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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, September 25, 2001, Vol. 2, Issue 187

                           Headlines


A R G E N T I N A

CORREO ARGENTINO: Exxel's OCA May Bid If Contract Auctioned
EPEC: Economic Instability Delays Technical Bids To Oct. 30
FARGO SA: Navarro Keeps Breadmaker; Talks With Bimbo Stalled
MUSIMUNDO SA: Exxel Founder To Get Rid Of Unprofitable Retailer
SUNSHINE MINING: Losing Grip On Jujuy Silver Project


B R A Z I L

CVRD: Dumps Steel Slab Project
CVRD: US Crisis Prompts Revision Of Expansion Plans
EMBRATEL PARTICIPACOES: Threatens To Pull Out Of Regions 1, 2
PSINET: Brazilian Providers Scramble For Estate
VARIG: Dealing With Drop In Demand; Maintains Full U.S. Schedule


C H I L E

GENER: AES Sells Argentine Assets To Totalfinaelf For $370M
LANCHILE: To Reduce Flight Schedule, Cut Workforce


D O M I N I C A N   R E P U B L I C

DOMINICANA AIRLINES: State Welcomes Aeropostal As New Partner


M E X I C O

AEROMEXICO: Seat Demand On U.S. Flights Down 30% After Attacks
CINTRA: Revised Aviation Policy Fundamental To Sale
MAXCOM TELECOMUNICACIONES: Needs New Financing By Year End
SANLUIS CORPORACION: Problems Started Last Year, Analyst Says
TRI-NATIONAL DEVELOPMENT: Senior Care Suit Includes Baja Assets
TRI-NATIONAL DEVELOPMENT: Senior Care Responds To Suit Story



     - - - - - - - - - - -


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

CORREO ARGENTINO: Exxel's OCA May Bid If Contract Auctioned
------------------------------------------------------------
The Exxel Group's postal service OCA SA may be interested in the
postal company Correo Argentino SA if the government auctions the
management contract, Bloomberg reported Friday. Correo Argentino
SA is currently seeking protection from creditors on at least
$400 million of debt.

"We will certainly bid if the government calls another round to
manage the post office," said Jorge Radivoj, president of OCA.
"We want to see what the terms are first."

Exxel's bid earlier this year to merge the OCA businesses with
Correo was rejected by Argentina's antitrust regulators.

Merging the two postal companies would have created a group with
more than a 60 percent share of basic postal services such as
mail transfers.


EPEC: Economic Instability Delays Technical Bids To Oct. 30
-----------------------------------------------------------
The opening of technical bids for the concession to operate
integrated power company Epec, which was scheduled for September
20, will now go ahead on October 30 of this year, Business News
Americas reported Friday. The postponement was due to the recent
terrorist attacks in the US, combined with an increase in the
country's risk and economic instability.

Two previous delays in the process came at the request of
prospective bidders over difficulties associated with financial
guarantees amid Argentina's slumping economy.

A total of six companies are participating in the process: US-
based AES, Enron and PSEG; Belgium's Tractebel; Spain's Union
Fenosa; and Italian-Argentine company Camuzzi. However, local
media claim only AES, Fenosa and Tractebel are still in the
running.

The Epec auction's new delay also pushes back the privatization
of Santa Fe province distributor Epesf, since the governors of
the two provinces, Cordoba's Jose Manuel de La Sota and Santa
Fe's Carlos Reuteman, agreed to hinge Epesf sale process on the
success of Epec's sale.


FARGO SA: Navarro Keeps Breadmaker; Talks With Bimbo Stalled
------------------------------------------------------------
The Exxel Group's Juan Navarro wants to hold on to its breadmaker
Fargo SA, which recently missed a $1.5 million payment to
Deutsche Bank AG, Bloomberg said Friday. The breadmaker had to
cut prices the last two years trying cope with a slumping
economy.

"We made a decision with Fargo," Navarro said. "We paid our high-
yield bonds, we paid the interest on high-yield bonds, and
negotiated with Deutsche Bank to renegotiate the loan."

