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       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, August 14, 2001, Vol. 2, Issue 158

                           Headlines


A R G E N T I N A

IRSA: S&P Places Ratings On CreditWatch; Negative Implications
MULTICANAL: S&P Assigns CreditWatch With Negative Implications


B R A Z I L

EMBRATEL: To Complete "Universal Service" Introduction By Yr-End
TRANSBRASIL: Continental Airlines Eyes Stake In Local Carrier
VESPER: Aims To Launch Corporate Data Services A Month Earlier


C H I L E

STARMEDIA:  Marc S. Henzel Firm Commences Class Action Lawsuit


E C U A D O R

SEGUROS ROCAFUERTE: To Operate Only Until September 26


G U Y A N A

GA 2000: Demerara Bank Assures Liquidity In Spite Of GA Debts
GA 2000: Receiver Awaits List Of Assets


M E X I C O

BANCRECER: Auction Winner To Be Declared Sep. 11
GRUPO DESC: Suffering From US Economic Slowdown; Cutting Costs
GRUPO DESC: Subsidiary Strikes Agreement With ViveICA
INTERACCIONES: Executive Disproves Looming Intervention Rumors
MINERA AUTLAN: Not In Bankruptcy; Looks For Strategic Partner



    - - - - - - - - - - -


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

IRSA: S&P Places Ratings On CreditWatch;  Negative Implications
---------------------------------------------------------------
Standard & Poor's Corp placed Inversiones y Representaciones SA's
(IRSA) ratings on CreditWatch with negative implications, AFX-
Asia reported Thursday. The ratings were based on the
deterioration in the company's credit quality and S&P's concerns
about the company's ability to continue to refinance its
significant short-term debt maturities.


MULTICANAL: S&P Assigns CreditWatch With Negative Implications
--------------------------------------------------------------
Standard & Poor's Corp. placed Multicanal SA on CreditWatch with
negative implications, AFX-Asia reported Thursday. The ratings
reflect delays in the closing of the refinancing of approximately
US$320 million in maturities the company has to face before Feb
2002.

However, the ratings agency earlier said that although financial
flexibility is restricted by the current market conditions, it
expects Multicanal to continue receiving shareholder support in
this refinancing process. Multicanal is 100 percent directly and
indirectly owned by Grupo Clarin.



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

EMBRATEL: To Complete "Universal Service" Introduction By Yr-End
----------------------------------------------------------------
In compliance with decree 2,592 of 1998, Embratel Participacaoes
SA plans to complete the introduction of a Universal Service
within its concession by the end of this year, AFX-Europe
reported Friday. The decree requires operators to introduce a
Universal Service within their concession area by 2003. They are
expected to make public telephones available operating 24 hours
and capable of providing long-distance and overseas services in
all localities with a population of over 300 which currently do
not have access to fixed-line services within a minimum radius of
30 kms.

Embratel has been posting losses for two quarters prompting
Worldcom, the company, which acquired it in 1998, to exclude it
from its consolidated balance sheets.


TRANSBRASIL: Continental Airlines Eyes Stake In Local Carrier
-------------------------------------------------------------
Continental Airlines, the fifth largest commercial airlines in
the United States, has its eye on local carrier Transbrasil,
financial daily Gazeta Mercantil reported Friday. The two
companies have conducted talks in recent months which could
evolve into a possible purchase of equity ownership, according to
Pete Garcia, Continental Airlines' sales and marketing vice-
president for Latin America.

"We are negotiating an accord that can be anything from a simple
flight sharing to the acquisition of part of the company," Garcia
said. "No option is ruled out, everything is possible."

Transbrasil, however, did not confirm the talks. A company
spokesman said only that there was dialogue with Continental. In
June, there was even an announcement of a code-sharing accord
with the US-based carrier. Sources, who are closely-monitoring
the talks between the two companies, though, confirm the
Continental's intentions of acquiring part of Transbrasil.

The Brazilian company is suffering through a financial crisis and
has cancelled routes in order to try to improve the utilization
of its aircraft. Last Thursday, a Boeing 767-300 aircraft it
operated was impounded in Miami. The plane reportedly belongs to
US leasing company Pegasus, who decided to impound it because
Transbrasil did not meet its payments obligations.


VESPER: Aims To Launch Corporate Data Services A Month Earlier
--------------------------------------------------------------
Rance Hesketh, Vesper's newly appointed executive VP of corporate
services subsidiary Vesper Business, says that the Brazilian
local telephony operator aims to launch corporate data services
one month ahead of schedule, Business News Americas reported
Friday.

"We have several (products), including data, that are just about
ready and my intention is to shorten the launch date to late
August-September," said Hesketh.

