9
--------------------------------------------------------------
                         Balestra Limited
                    (In Voluntary Liquidation)
                 The Companies Law (2004 Revision)

NOTICE is hereby given pursuant to section 145 of the Companies
Law (2004 Revision) that the extraordinary final general meeting
of Balestra Limited will be held at the offices of Cititrust
(Cayman) Limited, CIBC Financial Centre, George Town, Grand
Cayman, on February 9, 2006, for the purpose of presenting to
the members an account of the winding up of the company and
giving any explanation thereof.

CONTACT:  Buchanan Limited, Voluntary Liquidator
          P.O. Box 1170, George Town, Grand Cayman


BLUE STAR: Schedules Final Meeting on February 9
------------------------------------------------
                    Blue Star Company Ltd.
                  (In Voluntary Liquidation)
               The Companies Law (2004 Revision)

NOTICE is hereby given pursuant to section 145 of the Companies
Law (2004 Revision) that the extraordinary final general meeting
of Blue Star Company Ltd. will be held at the offices of
Cititrust (Cayman) Limited, CIBC Financial Centre, George Town,
Grand Cayman, on February 9, 2006, for the purpose of presenting
to the members an account of the winding up of the company and
giving any explanation thereof.

CONTACT:  Buchanan Limited, Voluntary Liquidator
          P.O. Box 1170, George Town, Grand Cayman


DRAYTON LTD.: To Explain Wind Up Process to Members on Feb. 9
-------------------------------------------------------------
                          Drayton Ltd.
                   (In Voluntary Liquidation)
                The Companies Law (2004 Revision)

NOTICE is hereby given pursuant to section 145 of the Companies
Law (2004 Revision) that the extraordinary final general meeting
of Drayton Ltd. will be held at the offices of Cititrust
(Cayman) Limited, CIBC Financial Centre, George Town, Grand
Cayman, on February 9, 2006, for the purpose of presenting to
the members an account of the winding up of the company and
giving any explanation thereof.

CONTACT:  Buchanan Limited, Voluntary Liquidator
          P.O. Box 1170, George Town, Grand Cayman


FEILUNG COMPANY: Sets Final Meeting on February 9
-------------------------------------------------
                    Feilung Company Limited
                   (In Voluntary Liquidation)
                The Companies Law (2004 Revision)

NOTICE is hereby given pursuant to section 145 of the Companies
Law (2004 Revision) that the extraordinary final general meeting
of Feilung Company Limited will be held at the offices of
Cititrust (Cayman) Limited, CIBC Financial Centre, George Town,
Grand Cayman, February 9, 2006, for the purpose of presenting to
the members an account of the winding up of the company and
giving any explanation thereof.

CONTACT:  Buchanan Limited, Voluntary Liquidator
          P.O. Box 1170, George Town, Grand Cayman


GUIAGUVIC INVESTMENTS: Disclosing Wind Up Process on February 9
---------------------------------------------------------------
                  Guiaguvic Investments Ltd.
                  (In Voluntary Liquidation)
               The Companies Law (2004 Revision)

NOTICE is hereby given pursuant to section 145 of the Companies
Law (2004 Revision) that the extraordinary final general meeting
of Guiaguvic Investments Ltd. will be held at the offices of
Cititrust (Cayman) Limited, CIBC Financial Centre, George Town,
Grand Cayman, on February 9, 2006, for the purpose of presenting
to the members an account of the winding up of the company and
giving any explanation thereof.

CONTACT:  Buchanan Limited, Voluntary Liquidator
          P.O. Box 1170, George Town, Grand Cayman


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


AMERICAN INTERNATIONAL: Chilean Unit Aims For Top Spot by 2007
--------------------------------------------------------------
La Interamericana Seguros de Vida, American International Group
Inc.'s (NYSE: AIG) Chilean unit, intends to become first in the
traditional life insurance segment by 2007, according to a
report from the Diario Financiero.

Ricardo Garcia, La Interamericana's president, told the paper,
that the company seeks to grow its life premiums at least 30% in
2006.  Life annuities account for 53% of total life policies in
Chile.