Still, negotiations with Mexico's Grupo Bimbo SA on a potential
partnership with Fargo have stalled "indefinitely," he said,
adding "Argentina's too risky for the Mexicans right now."

Fargo reports sales of approximately $140 million and liabilities
of close to $120 million. Its parent company, Exxel, is seeing a
significant negative impact as a result of the Argentinean
recession.


MUSIMUNDO SA: Exxel Founder To Get Rid Of Unprofitable Retailer
---------------------------------------------------------------
Juan Navarro, the founder of Latin America's biggest buyout fund,
The Exxel Group, is looking for buyers for its troubled music
retailer Musimundo SA, Bloomberg revealed Friday.

Musimundo last month sought protection from creditors as
recession cut sales in half over the last two years and debts
from its expansion mounted. Exxel had invested $86 million to
double the number of stores to 120 and expand into Chile. Net
sales are estimated to fall to $169 million this year from $314
million in 1999.

The retailer, which controls 60 percent of Argentina's compact
disc and cassette market, has $206.4 million of debt, most of
which is held by a group of banks including Citigroup Inc. and
Banco de Galicia y Buenos Aires SA.

"Until we find a buyer for Musimundo we will keep operating the
business," said Navarro. "We lost money, but someone else will
make Musimundo viable."


SUNSHINE MINING: Losing Grip On Jujuy Silver Project
----------------------------------------------------
The Pirquitas silver project in northwest Argentina's Jujuy
province needs a price of US$5/oz to be developed into a
profitable operation, and time is running out for property holder
Sunshine Mining and Refining Company of Dallas, Texas, Business
News Americas reported Friday.

"That price would be a nice start, but it doesn't mean we'd have
the financial ability to develop it," according to company
president William Davis. "At US$5/oz, it has estimated returns of
over 20%."

Pursuant to the Company's independent bankable feasibility study,
Pirquitas has 129Moz of silver reserves, plus significant tin and
zinc reserves. It is envisioned as an open pit operation
producing 11Moz of silver, 3200 tonnes of tin and 16,300 tonnes
of zinc per year. The independent feasibility study forecasts
that pre-production capital and working capital required to
develop the property will total approximately $140 million, and
net cash cost of production will be approximately $1.53/oz of
silver.

The problem for Sunshine, which emerged from bankruptcy
protection in February this year, is that under present plans it
has the resources to hold Pirquitas only until 3Q02, and even
that depends on the company's lenders subscribing to the full
US$8 million of an optional commitment under a credit agreement,
and completing asset sales.

"After that, our creditors could potentially take it [Pirquitas]
from us," said Davis.

CONTACT:  Sunshine Mining and Refining Company, Dallas
          William W. Davis, 214/265-1377



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

CVRD: Dumps Steel Slab Project
------------------------------
Brazilian iron ore giant CVRD withdrew from Costa Atlantica steel
slab project it was planning for Colombia's Caribbean coast along
with local steelmaker Acesco, according to Acesco president Oscar
Ivan Zuluaga. In a Business News Americas report released Friday,
Zuluaga revealed that CVRD's withdrawal comes after the Colombian
government declined to guarantee the gas and energy supplies the
two companies said the plant would require.

"Colombia has limited prospects when it comes to gas reserves,
and state oil company Ecopetrol could only offer to supply the
project until 2010, just five years into operations, and that's
unheard of," he said.

The government isn't in a position to guarantee contracted prices
either, making the project too risky for Rio-based CVRD, which
did not regard the Colombian government's efforts as sufficient.
As a result, it will be very difficult to develop the project in
present circumstances, Zuluaga said.


