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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

            Wednesday, August 22, 2001, Vol. 2, Issue 164

                           Headlines


A R G E N T I N A

MULTICANAL: Refinancing Talks Extended Until August 30


B R A Z I L

CVRD: Discovers New Copper Reserves; Signs 20-Yr. Contract
CVRD: JBP Gets Aid From JBIC To Purchase Cenibra
TRANSBRASIL: ECT Deposits $2.7M As Debt Payment
VARIG: Still Seeking Strategic Partners To Help Shoulder Debt
VITECH AMERICA: Microtec Not Included In Chapter 11 Proceedings


C H I L E

EDELNOR: Moody's Lowers Senior Unsecured Ratings


M E X I C O

ABC-NACO: Settles Strike in Mexico
AEROMEXICO: Aims To Bolster Position On 3 Routes Next Year
BANCRECER: Scotiabank-Inverlat Ready To Face Consequences
CORPORACION GEO: Issues 300M Pesos Medium-Term Promissory Note  
DAEWOO ELECTRONICS: Shuts Down Mexican Monitor Production Line
GRUPO BITAL: Shareholders Welcome Offers


P E R U

AERO CONTINENTE: Court OK's Resumption Of Chilean Operations
MINERA ATACOCHA: Regulator Suspends Milpo's Voting Rights


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

MULTICANAL: Refinancing Talks Extended Until August 30
------------------------------------------------------
Struggling to avert a default, Buenos-Aires based cable
television company Multicanal SA said it has agreed with seven
banks to extend talks on a $164-million debt coming due Tuesday,
Bloomberg covered in a report. The company is hopeful it will be
able to refinance two securities held by the banks by a new
deadline of Aug. 30.

Multicanal has $25 million of commercial paper coming due next
month, $125 million of bonds due in February and $450 million of
bonds due in 2007 and later. The company expects talks with the
seven banks will yield a refinancing solution for debt payments
due over the next 12 months or longer, said Jorge Rendo, a
spokesman for parent Grupo Clarin, Argentina's largest media
group.

"We are developing a plan to attend to our short- and medium-
term obligations," Rendo said.

The seven banks involved in the transaction are Credit Suisse
First Boston, Citigroup Inc.'s Citibank, FleetBoston Financial
Corp.'s Bank of Boston, Toronto-Dominion Bank, Credit Lyonnais,
Deutsche Bank AG, and state-owned Banco de la Nacion, Taylor
said.



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B R A Z I L
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CVRD: Discovers New Copper Reserves; Signs 20-Yr. Contract
----------------------------------------------------------
Cia. Vale do Rio Doce (CVRD), the world's largest iron ore
exporter, discovered new reserves adjoining its existing copper
reserves in the Carajas region of the Brazilian Amazon, where it
already has a plan with Phelps Dodge to develop a $485-million
copper project, Bloomberg reported Monday. With the new
discovery, CVRD could eventually become the No. 1 copper producer
in the world.

Meanwhile, CVRD planned to sign Monday a 20-year iron-ore
contract with the Shanghai Baosteel Group. The operation, which
is valued at $1.8 billion, would guarantee iron ore supply to
China's most profitable steelmaker, eventually turning the
Brazilian company into its leading source of iron ore.


CVRD: JBP Gets Aid From JBIC To Purchase Cenibra
------------------------------------------------
The Japan Bank for International Cooperation (JBIC) will extend a
US$420-million loan to Japan Brazil Paper and Pulp Resources
Development Co., Ltd. (JBP) in order for JBP to purchase control
of Celulose Nipo-Brasileira S/A (Cenibra), Valor Economico
reported Aug. 15, 2001. The figure represents 40 percent of the
US$670 million total, which JBP will have to pay to CVRD for
Cenibra.

The sale of the CENIBRA shares ratifies CVRD's strategic focus on
mining and logistics.


TRANSBRASIL: ECT Deposits $2.7M As Debt Payment
-----------------------------------------------
The Brazilian post office Empresa Brasileira de Correios e
Telegrafos (ECT) deposited R$2.7 million Friday in Transbrasil's
bank account as payment of a debt relative to cargo services
supplied between July 2000 and July 2001, Gazeta Mercantil Online
disclosed Monday. According to Transbrasil attorney Paula
Ribeiro, the amount will be used to pay overdue salaries to
nearly 1,000 employees.