"Premium volume in the life annuity business may make one think
that from a strategic and commercial point of view it is the
most important segment in Chile but at Interamericana we don't
so. Traditional life insurance has a business volume... and a
wider variety of price negotiation than the life annuity
business," Mr. Garcia said.

American International Group, Inc. --
http://www.aigcorporate.com/-- is the world's leading  
international insurance and financial services organization,
with operations in more than 130 countries and jurisdictions.  
AIG member companies serve commercial, institutional and
individual customers through the most extensive worldwide
property-casualty and life insurance networks of any insurer.  
In the United States, AIG companies are the largest underwriters
of commercial and industrial insurance and AIG American General
is a top-ranked life insurer.  AIG's global businesses also
include retirement services, financial services and asset
management.  AIG's financial services businesses include
aircraft leasing, financial products, trading and market making.  
AIG's growing global consumer finance business is led in the
United States by American General Finance.  AIG also has one of
the largest U.S. retirement services businesses through AIG
SunAmerica and AIG VALIC, and is a leader in asset management
for the individual and institutional markets, with specialized
investment management capabilities in equities, fixed income,
alternative investments and real estate.  AIG's common stock is
listed in the U.S. on the New York Stock Exchange and ArcaEx, as
well as the stock exchanges in London, Paris, Switzerland and
Tokyo.

                        *    *    *

On Jan. 20, 2006, Fitch Ratings downgraded its outlook on the
Chilean annuity subsidiary of U.S. insurance giant American
International Group Inc. (NYSE: AIG) to negative from stable
after local Grupo Security's recent takeover announcement.

Last week local financial holding Grupo Security offered 67
billion pesos (US$128 million) for 100% of AIG's Interamericana
Rentas Seguros de Vida in a deal expected to close before the
end of the month.

The outlook downgrade acknowledges the company's lower financial
support after the takeover, Fitch said in a report.


CELCO: Can Start Building Nueva Aldea's Emissions Outlet
--------------------------------------------------------
Celco obtained conditional approval from Chile's regional
environmental commission, Corema, to build an emissions outlet
for its US$1.4 billion pulp plant in Nueva Aldea, according to a
report from the Business News Americas.

The environmental agency ordered Celco to strictly follow
Chile's waste disposal law and locate the plant's emissions
outlet at least 200 meters from the public roads.  Celco
proposed a 229 million pesos (US$427,398) environmental
insurance in case the transport of liquid and solid wastes from
the Nueva Aldea plant will cause environmental harm.

With the Corema's authorization in hand, Celco can now start
building the first 13.4 kilometers of the emissions outlet that
will run from the plant's Itata river pipeline connection until
the town of Magdalena, Business News relates.  The rest of the
50.8-km outlet, 2.3 of which will run underwater, still awaits
the agency's approval.

Celco's Valdivia plant closed down last year after the
government questioned the company for allegedly filing false
environmental studies on the contamination of the Carlos
Anwandter natural reserve.  Environmentalist groups detected a
decrease in the black-necked swan population in the reserve.


=======
C U B A
=======

* 2005 Results Places China as Second-Largest Trading Partner
-------------------------------------------------------------
According to reports, China was Cuba's second-largest trading
partner after Venezuela in 2005.  Cuba's Deputy Foreign Minister
Rafael Dausa estimated the total bilateral trade at $1 billion.

In 2005, China's exports to Cuba grew 95% while imports grew
17%.  The country also signed an oil production-sharing
agreement with Sinopec, China's second-largest state oil
company.

A $500 million investment by China's state-owned Minmetals Corp.
in the country's nickel industry is still under negotiation.  
The project is expected to produce 68,000 tons of ferro-nickel
beginning 2007-2008.

Cuba is also planning to buy one million Chinese refrigerators
to take the place of very old household appliances.

China's influence on Cuba's economy is evident on the
predominance of Chinese goods in streets and shops.  Chinese
businessmen have become a familiar sight in the island.

Venezuela remains Cuba's biggest economic ally.  In 2005, it
sold to Cuba up to 80,000 barrels of oil per day under easy
financial terms.