In February, Vesper decided to prioritize profitability by
cutting costs, restructuring business lines and network layout,
with a focus on the corporate segment. At that time, it expected
to launch Internet access in October.

"We are solving the problem (of facilitating corporate access)
and my priority now is to roll out a broader scope of products,"
Hesketh said, adding that Vesper expects to accomplish "in a very
short period" the original residential coverage requirements set
by regulator Anatel.

Meanwhile, Bell Canada International (BCI), one of the
controllers of Vesper with 34.4 percent, has been trying to sell
its stake for over a year. BCI recently cut the value of its
offering to US$300 million from US$875 million. The company now
treats Vesper as a discontinued operation in its quarterly
results.

The other major controllers of Vesper are the Velocom consortium
(49.4 percent), and Qualcomm (16.2 percent).



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

STARMEDIA:  Marc S. Henzel Firm Commences Class Action Lawsuit
--------------------------------------------------------------
A class action lawsuit was filed in the United States District
Court for the Southern District of New York on behalf of
purchasers of the securities of StarMedia Network, Inc. (Nasdaq:
STRM) between May 25, 1999 and December 6, 2000, inclusive.

The action is pending against defendants StarMedia Network,
Goldman Sachs & Co., BancBoston Robertson Stephens, Inc., Salomon
Smith Barney, Inc. and Morgan Stanley & Co., Incorporated.

The complaint alleges violations of Section 10(b) of the
Securities Exchange Act of 1934 and Rule 10b-5 promulgated
thereunder. On or about May 25, 1999, StarMedia commenced an
initial public offering of 7,000,000 of its shares of common
stock at an offering price of $15.00 per share (the "StarMedia
IPO"). In connection therewith, StarMedia filed a registration
statement, which incorporated a prospectus (the "Prospectus"),
with the SEC. The complaint further alleges that the Prospectus
was materially false and misleading because it failed to
disclose, among other things, that: (i) defendants had solicited
and received excessive and undisclosed commissions from certain
investors in exchange for which defendants allocated to those
investors material portions of the restricted number of StarMedia
shares issued in connection with the StarMedia IPO; and (ii)
defendants had entered into agreements with customers whereby
defendants agreed to allocate StarMedia shares to those customers
in the StarMedia IPO in exchange for which the customers agreed
to purchase additional StarMedia shares in the aftermarket at
pre-determined prices.

As alleged in the complaint, the SEC is investigating
underwriting practices in connection with several other initial
public offerings.

Plaintiff is represented by The Law Offices of Marc S. Henzel.



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E C U A D O R
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SEGUROS ROCAFUERTE: To Operate Only Until September 26
-------------------------------------------------------
After signing on May 14th this year, Insurance company Seguros
Rocafuerte cancelled its contract with Petroecuador, prompting
the oil company to search for a new insurance company, El
Universo reported last Tuesday. Seguros is reportedly facing
fincnail problems causing it to discontinue insurance services
after September 26, 2001.

Petroecuador will change terms and conditions to sign a new
contract. It will request the banks commission Superintendencia
de Bancos to analyze potential candidates for bidding. So far, 3
foreign insurance companies have been contacted. Petroecuador
predicts that the new contract will be worth at least US$2mil.



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G U Y A N A
===========

GA 2000: Demerara Bank Assures Liquidity In Spite Of GA Debts
-------------------------------------------------------------
Demerara Bank has assured that it has some US$4.4 million in
securities to cover the US$3.1 million owed it by the now
bankrupt Guyana Airways 2000. The bank was confident of
recovering the full amounts due, The Stabroek News reported
Thursday. In a statement released by the bank, it said that its
deposits in recent months increased from $7.8 billion at July 6,
to $8.05 billion at August 7.

"We wish to clarify that Demerara Bank Ltd is in a good liquid
position and will make a good profit. Our results have been
impressive up to Year 2000 and we shall make a good profit come
year ending September 30, 2001," the statement said.


GA 2000: Receiver Awaits List Of Assets
---------------------------------------
Ronald Alli, the receiver appointed by Demerara Bank Limited to
wind up the affairs of the now bankrupt Guayana Airways 2000 (GA
2000), is reluctant to comment on the government's advertisement
for expressions of interest into the route rights. Mr. Alli
believes he should have a list of the airline's assets before
beginning any potential negotiations, The Stabroek News revealed
Thursday. However, according to Alli, he had noted the
advertisement in then newspapers and had queried it.

According to informed sources, the route rights had been leased
by the state to GA 2000 for a period of five years and, at this
time, were practically worthless. Another source said that GA
2000's ownership of the route rights was based on performance and
could have been withdrawn if the airline did not meet its
obligations under the contract.