Meanwhile, on Friday Transbrasil also solicited the Federal
Regional Court (TRF) 1st Region in Brasilia to suspend its
request to jail ECT president Hassan Gebrim. The arrest request,
made last Friday, was based on an injunction granted August 11
by Justice Maria de Fatima de Paula Costa, of the TRF, ordering
the immediate payment of the debt by the ECT or its chief
executive would face arrest if it was not done.


VARIG: Still Seeking Strategic Partners To Help Shoulder Debt
-------------------------------------------------------------
Struggling to reduce its debt load of $1.25 billion, Brazilian
airline Varig seeks to sell part of its equity, Ozires Silva,
airline president, said in an EFE report Monday issue. Silva
announced that Varig, which posted $231 million in losses during
the first half of this year, is now in talks with possible
strategic partners, but he did not provide any details.

"We are prepared to accept domestic or foreign partners," Silva
said. Brazilian law limits foreign ownership of airlines to a 20-
percent stake.

Silva warned though that the equity sale would not be enough to
bolster Varig's finances, urging the government to take steps to
help domestic airlines compete with larger foreign rivals.


VITECH AMERICA: Microtec Not Included In Chapter 11 Proceedings
---------------------------------------------------------------
Vitech America, Inc. (Nasdaq:VTCH), a leading provider of PC-
based Information Technology solutions direct to business and
individual clients, announced Friday that the Company has filed a
voluntary petition for bankruptcy protection under Chapter 11 of
the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the
Southern District of Florida (Case. No. 0118857).

The Company's Brazilian operating subsidiary, Microtec, was not
part of Friday's filing and Microtec will continue to provide
high quality products and solutions to its clients.

Vitech expects to continue its ongoing day-to-day operations
while it uses the reorganization process to protect itself from
the judgment given to Gateway in its New York case against Vitech
while allowing Vitech to proceed with its Florida case against
Gateway. The goal will be for Vitech to have adequate relief from
Gateway and other creditors to regain the financial strength it
requires to continue to compete effectively. The Company will
continue to develop and evaluate strategic alternatives,
including the sale of the Company as a going concern.

The Company is seeking permission from the Courts to continue to
pay employees in the normal course of business and to continue
their medical and other benefits. The Company intends to pay
vendors on a timely basis for goods and services they deliver
after the filing date.

Litigation against Gateway

On March 9, 2001, Vitech America, Inc. filed a lawsuit against
Gateway in the United States District Court for the Southern
District of Florida for fraud, negligent misrepresentation and
breach of contract. The Company believes that Gateway
fraudulently induced it to enter into the September 1999
convertible loan agreement. In particular, the suit alleges that
Gateway represented to the Company that it would make certain
investments in Vitech according to a capital plan presented by
Vitech to Gateway, provide savings in cost of goods sold, and
provide Vitech with use of the Gateway brands and trademarks,
among other things. During the term of the relationship, Vitech
believes that Gateway is and has been in breach of these
contractual obligations causing material damages to Vitech.

Gateway made numerous representations to Vitech that it planned
to convert its debt to equity or extend additional debt financing
at, or prior to maturity of the loan in March 2001, all in
accordance with the Company's capital plan. During the first
quarter of 2001, Gateway allegedly blocked alternative financing
that Vitech had been seeking, and demanded that it be given
voting control over a majority of Vitech's stock without
protecting the Company's shareholders or providing methods to
enhance the shareholder's value. Vitech believes that all of this
was part of Gateway's scheme to engineer technical defaults by
Vitech so that Gateway could take over the Company's Brazilian
computer manufacturing operation.

Gateway responded to the lawsuit in Miami with a separate lawsuit
filed in New York claiming that Vitech is in default on $41
million of the loans made to the Company and seeking repayment
under the promissory notes issued pursuant to the loans. In
response, Vitech filed a motion with the New York court to
dismiss, transfer, stay or abate the Gateway suit on the basis
that Vitech had a prior pending action in the Southern District
of Florida court concerning the same agreements and that the New
York court should defer to the action in the Florida court under
the "first-filed" rule. The New York court responded to Vitech's
motion by bifurcating the Gateway suit and transferring all
matters related to the fraud, negligent misrepresentation and
breach of contract under the loan agreement and the licensing
agreement to the Florida court, but keeping the Gateway suit as
it related to payment on the promissory notes in the New York
court.