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


MILLICOM: Reviews Strategic Options after Unsolicited Approaches
----------------------------------------------------------------
Millicom International Cellular S.A. is reviewing strategic
options after a high number of unsolicited approaches, Reuters
reports.  The Company said it hired Morgan Stanley as financial
advisor.

Discussions were ongoing with a number of interested parties,
according to an anonymous source.  Nothing, however, would be
decided before the Company's quarterly report on Feb. 14.
Swedish company Kinnevik, Millicom's largest shareholder,
supported the Company's decision to conduct a strategic review.

According to research firm Redeye, the fact that Millicom had
made a public announcement was a sign that Kinnevik is seriously
considering selling and wants to flush out more bidders and
raise the price.

Interest has been high for Millicom, Kinnevik's Chief Executive
Vigo Carlund said.

"It has been at the level that we are forced to look into a
deal," Carlund said. "Of those who have contacted us, interest
is for the whole of Millicom," he added.

An analyst informed that the price will be well over 300 crowns
for the whole Company.


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

HONDUTEL: International Rates Slashed 40%
-----------------------------------------
Hondutel, the state telecom of Honduras, has cut its
international rates an average of 40%, Business News Americas
reports.  This is the second cut the Company made in just under
a month after it lost its ILD market monopoly.

The Company cut rates to Mexico, Canada and the US by 46.5% to
US$0.38 a minute from US$0.71. From US$1.21 a minute, calls
within Central America will fall 40% to US$0.24. In
International calling, about 91% will be slashed from US$1.21,
resulting to about US$0.10.

Before December 25, the Company had cut rates to US$0.71 from
US$0.84 in anticipation of the new environment. The Company's
monopoly of the international calls market had ended on
Christmas in accordance with stipulations in local
telecommunications law and a series of free trade agreements.

The Company's studies show that the increased demand resulting
from the drop in rates will more than compensate for the lost
revenue from lower calling rates.

"For months we have been preparing ourselves for this measure to
make the company very competitive with the private sector in
both prices and quality," Hondutel's CEO Jesus Castellanos said.

                        *    *    *

As reported in Troubled Company Reporter on Jan. 11, 2006,
analysts stated that Hondutel will have to find a strategic
partner in order to survive the competition in the Internet and
mobile telephony segments, as it faces an uncertain future after
its monopoly of the international long distance market, opening
up the market to greater competition.


* Wants WTO Ruling on Banana Dispute with European Union
--------------------------------------------------------
Reuters reports that the Republic of Honduras asks the World
Trade Organization to arbitrate a banana exportation dispute
with the European Union.  The country contend that the European
Union is imposing an "exaggerated and prohibitive" tariff on
Central American country's banana exports.

Deputy Foreign Trade Minister Melvin Redondo told Reuters
Honduras would lodge the complaint late this month or early
February to force the Union to drop the levy.

The WTO has ruled several times against the Union's tariff on
banana imports, Reuters relates.  The most recent was October
last year when a proposed 187-euro tariff was slammed by the WTO
for being too high.  The tariff was lowered but not enough to
satisty Latin American producers.  Honduras would seek total
elimination of the levy or for an unspecified amount below 75
euros.

Honduras exports some 30 million 18-kg cases of bananas a year,
and is the fifth largest producer in Latin America, after
Ecuador, Costa Rica, Colombia and Guatemala.


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


BALLY TOTAL: Closes Crunch Fitness Sale
---------------------------------------
Bally Total Fitness, the nation's leader in health and fitness,
announced Friday that it has completed the sale of its Crunch
Fitness division for $45 million in cash to an investor group
formed by Angelo, Gordon & Co., an alternative asset investment
management firm. Crunch will be led by Marc Tascher, a leading
entrepreneur and club industry veteran.

"Both sides have worked diligently to satisfy the closing
conditions and we are pleased that we were able to bring this
deal to a successful completion," said Paul Toback, Chairman and
chief executive officer of Bally.  "As we have said previously,
completing this transaction enables us to better focus our
resources toward building the Bally brand and reducing debt."