Dr Roger Luncheon, Head of the Presidential Secretariat, earlier
this month announced that the government was moving to ensure
that the position vacated by GA 2000 was filled before the
beginning of the Christmas season when large numbers of Guyanese
traditionally return home. He said too that one airline,
Universal Airlines, had been granted a provisional license and
another, Air Guyana Inc, was in the process of satisfying the
conditions required for the granting of a license.



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

BANCRECER: Auction Winner To Be Declared Sep. 11
------------------------------------------------
Carlos Septien, president of the failed Mexican bank Bancrecer,
advised that the winner of the bank's auction will be known by
September 11 and that the two contenders, Grupo Financiero
Banorte and Grupo Financiero Scotiabank, must submit by Aug. 20
their technical and economic proposals, Mexican financial daily
El Economista reported Friday.

"The bank is being sold with a capital base of 2.5 billion pesos.
Banorte and Scotiabank will decide the final price. If the final
reference price fixed by the government is not reached, the
institution won't be sold," he told Mexico City daily el
Economista.

Bancrecer is under the administration of Mexico's bank bailout
agency IPAB, and is seen as one of the last chances for foreign
investors to buy their way into the Mexican banking market.


GRUPO DESC: Suffering From US Economic Slowdown; Cutting Costs
--------------------------------------------------------------
Mexican Industrial conglomerate Grupo Desc revealed industrial
sales in the second quarter of this year declined by 9.1 percent,
to US$554 million, Mexican financial daily El Economista reported
Friday. The company also saw its operating profits declined by
32.3 percent, and EBITDA was US$80 million, a decline of 18.1
percent compared to the same period in 2001. Analysts believe
that the company suffered from the impact of the U.S. economic
slowdown and the continued appreciation of the peso against the
U.S. dollar. However, according to these analysts, the company is
benefiting from programs to reduce costs and make operations more
efficient, similar to those undergone throughout the sector.


GRUPO DESC: Subsidiary Strikes Agreement With ViveICA
-----------------------------------------------------
Grupo Desc subsidiary Productos de Consumo Resistol reached a
deal with home-building company ViveICA, a subsidiary of ICA,
Mexico City daily Reforma disclosed Friday. ViveICA is headed by
Bernardo Quintana. The deal reportedly involves collaboration in
the application of improved technologies and the improvement of
the quality and conditions of the application of Fester-Acriton
products in ViveICA's developments throughout Mexico. Both firms
agreed to establish a work team in order to share experiences and
make technical recommendations, with the goal of optimizing the
use of the Fester-Acriton products in the home-building projects
of ViveICA.


INTERACCIONES: Executive Disproves Looming Intervention Rumors
--------------------------------------------------------------
Grupo Financiero Interacciones President Carlos Hank Gonzalez
announced that the bank's strengthened financial health over the
past several weeks means it is not in danger of intervention from
the federal government, Mexican financial daily El Economista
reported Friday. The announcement came amid reports that the
institution is one of three banks believed to be experiencing
insolvency problems and potentially subject to intervention if
their financial health does not recover quickly.

According to Gonzales, as of July 2001, the bank had complete
reserves for its past due loan portfolio, a fact that will be
evident in the bank's third-quarter results.

"In fact, it's the first time in our history we've had reserves
of 100 percent for this portfolio," he said.

In addition to debt coverage, the bank expects to see profits of
US$58 billion in the third quarter, up from losses in the first
half of the year.


MINERA AUTLAN: Not In Bankruptcy; Looks For Strategic Partner
-------------------------------------------------------------
Contrary to recent press reports, Companhia Minera Autlan, which
produces ferrous and ferrous-manganese products, hasn't declared
itself technically bankrupt, AFX-Europe disclosed Friday. The
company revealed it is in the process of looking for a strategic
partner, and has already appointed BNP Paribas to assist it on
its move.

Additionally, Autlan also intends to sell non-strategic assets to
raise funds. The company decided to temporarily suspend
production at its plant in Gomez Palacio and to close its
Teziutlan, Puebla plant permanently due to the current economic
slowdown, the strengthening of the peso and the depressed state
of the steel industry. However, its plants in Tamos en Veracruz
and its mine in Molango y Nonoalco in Hidalgo continue to operate
normally. Autlan also continues to work on its energy projects in
Puebla and its real estate projects in Puebla and Coahuila.

The company expects to reach a debt restructuring accord with the
bank committee formed by BBVA-Bancomer SA, Bank of Montreal and
ABN Amro Bank.




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

Troubled Company Reporter Latin American is a daily newsletter
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and Beard Group, Inc., Washington, DC. John D. Resnick and Edem
Psamathe P. Alfeche, Editors.

Copyright 2001.  All rights reserved.  ISSN 1529-2746.

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