In July, Gateway filed a motion for summary judgment in the New
York court asking for a judgment to be entered against Vitech on
the $41 million of promissory notes issued by Vitech pursuant to
the Gateway loans plus accrued interest. Vitech's response asked
the New York court not to grant the motion while the Florida case
was still pending on the basis that the promissory notes are
inseparable from the other agreements between Vitech and Gateway
that are part of the suit filed against Gateway in Florida for
fraud, negligent misrepresentation and breach of contract.
Despite Vitech's defense and no discovery being conducted, on
August 7, 2001, the New York court granted Gateway its motion for
summary judgment against Vitech for the $41 million promissory
notes plus accrued interest. Vitech is exploring a potential
appeal of the decision by the New York court. Vitech intends to
vigorously pursue its case against Gateway and intends to seek a
stay of any execution by Gateway on the New York judgment pending
the outcome of the Florida case with the Court.

Corporate Information

Vitech America, Inc., a Miami-based company, is a leading
provider of PC-based Information Technology solutions direct to
business and individual clients, including the manufacture and
marketing of PCs, servers and related products, business systems
integration products and turn-key business solutions in Brazil
under the names: Microtec Digital World and Microtec(TM), with
product lines of Mythus(TM), Quest(TM), Spalla(TM), Vesper(TM)
and Vision(TM).



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C H I L E
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EDELNOR: Moody's Lowers Senior Unsecured Ratings
------------------------------------------------
Moody's Investors Service downgraded the senior unsecured rating
on the loan participation certificates of Empresa Electrica del
Norte Grande S.A. (EDELNOR) to Ca from Caa1, the rating agency
announced Monday.

Ratings downgraded to Ca from Caa1 include:

- US$90 Million 10.5% Senior Loan Participation Certificates due
June 15, 2005 and

- US$250 Million 7.75% Senior Loan Participation Certificates due
March 15, 2006.

The rating action reflects largely the recent announcement by
parent company, Mirant Corporation that it does not intend to
make additional cash infusions into EDELNOR unless it can be
assured that it will be repaid in the near term. In addition to
that, asset sales contemplated by EDELNOR appear to be delayed
which further strains the company's liquidity.

The rating outlook is stable.



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M E X I C O
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ABC-NACO: Settles Strike in Mexico
----------------------------------
In a company press release, ABC-NACO Inc. (ABCR) announced Monday
the settlement of the 80-day-old labor dispute at its facility in
Sahagun, Mexico. The agreement provides for a modest wage
increase in line with Mexican national averages and establishes
new approaches for increasing both labor productivity and
operating flexibility. The agreement was ratified by the union
membership on August 19, 2001 and operations will begin to resume
on August 20, 2001.

Vaughn W. Makary, ABC-NACO's President and Chief Executive
Officer, said, "I congratulate the efforts of our Mexican
management team as well as the union leadership on the
settlement. The agreement reached is fair to our employees and
the Company, and establishes creative new approaches that will
serve as the basis for increased productivity in Sahagun. With
this agreement, I believe that our Mexican unit will have the
opportunity to reach its potential even during this period of
weak market demand."

ABC-NACO is one of the world's leading suppliers of
technologically advanced products to the rail industry. With four
technology centers around the world, ABC-NACO holds pre-eminent
market positions in the design, engineering and manufacture of
high-performance freight car, locomotive and passenger suspension
and coupling systems, wheels and mounted wheel sets. The Company
also supplies railroad and transit infrastructure products and
services and technology-driven specialty track products. It has
offices and facilities in the United States, Canada, Mexico,
Scotland, Portugal and China.


AEROMEXICO: Aims To Bolster Position On 3 Routes Next Year
----------------------------------------------------------
Aeromexico hopes to strengthen its position on its three main
international routes: Lima, Sao Paulo and Santiago de Chile, next
year, despite the sector's dire financial situation, El
Financiero reported Monday. So far, only the Mexico City-Santiago
route has generated profits for the airline with 65 percent
occupancy, while the Sao Paulo and Lima flights have reported
revenues of US$20 million and US$13 million, respectively, but no
profits. Total sales for the three flights totaled US$25 million
this year. Losses on the route to Brazil's business capital are
on the slide and the flights to Chile's capital now run nine
times per week (5 on code-sharing flights with Lanchile).


BANCRECER: Scotiabank-Inverlat Ready To Face Consequences
---------------------------------------------------------
Even with the financial compromises it might have with Mexico's
bank bailout agency IPAB, Scotiabank-Inverlat announced it would
proceed with its bid for failed bank Bancrecer, Mexico City daily
El Universal said Monday in a report. According to an official of
Scotiabank-Inverlat, Alfredo Uresti, the firm would be willing to
buy IPAB's investment in Inverlat.