"We believe Crunch is uniquely positioned for growth in its core
urban markets as well as in new markets given its tremendous
brand name recognition and loyal membership base," said Brent
Leffel, a Director in the private equity group of Angelo Gordon.  
"We have earmarked a significant amount of capital to upgrade
existing clubs and expand our footprint."

Bally Total Fitness is the largest and only nationwide
commercial operator of fitness centers in the U.S., with nearly
440 facilities located in 29 states, Mexico, Canada, Korea,
China and the Caribbean under the Bally Total Fitness, Pinnacle
Fitness, Bally Sports Clubs and Sports Clubs of Canada brands.  
Bally offers a unique platform for distribution of a wide range
of products and services targeted to active, fitness-conscious
adult consumers.

Bally Total Fitness is the largest and only nationwide
commercial operator of fitness centers, with approximately four
million members and 440 facilities located in 29 states,
Mexico, Canada, Korea, China and the Caribbean under the Bally
Total Fitness(R), Crunch Fitness(SM), Gorilla Sports(SM),
Pinnacle Fitness(R), Bally Sports Clubs(R) and Sports Clubs of
Canada(R) brands.  With an estimated 150 million annual visits
to its clubs, Bally offers a unique platform for distribution
of a wide range of products and services targeted to active,
fitness-conscious adult consumers.

                        *    *    *

As reported in the Troubled Company Reporter on Dec. 6, 2005,
Standard & Poor's Ratings Services revised its CreditWatch
implications on Bally Total Fitness Holding Corp. to developing
from negative.  The corporate credit rating remained at 'CCC'.

Bally's ratings were originally placed on CreditWatch on
Aug. 8, 2005, following the commencement of a 10-day period
after which an event of default would have occurred under the
company's $275 million secured credit agreement's cross-default
provision and the debt would have become immediately due and
payable.  Subsequently, Bally entered into a consent with
lenders to extend the 10-day period until Aug. 31, 2005.  Prior
to Aug. 31, the company received consents from its bondholders
extending its waiver of default to Nov. 30, 2005.

Bally Total has assets amounting to US$1,453,300,000 and
liabilites of US$1,611,500,000.


TELMEX: Loses Most Heavily Weighted Stock Position
--------------------------------------------------
Mexican company Telefonos de Mexico aka Telmex has been
displaced as the most heavily weighted stock on the IPC blue
chip index on the Mexico City stock exchange, Business News
Americas reports.

Taking its place is mobile phone giant America Movil, which is
also its sister company.

Telmex had an 8% weighting with a market value of US$27.3
billion at the close of 2005, while America Movil's weighting
was 18.8 with a market value of US$53 billion. Telmex billed
MXN63.7 billion over the first nine months of last year while
America Movil billed MXN127.7 billion.

Owner Carlos Slim decided to separate the two companies in 2000
and listed America Movil on the stock market due to the
attractive value that mobile companies were attaining on stock
markets around the world at the time.

                        *    *    *

As reported in Troubled Company Reporter on March 9, 2005, court
No. 4 of Buenos Aires' civil and commercial tribunal declared
Telmex bankrupt, appointing Ms. Maria Lilia Orazi as the
trustee.


=====================
P U E R T O   R I C O
=====================

GUILLERMO VAELLO: Court Sets May 15 as General Claims Bar Date
--------------------------------------------------------------
The United States Bankruptcy Court for the District of Puerto
Rico, set May 15, 2006, as the deadline for all creditors owed
money by Guillermo Vaello Rodriguez on account of claims arising
prior to Jan. 17, 2006, to file their proofs of claim.

Creditors must file written proofs of claim on or before the Mat
15 claims bar date and those forms must be delivered to:

              Celestino Matta-Mendez
              Clerk of the Bankruptcy Court
              U.S. Post Office and Courthouse Building
              300 Recinto Sur Street, Room 109
              San Juan, Puerto Rico 00901
              Phone: 787-977-6000    
    
The claims bar date applies to all claims except for
governmental units.                   

Headquartered in Levittown Station, Puerto Rico, Guillermo
Vaello Rodriguez filed for chapter 11 protection on Jan. 17,
2006 (Bankr. D. Puerto Rico).  Victor Gratacos-Diaz, Esq., of
Caguas, Puerto Rico, represents the Debtor in his restructuring
efforts.  When he filed for bankruptcy, the Debtor listed
$1,169,225 in total assets and $1,116,000 in total debts.