CVRD: US Crisis Prompts Revision Of Expansion Plans
---------------------------------------------------
The recent terrorist attacks in the United States, which has
provoked international crisis, has prompted CVRD to revise its
expansion plans for this year and next, Gazeta Mercantil reported
Friday. The 9 percent increase in sales for the first half of
this year will not be achieved. However the devaluation of the
Brazilian currency Real will have a positive impact on its cash
and profit despite its indebtedness of US$2.6 billion. Vale
predicts a 7.5-percent growth on the exports to China. Japan
acquires 15 percent of its production and Europe other 25
percent. The company had originally forecast US$120 million per
month from the US$1 billion sale proceeds of interests in Bahia
Sul and Cenibra.


EMBRATEL PARTICIPACOES: Threatens To Pull Out Of Regions 1, 2
-------------------------------------------------------------
Embratel Participacoes will give up operating in regions 1 and 2
if Anatel (Agencia Nacional de Telecomunicacoes) keeps the
current requirements, according to a report Friday in Jornal do
Commercio. The company complains that providing 1 percent of the
population in towns with more than 200,000 inhabitants would cost
some R$1.2 billion and is not economically feasible.

For more information on the company's financial statements see:
http://www.bankrupt.com/misc/Embratel.doc

Contact:  Embratel Participacoes S.A.
          Silvia M.R. Pereira
          Investor Relations
          tel: (55 21) 2519-9662
          fax: (55 21) 2519-6388
          email: invest@embratel.com.br
          or
          Wallace Borges Grecco
          Press Relations
          tel: (55 21) 2519-7282
          fax: (55 21) 2519-8010
          email: cmsocial@embratel.net.br


PSINET: Brazilian Providers Scramble For Estate
-----------------------------------------------
Brazilian providers are now competing for the estate of Psinet,
Gazeta Mercantil revealed Thursday. Psinet recently discontinued
operations in the Latin American country after several failed
attempts to reach an agreement with investors over the sale of
the business. The company has been operating in Brazil for two
years, investing a total of US$70 million to acquire 11 local
access providers. PSINet filed for a chapter 11 petition for
protection from creditors in the US in May due to dwindling cash
reserves and mounting losses.


VARIG: Dealing With Drop In Demand; Maintains Full U.S. Schedule
----------------------------------------------------------------
In a company press release, VARIG Brazilian Airlines, Latin
America's largest airline and the Flag carrier of Brazil,
announced Friday that it is taking steps to immediately adapt its
capacity to the reduced worldwide demand that has resulted from
the terrorist attacks which occurred last week in the United
States of America. The airline noted that it will, however,
maintain its full schedule to the U.S.

The actions being announced today by VARIG are consistent with
reductions earlier revealed by other major international air
carriers as the industry reacts to softening economic indicators
which have impacted both business and leisure travel. Faced with
the marketplace uncertainties which currently exist, VARIG has
decided to take the following prudent steps to assure the long-
term viability of the Company:

-- Over the next two months, remove 13 narrow body aircraft from
its total active fleet of 93 aircraft, a reduction of 14%.

-- Immediately ground 8% of its wide-body fleet of 30 aircraft of
the 767, DC-10 and MD-11 categories.

-- Reduce the workforce payroll by the equivalent of 10%,
approximately 1700 positions.

-- Suspend plans for the introduction of additional flights to
the U.S.A. which were scheduled for later in 2001, New York-Rio
de Janeiro non-stop and the second frequency Miami-Manaus.

-- Embark on an intensive analysis of measures to cut operating
costs which do not impact on the safety, security or services
offered to VARIG's customers or shippers.

-- Curtail capital investments except those which are ear-marked
for aircraft maintenance and fleet renovations.

The airline noted that it will continue to work closely with all
Brazilian and foreign governmental authorities to adhere to
regulations which have been formulated to maintain the highest
degree of passenger safety and security.

VARIG said that it was taking these actions to improve its
economic base in order to secure its future. It pointed out that,
as Brazil's largest air carrier, it was a vital force in the
economic development of Brazil.

The Company noted that it will be celebrating its 75th
anniversary in 2002 and is committed to continuing its proud
tradition of providing top quality service to the international
and domestic traveling publics as well as shippers.