"I know we're bidding for Bancrecer, us and Banorte, and despite
what happens in the future with IPAB, we will continue working to
get Bancrecer," he said.

With the acquisition of Bancrecer, Scotiabank-Inverlat will
increase the number of its branches throughout the country, from
370 to 1,124.


CORPORACION GEO: Issues 300M Pesos Medium-Term Promissory Note  
--------------------------------------------------------------
In an effort to restructure debts, Corporacion Geo SA, Mexico's
No. 1 Homebuilder, issued a medium-term promissory note for 300
million pesos. Similar to last year's financing, this locally-
placed matures in 2005, Excelsior reported August 17. The
transaction was led by Multivalores Casa de Bolsa and Banorte
Casa de Bolsa. The first issue reportedly took place in June last
year. GEO has a Eurobond maturing in May next year.


DAEWOO ELECTRONICS: Shuts Down Mexican Monitor Production Line
--------------------------------------------------------------
Embattled Daewoo Electronics Co Ltd closed the monitor production
line at its Mexican operation and decided to focus on TV sets and
VCRs as part of restructuring efforts aimed at accelerating the
sale of the company, The Korea Herald reported Monday. The
monitor production line, with an annual capacity of 700,000
units, had supplied products to Hewlett-Packard and Compaq on a
contract basis but suffered losses due to the plunging prices and
onslaught of cheaper Chinese monitors.
  
Daewoo said it plans to increase the TV production capacity of
its Mexico factory to 2 million units by 2005 in a bid to raise
its North American market share to 10 percent.
  
According to Daewoo, its production lines increasingly resort to
OEM or contract-based projects for other companies as its own
brand lost its appeal in the wake of the bankruptcy of the Daewoo
Group.

Recently Daewoo Electronics' creditors have designated KPMG as
financial advisor for the sale of the company's main businesses.
KPMG has completed presentation material about Daewoo as a prior
step in the sale of the company. Creditors have been trying to
sell Daewoo Electronics since the Daewoo Group, once South
Korea's second-largest business concern, collapsed in 1999 with
more than $80 billion worth of debt.

So far, no company had expressed its intention to take over
Daewoo Electronics, though local media speculated that Daewoo
Electronics, whose debts are nearly twice as much as its assets,
could be sold by the end of this year.

Last month, Daewoo Electronics' creditors agreed on a bailout
plan, including a swap of 406.5 billion won of its debt for
equity as part of plans to break up and sell the firm.


GRUPO BITAL: Shareholders Welcome Offers
----------------------------------------
Eduardo Berrondo, head of Mexico's Grupo Financiero Bital,
informed that the bank's shareholders are ready to sell part or
all of the institution if and when an attractive or irrefutable
offer comes along, Mexico City daily El Universal reported
Monday. Berrondo, brushing aside about what a lot of people
think, affirmed that Bital currently has a high market value.
Once Bital concludes its acquisition of Banco del Atlantico, both
of its associates, Santander and Banco Portugues, will
participate in additional investments to strengthen the bank's
capital, Berrondo said. However, this does not necessarily mean
they will increase their ownership, he added.



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P E R U
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AERO CONTINENTE: Court OK's Resumption Of Chilean Operations
------------------------------------------------------------
A spokesman for the Santiago Appeals Court confirmed the court
has ruled that Peruvian airline Aero Continente, which is facing
money laundering charges, may resume its Chilean operations, EFE
said Monday. Special Judge Victor Montiglio announced that the
ruling of the appeals court leads to the immediate cancellation
of all the pre-trial judicial orders that had restricted the
airline's activities in Chile. Montiglio restored the company's
offices and airplanes and only retained financial information
critical to the investigation launched in Santiago's Fifth
Criminal Court. However, the judge said he would continue to
investigate the conspiracy and money laundering charges filed by
the Attorney General's Office.


MINERA ATACOCHA: Regulator Suspends Milpo's Voting Rights
---------------------------------------------------------
Peruvian zinc miner Minera Atacocha's shareholders meeting, which
was supposed to be held Wednesday, August 15, was cancelled when
representatives of Cia. Minera Milpo SA didn't show up, Gestion
said in a report. The meeting, which was scheduled at the request
of Milpo and West LB last month, would have seen the ratification
or removal of the existing board of directors. The securities and
exchange commission Conasev suspended Milpo's voting rights
(acquired after the IPO) over Minera Atacocha's stocks.




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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