GUILLERMO VAELLO: U.S. Trustee Will Meet Creditors on Feb. 13
-------------------------------------------------------------
The United States Trustee for Region 21 will convene a meeting
of Guillermo Vaello Rodriguez's creditors at 10:30 a.m., on Feb.
13, 2006, located at Ochoa Building, 500 Tanca Street, First
Floor in San Juan, Puerto Rico.  This is the first meeting of
creditors required under 11 U.S.C. Sec. 341(a) in all bankruptcy
cases.

All creditors are invited, but not required, to attend. This
Meeting of Creditors offers the one opportunity in a bankruptcy
proceeding for creditors to question a responsible office of the
Debtor under oath about the company's financial affairs and
operations that would be of interest to the general body of
creditors.

Headquartered in Levittown Station, Puerto Rico, Guillermo
Vaello Rodriguez filed for chapter 11 protection on Jan. 17,
2006 (Bankr. D. Puerto Rico).  Victor Gratacos-Diaz, Esq., of
Caguas, Puerto Rico, represents the Debtor in his restructuring
efforts.  When he filed for bankruptcy, the Debtor listed
$1,169,225 in total assets and $1,116,000 in total debts.


MUSICLAND HOLDING: Gets Court Okay on $60 Mil. of DIP Financing
---------------------------------------------------------------
Without access to fresh financing, Musicland Holding Corp. and
its debtor-affiliates will not be able to sustain on-going
business operations, Craig Wassenaar, chief financial officer of
Musicland Holding Corp., tells the U.S. Bankruptcy Court for the
Northern District of Georgia.

The Debtors do not have sufficiently reliable liquidity sources
available to ensure continued operations.  The Debtors need
fresh financing to permit, among other things, the orderly
continuation of their businesses, to maintain business
relationships with vendors, suppliers and customers, to make
payroll disbursements, to make capital expenditures, and to
satisfy other working capital and operational needs.

The Debtors sought the Court's authority to continue their
credit relationship with their senior secured lenders.  The
Debtors seek to convert their prepetition loan agreement -- a
revolving secured credit facility with outstanding amounts as of
the Petition Date of no less than $38,097,756, into a DIP
revolving secured credit facility under Section 364(c) of the
Bankruptcy Code.

Mr. Wassenaar assures Judge Bernstein that the Debtors have the
full support of their prepetition secured lenders, the Second
Lien Trade Creditors and their Third Lien Merchandise Agent.

Mr. Wassenaar explains that because the Debtors do not believe
that it is feasible to attempt to prime the Prepetition Secured
Lenders on a non-consensual basis, the DIP financing
alternatives are limited.  "Moreover, a new DIP lender would
also have to prime the Second Lien Trade Creditors and the Third
Lien Merchandise Agent, further complicating the landscape for a
potential DIP lender."

Prior to the Petition Date, the Debtors contacted two lending
institutions with broad experience lending to chapter 11
debtors.  Neither was willing to go forward with a DIP financing
proposal.

The Debtors later determined that the proposal from their
prepetition secured lenders was their only real DIP financing
option.  According to Mr. Wassenaar, the Prepetition Lenders'
proposal provides the Debtors with funding to operate and
maintain their businesses and to pay necessary expenses during
their Chapter 11 cases.

The Debtors and Wachovia Bank, N.A., as agent for the
Prepetition Secured Lenders, engaged in good faith and extensive
arm's-length negotiations that culminated in the Prepetition
Secured Lenders' agreement to provide the Debtors up to
$75,000,000 of secured postpetition financing.

The parties entered into a Ratification and Amendment Agreement
on Jan. 12, 2006.  A full-text copy of the 29-page Ratification
Agreement is available for free at

          http://ResearchArchives.com/t/s?478

The DIP Lenders are Wachovia Bank, N.A., Banc of America
Securities, LLC, National City Business Credit, Inc., Western
Bank Business Credit, GMAC Commercial Finance LLC, LaSalle
Retail Finance, Wells Fargo Retail Finance, LLC, Textron
Financial Corporation, Burdale Financial Limited, Grayson & Co.,
Senior Debt Portfolio, Eaton Vance Senior Income Trust and The
CIT Group/Business Credit.