CONTACT:  VARIG Brazilian Airlines, Miami
          Jeff Kriendler, 305/866-2115



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

GENER: AES Sells Argentine Assets To Totalfinaelf For $370M
------------------------------------------------------------
The AES Corporation (NYSE:AES) announced Friday that it has
closed on the sale of related interests in the Argentine
hydroelectric facility Hidronequen to Total Austral S.A. a
subsidiary of TotalFinaElf.

Pursuant to the transaction, Total Fina purchased AES Gener's 70%
interest in Hidronequen for $72.5 million as well as subordinated
debt related to Hidronequen held by AES Gener for $50 million. In
addition, last month AES also sold Gener's 64% interest in the
Argentine thermal generator, Central Puerto SA, also to
TotalFinaElf's subsidiary, for $255 million.

AES agreed last year to sell both Hidronequen and Central Puerto
in conjunction with its tender offer for Gener S.A. In March
2001, AES Gener and TotalFinaElf executed a purchase and sale
agreement which granted to TotalFinaElf the option to purchase
three of Gener's generating assets in Argentina: Central Puerto,
Hidronequen and TermoAndes.

TotalFinaElf has until November 1, 2001 to exercise its option to
purchase TermoAndes.

The proceeds of approximately $367 million will be applied to
completely repay an acquisition loan incurred in connection with
AES's tender offer for Gener SA.

Naveed Ismail, President AES Andes, stated, "We are very pleased
to complete the sales of Central Puerto and Hidroneuquen to
TotalFinaElf. These sales represent an important milestone in the
implementation of our business plan for Gener and are a major
step towards reorienting AES Gener back towards the Chilean power
market."

Dennis W. Bakke, President and CEO of AES, stated, "The people in
our Andes Group have done a terrific job in acquiring AES Gener
and completing the transactions related to the initial purchase.
These sales ensured that AES did not have an excessive share of
the generating capacity in Argentina. We continue to like our
balance of hydro and thermal facilities in Argentina, including
our new, clean, efficient AES Parana gas-fired combined-cycle
facility which is expected to commence commercial operations
prior to the end of 2001."

CONTACT:  AES Corporation
          Kenneth R. Woodcock, 703/522-1315


LANCHILE: To Reduce Flight Schedule, Cut Workforce
--------------------------------------------------
Chilean leading airline announced plans to cancel flights and
layoff staff to minimize financial losses in the wake of a global
airline crisis following the recent terrorist attacks against the
United States, Reuters reported Friday.

The company did not provide any specific numbers but said it
would make public key decisions over the next two weeks.

"As a result of this crisis, there will be a restructuring of the
worldwide air industry and in that context, LanChile must adapt
and carry out the appropriate actions in terms of itineraries as
well as in its fleet and personnel," said Chief Executive Officer
Luis Ernesto Videla.

LanChile was already hurting financially before the U.S. attacks
from a softening of cargo demand in the limping economies of
South America, rising fuel prices and a pilot slowdown. Less than
two weeks ago, it dismissed 73 pilots in a labor dispute
unrelated to the U.S. attacks, and it is bracing for turbulent
contract negotiations with the pilots' union starting mid-
October.

To see company's latest financial statements:
http://www.bankrupt.com/misc/LanChile.pdf

CONTACT:  LanChile Airlines
          Martin Mosley, 305/670-1961        
          mmosley@lanchile.com     



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

DOMINICANA AIRLINES: State Welcomes Aeropostal As New Partner
-------------------------------------------------------------
The Commission for Public Enterprise Reform (CREP) has chosen
Aeropostal (a.k.a. Consorcio Dominicano 2001) to privatize
Dominicana Airlines, according to a report Saturday in the
Caribbean Weak. Aeropostal, the only company that qualified for
the tender, bid US$10.2 million for the airline, the minimum set
by the CREP, revealed CREP President Rafael Montilla Martinez.