Borrowings will be repaid in full, and the $75,000,000
Commitment will terminate, at the earliest of January [__], 2007
or the confirmation of the plan.

All direct borrowings and reimbursement obligations under
lenders of credit and other obligations under the DIP Financing
will be, subject to a carve-out, entitled to joint and several
superpriority claim status, and secured by valid and perfected
first priority security interests and liens on all Collateral.

The Professional Fee Carve-Out will not exceed $1,750,000 for
the period from the Petition Date through February 3, 2006,
which sum will increase to $3,100,000 for the period from
February 4, 2006, through February 28, 2006, and $3,500,000 for
the period from and after March 1, 2006.

The Carve-Out Expenses also include statutory fees payable to
the U.S. Trustee and fees payable to the Clerk of the Bankruptcy
Court.

The fees are non-refundable under all circumstances.

The DIP Credit Agreement provides for a number of fees,
including Unused Line Fee, Letter of Credit Fees, DIP Agent's
and DIP Lenders' Fees, and Prepayment Fee.

The interest rate for Prime Rate Loans is a rate equal to the
Prime Rate plus 0.25% per annum.  The interest rate for
Eurodollar Rate Loans is a rate equal to the Adjusted Eurodollar
Rate plus 3.25% per annum.  The Default Interest is 2%.

The DIP Credit Agreement requires that:

    -- on or before January 17, 2006, the Debtors must
       distribute bid packages for 284 retail locations to at
       least four inventory liquidation agents and file
       appropriate motions with the Court to commence Going-Out-
       of-Business Sales;

    -- on or before February 3, 2006, GOB Sales must commence;
       and

    -- on or before February 21, 2006:

          (a) the Debtors will file a sale motion for
              substantially all of their assets, which sale will
              close no later than March 17, 2006, or

          (b) the Debtors will submit a restructuring plan
              acceptable to the DIP Agent and DIP Lenders.

The Debtors are also required, among others, to maintain Excess
Availability not less than $5,000,000; and deliver to the DIP
Agent by February 21, 2006, projected consolidated financial
statements and a projected Borrowing Base for each month during
the 12-month period ending February 2007.

                           Interim Approval

Judge Bernstein has permitted the Debtors to borrow up to
$60,000,000 under the $75,000,000 DIP Credit Agreement.  The
Debtors will use the loan proceeds to pay administrative
expenses in accordance with a budget.

A full-text copy of the Interim DIP Order is available for free
at http://bankrupt.com/misc/musicland_interimDIPorder.pdf

The Court will convene the Final DIP Hearing on February 7,
2006, at 2:00 p.m.

Objections must be filed and served, no later than February 1,
2006 at 4:00 p.m., prevailing Eastern time, on:

    (a) counsel for the Debtors,
        Kirkland & Ellis LLP
        153 E. 53rd Street
        New York, New York 10022-4611
        Attn: James A. Stempel, Esq.
        Fax: (312) 861-2200

    (b) counsel for the Agent
        Otterbourg, Steindler, Houston & Rosen, P.C.
        230 Park Avenue
        New York, New York 10169-0075
        Attn: Jonathan N. Helfat, Esq. and
              Andrew M. Kramer, Esq.
        Fax: (212) 682-6104

    (c) counsel for the Secured Trade Agent
        Morgan, Lewis & Bockius LLP
        Attn: Michael A. Bloom, Esq., Fax (215) 963-5001
              Richard S. Toder, Esq., Fax (212) 309-6001

    (d) counsel for the Merchandise Agent
        Eric Kaup, Esq., Fax (847) 897-0766

    (e) counsel to any Committee; and

    (f) the U.S. Trustee

Headquartered in New York, New York, Musicland Holding Corp., is
a specialty retailer of music, movies and entertainment-related
products.  The Debtor and 14 of its affiliates filed for chapter
11 protection on Jan. 12, 2006 (Bankr. S.D.N.Y. Lead Case No.
06-10064).  James H.M. Sprayregen, Esq., at Kirkland & Ellis,
represents the Debtors in their restructuring efforts.  When the
Debtors filed for protection from their creditors, they
estimated more than $100 million in assets and debts.  
(Musicland Bankruptcy News, Issue No. 2; Bankruptcy Creditors'
Service, Inc., 215/945-7000)


===============
S U R I N A M E
===============

* Fitch Affirms B Rating on Foreign Currency IDR
------------------------------------------------
Fitch Ratings has affirmed Suriname's Foreign Currency Issuer
Default Rating at 'B' and the Local Currency IDR at 'B+'.  The
Rating Outlook on both is Stable.  In addition, Fitch affirms
the country ceiling at 'B'.

A low level of public sector and external debt, as well as a low
debt servicing requirement support the long-term IDR assigned to
Suriname.  Nevertheless, these credit strengths are offset by a
weak track record of public finance management and
implementation of structural reforms, areas that need to be
strengthened in light of Suriname's vulnerability to
international commodity price shocks.  High international
commodity prices, however, particularly for the mining sector,
should continue to underpin economic and fiscal revenue growth
near term, benefiting both external and public sector debt
dynamics. Furthermore, the foreign currency rating is
constrained by the periodic occurrence of arrears with bilateral
creditors, which has yet to be resolved.

In spite of recording significant fiscal imbalances over the
years, debt levels have not increased substantially, in part due
to monetization of the fiscal deficit.  In 2005, Suriname's
public debt/GDP ratio of 37.8% was among the lowest reported for
sovereigns rated in the 'B' range.  Although public external
debt remained unchanged in absolute terms, net public external
debt as a proportion of export receipts and GDP declined to an
estimated 13.0% and 9.5%, respectively, in 2005 due to export
and foreign asset growth.  These ratios are drastically below
the single-'B' median for the NPXD/CXR and NPXD/GDP ratios of
88.2% and 28.8%, respectively.

Such favorable debt and debt service ratios contradict an
inferior external payment record, which is one of the key
constraints on Suriname's sovereign ratings.  Poor public
finance management has led to the accumulation of arrears with a
variety of bilateral creditors and progress on resolving this
situation has been slow.  Total arrears remained around 8% of
GDP in 2004 and 2005 due entirely to GDP growth as arrears
increased in absolute terms.

The Rating Outlook on Suriname is Stable.  Maintaining
macroeconomic stability will depend on the authorities'
commitment to fiscal restraint and moving ahead with important
public sector reforms.  Factors that could improve
creditworthiness include clearance of bilateral creditor arrears
and progress on the structural reform front that would help
reduce Suriname's fiscal vulnerability and improve economic
efficiency.


=============
U R U G U A Y
=============

* Urged to Join Natural Gas Pipeline Project
--------------------------------------------
Leaders of Brazil, Argentina and Venezuela invites Uruguay to
join in the construction of a 10,000km natural gas pipeline
network from Venezuela to Argentina across Brazil.

According to reports, the pipeline requires US$17 billion to
US$25 billion in investments and would take six years to finish.  
Once completed, the pipeline will be able to transport 150
million cubic meters of gas per day.

The project was discussed in a meeting on January 19 among
Brazil's President Luiz Inacio Lula da Silva, Venezuela's
President Hugo Chavez and Argentina's President Nestor Kirchner,
together with each country's energy ministers.

"There is talk of including another six countries in the project
[including Bolivia and Uruguay]," a spokesperson told Business
News Americas.  

Uruguay and Bolivia got invited to participate because of the
former's demand for gas and the latter's large natural gas
reserves.

A committee to study the political implications of the pipeline
construction has been formed by the three countries.

The pipeline's primary purpose is to allow Venezuela to increase
its natural gas exports significantly and help meet Brazil's
growing natural gas demand for power generation and other uses.

President Chavez proposed building social development centers
along the pipeline route that would include industry,
agriculture and housing construction, Agencia Brasil reported.

                            ***********


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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