Amin Canaan, the president of the National Association of
Airlines, commented that going ahead with a tender with only one
company enabled Aeropostal to get the state airline at "a real
bargain." Canaan estimated the airline's real worth as in the
range of between US$40-$50 million.

"We feel it was an incorrect and unfair decision because the
timing is poor and only one company was participating," he said.
Canaan also warned that the company had overvalued its airplanes
and that they are obsolete.

The privatization stipulates that the state will own 50 percent
and private investors 50 percent.



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

AEROMEXICO: Seat Demand On U.S. Flights Down 30% After Attacks
--------------------------------------------------------------
Leading Mexican airline Aeromexico on Friday revealed that demand
for seats on flights to the U.S. has fallen as much as 30 percent
after the recent deadly attacks in the United States using
hijacked aircraft, Reuters said in a report. However, domestic
demand remains unchanged.

Aeromexico's chief executive, Alfonso Pasquel, previously
estimated demand on U.S. flights had fallen 10-20 percent, but
demand has fallen further since then, said marketing director and
spokesman Alejandro Yberri.

"It depends on the flights, but it's between 20 percent and 30
percent. But this is a very recent development. We'll have to see
what happens in the coming weeks," said Yberri.

Yberri did not see domestic demand falling as a direct
consequence of the attacks in the U.S., but if Mexico's economic
slowdown becomes more serious, that will begin to effect demand.  
One possibility for being contemplated by Aeromexico, which
posted operating losses in the first half of the year, was to
return aircraft that it leases from other companies. Some 80
percent of the company's aircraft are leased.

According to experts, lease costs are $300,000 a month for 150-
seat aircraft and $400,000 for 200-seat planes.

Yberri said the company was evaluating various ways it could
reduce the supply of seats, including leaving some of its own
aircraft on the ground or selling them.

Aeromexico has just under 7,000 employees, including pilots,
flight attendants and ground crews. But he said job cuts was the
last option the company would consider.

CONTACT:  Mayte Sera Weitzman of AeroMexico, +1-713-744-8446, or
          mweitzman@aeromexico.com


CINTRA: Revised Aviation Policy Fundamental To Sale
---------------------------------------------------
Mexico's revised aeronautical policy, which will be published
this week, will be a fundamental document that will be able to
"condition" the sale of Cintra, the holding company of leading
airlines Aeromexico and Mexicana, according to Communications and
Transportation Minister Pedro Cerisola in a report Friday in
Mexican financial daily El Economista. Although, the text
submitted to him by the Chamber of Deputies will be adjusted
slightly, the document will be completed with "consensus and
enrichment," Cerisola said. The new policy will avoid "crossed
subsidies" between different airlines, and the "control of the
Mexican airlines should be maintained in the hands of Mexicans,
independent of the level of participation they have," he added.


MAXCOM TELECOMUNICACIONES: Needs New Financing By Year End
----------------------------------------------------------
Maxcom President Fulvio del Valle said that the local-service
telecom company is need of a new financing, Mexico City daily El
Universal reported Friday. Maxcom issued $300 million in debt at
the beginning of the year, immediately putting a portion of the
funds in an account to pay interest on the same debt. Maxcom
needs the new financing by the end of the year, when the original
$300 million is expected to run out, he said.

Maxcom registered minimal growth last year and suffered from a
change in leadership, while fighting to gain a small percentage
of the total market. Del Valle assumed leadership of the company
in April 2001, and since then, the company has created 23
thousand new lines of capacity and sold 17 thousand in August,
compared to sales of close to 3 thousand lines monthly in the
first quarter of the year.


SANLUIS CORPORACION: Problems Started Last Year, Analyst Says
-------------------------------------------------------------
The problems affecting Sanluis Corporacion, the company which
recently announced a suspension in debt payment, were apparent as
early as last year, with the decline in the automobile parts
industry and the slowdown of the U.S. economy, said Valores
Mexicanos analyst Ismael Capistran. In a report in Mexican
financial daily El Economista released Friday, Capistran revealed
that the decision by the conglomerate was made because the
company's financial situation would have worsened with lower cash
levels. Still, the move sends a bad signal to the market, he
said.

"The situation of Sanluis was expected. In the second quarter of
the year, what they had in cash and what they were generating in
cash were not enough for the payment and service on their debt
for the rest of the year," said Capistran.


TRI-NATIONAL DEVELOPMENT: Senior Care Suit Includes Baja Assets
---------------------------------------------------------------
Tri-National Development Corp. (OTCBB:TNAV) announced Thursday
that on Sept. 17, 2001 it filed a lawsuit against Senior Care
Industries (OTCBB:SENC) in the U.S. District Court in the
Southern District of California.

The lawsuit asserts that Senior Care is guilty of fraud,
fraudulent inducement, breach of contract and S.E.C. violations,
and seeks actual, consequential and exemplary damages, an
injunction against further misrepresentations by Senior Care
regarding its ownership of Tri-National assets, and a declaratory
judgment adjudicating the rights of the parties under an
agreement entered into by them relating to the sale of certain
assets and property in Baja California, Mexico. This lawsuit was
filed on behalf of Tri-National by Gerald Padmore of Cox Padmore
Skolnik & Shakarchy, a partner and head of the firm's Denver
office.

Michael Sunstein, president and chief executive officer, said,
"Continuing the actions initiated last week to defend and protect
our corporate interests and our shareholders, we are now
aggressively pursuing Senior Care on the legal front. We believe
they have engaged in an intentional strategy of misrepresentation
and deception, which has harmed the company and its shareholders.
We are seeking damages for those actions and their consequences,
as well as an injunction prohibiting further misrepresentations
and terminating their Tender Offer. We are also asking the court
to declare the asset sale agreement -- which Senior Care claims
was previously effective -- null and void based on Senior Care's
breach of contract in not producing the $10 million in financing
to which they committed."

As previously related, the company is continuing to work together
with a number of highly respected and well-funded industry
partners to create a comprehensive strategic plan for the
development and realization of the significant asset values the
company owns and for the payment of its liabilities. Successful
execution of such a plan would leave Tri-National virtually debt
free, with significant cash flows from major ongoing development
projects. It is to this end that the company is devoting all its
efforts. As always, we greatly appreciate the support of our
longstanding and patient shareholders.

Tri-National Development Corp. is an international real estate
development, sales and management company.

CONTACT:  Tri-National Development Corp.
          Jason Sunstein, 619/718-6370, Fax 619/718-6377
          jason@tri-national.com
                  

TRI-NATIONAL DEVELOPMENT: Senior Care Responds To Suit Story
------------------------------------------------------------
Senior Care Industries Inc. (OTCBB:SENC), said Thursday that it
had neither seen nor had it been served with any lawsuit
reportedly filed by Tri-National Development (OTCBB:TNAV) on
Sept. 17, 2001.

It reserved comment on any lawsuit until it receives a copy.

"What we do know as fact is that Judge John Hargrove, who is
presiding over the involuntary bankruptcy case filed against Tri-
National by several of Tri-National's creditors in the United
States Bankruptcy Court in San Diego, has set October 26, 2001,
as the date when he will determine whether Tri-National will be
forced into bankruptcy," said Robert Coberly, vice president in
charge of development for Senior Care.

"As we reported yesterday, numerous other creditors have
expressed their desire to join the original list of co-
petitioners against Tri-National. We anticipate that the
collective appeal of this growing list of creditors will compel
the judge to put Tri-National into bankruptcy."

Once in bankruptcy, said Coberly, the creditors would push to
remove Tri-National management and propose a plan to reorganize
the company. Senior Care welcomes this eventuality, he said, and
is moving full speed ahead with its tender to Tri-National
shareholders to gain control of the company.

CONTACT:          Investor Relations Network
                  Tom Gavin, 909/279-8884
                  tom@irnonline.com

                


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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