/raid1/www/Hosts/bankrupt/TCRLA_Public/011023.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, October 23, 2001, Vol. 2, Issue 207

                           Headlines



A R G E N T I N A

AEROLINEAS ARGENTINAS: ARG Challenges Domestic Flight Rights
S&P Downgrades Banks Under Shadow of Sovereign Debt Troubles


B R A Z I L

BANCO ECONOMICO: Gerdau Won't Bid For More Of Acominas
CELESC: Shares Go Up On Anticipation Of Debt Payment
CESP: Shares Rise 20% On Optimism Of Sale
CVRD: Concludes Negotiation with Baosteel; New Company Formed
EMBRAER: Shares Jump 9.4% On Favorable WTO Ruling
FAZENDA REUNIDAS: Firing 20% Of Workforce In Bid To Settle Debts


C H I L E

EDELNOR: Mirant Updates Sales Process for EDELNOR
EDELNOR: Shares Slip On Withdrawal Of Two Potential Bidders


C O L O M B I A

OSPINAS Y CIA: Restructures Debts; May Emerge from Protection


M E X I C O

ALESA: Rigida OK's Settlement With Creditors; Management Deal
HYLSAMEX: To Lodge Anti-Dumping Case Against Exporters


P E R U

NBK/NUEVO MUNDO: NBK To Go Ahead With Sale; Fierro Drops Plans


T R I N I D A D   &   T O B A G O

BWIA: To Discuss Government Financial Aid Later This Week


     - - - - - - - - - - - -


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

AEROLINEAS ARGENTINAS: ARG Challenges Domestic Flight Rights
------------------------------------------------------------
ARG is challenging Aerolineas Argentinas SA's rights to fly
scheduled domestic routes because its new ownership, under the
Air Comet consortium, is not an Argentine majority, Lapa SA
chairman Guillermo Francos said in an AFX-Asia report. Francos
went on to insinuate that Aerolineas Argentinas' plan to recover
market share by cutting rates could place safety in jeopardy.

Under a previous ruling, the court decreed that the aeronautical
code's requirement for scheduled domestic carriers to have an
Argentine majority ownership was satisfied if the parent company
was registered in Argentina, irrespective of the nationality of
its shareholders.

"Argentina is the only country in the world that opens its market
to foreign companies ... and if we went to Spain and applied for
a domestic route we would be laughed at," Francos said.

The decree referred to by Francos was issued in 1994 when Domingo
Cavallo was economy minister, with a portfolio that at the time
also included public works and services, and was revoked last
year. LAPA is seeking a court order that would prevent a new
reiteration of the decree.



S&P Downgrades Banks Under Shadow of Sovereign Debt Troubles
------------------------------------------------------------
After downgrading the sovereign ratings on the Republic of
Argentina, international rating agency Standard & Poor's (S&P)
lowered the counterparty credit ratings on the following
Argentine banks to triple-C-plus/single-C or triple-C-pi:

- Banco Rio de la Plata S.A. - Counterparty credit ratings CCC+/C
B-/C Senior secured debt CCC+ B-Senior unsecured debt CCC+ B-CDs
CCC+/C B-/C

- Banco de Galicia y Buenos Aires S.A.Counterparty credit ratings
CCC+/C B-/C
Senior unsecured debt CCC+ B-CDs CCC+/C B-/C

- BBVA Banco Frances S.A. Counterparty credit ratings CCC+/C B-/C
Senior unsecured debt CCC+ B-CDs CCC+/C B-/C

- HSBC Bank Argentina S.A. Counterparty credit ratings CCC+/C B-
/CCDs CCC+/C B-/C

- Banca Nazionale Del Lavoro S.A. Counterparty credit ratings
CCC+/C B-/CCDs CCC+/C B-/C

- Banco Patagonia S.A. Counterparty credit ratings CCC+/C B-/C

- Banco Hipotecario S.A. Counterparty credit ratings CCC+/C B-/C
Senior unsecured debt CCC+ B-CDs CCC+/C B-/C

- Mercado de Valores de Buenos Aires S.A. Counterparty credit
ratings CCC+/C B-/C

- Caja de Valores S.A. Counterparty credit ratings B+/B BB-/B
RATING LOWERED

- Scotiabank Quilmes S.A. Counterparty credit rating CCCpi B-pi
RATING

AFFIRMED
  
- Banco de la Provincia de Buenos Aires Counterparty credit
rating CCCpi

The outlooks on the financial institutions' full interactive
ratings remain negative, in line with that of the sovereign, S&P
said in a statement.

Additionally, the ratings Caja de Valores, were lowered to
single-B-plus/single-B, though they remain three notches above
those of the sovereign and other Argentine financial
institutions. The ratings on Mercado de Valores de Buenos Aires
were lowered to triple-C-plus/single-C.

The downgrades reflect the increasingly uncertain economic
environment faced by the banks in the context of enhanced
probabilities of sovereign debt restructuring, as the prospects
for the government achieving its goal of a "zero deficit" budget
diminished after September's sharply reduced collected taxes.

S&P said it would continue to monitor the expected deterioration
in asset quality in the three-year-old recession, as well as the
financial system's liquidity position in the context of the
increasingly confidence-sensitive performance of deposits.

OUTLOOK: NEGATIVE

Argentine financial institutions retain substantial exposure to
government risk, in the form of loans and securities that
generally exceed the equity on their books, the agency said. An
Argentine sovereign default or devaluation could therefore
trigger an adverse depositor reaction, resulting in the
government freezing deposits and implying a change in the terms
of banks' contractual obligations.

On the other hand, if the government controls the fiscal deficit
and avoids a default, banks should be able to manage a reasonable
amount of distress, as the level of capital and liquidity
reserves point to their relative strength within the Argentine
environment, S&P said.



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

BANCO ECONOMICO: Gerdau Won't Bid For More Of Acominas
------------------------------------------------------
In an investment analysts' conference call Friday, Gerdau CFO
Osvaldo Schirmer announced that the Porto Alegre-based company
would not bid for an increased stake in Acominas, Business News
Americas said in a report. Gerdau already holds a 38 percent
share of the Minas Gerais-based steelmaker Acominas.

Gerdau, along with its partners in Acominas (NationalSteel of
Singapore and Acominas employees' club CEA), believed that the
minimum price being set by the Brazilian Central Bank is "out of
market reality," Schirmer said.

Brazil's Central Bank has set 489 million reais (US$178 million
at current exchange rates) as the minimum price for the 17.69
percent it holds in Acominas. The auction is due to take place on
October 24.

The Central Bank is selling the Acominas shares as administrator
of the affairs of failed bank Economico, original holder of the
voting stake that is up for sale.


CELESC: Shares Go Up On Anticipation Of Debt Payment
----------------------------------------------------
Shares in Brazilian power utility Centrais Eletricas de Santa
Catarina SA soared as much 23 percent, to 43 centavos, Bloomberg
reported Friday. Shares rose on anticipation that the government
is going to issue bonds to the company for the amount Santa
Catarina state owes it. The cash would be used to pay off debts.

"This is very good news for the company as Celesc's image will
get better" among lenders, said Andre Segadilha, an analyst at
Banco Brascan SA.

According to Aldo Roberto Schuhmacher from Celesc's investor
relations department, Santa Catarina state has owed about 600
million reais ($219.5 million) to Celesc since 1994. The utility
and the state requested the government assume the debt and issue
bonds for the same amount to Celesc.

"It's not a closed deal so some caution is needed," Segadilha
said. "It's maybe too much money for the government. On the other
hand, it's in the government's interest to balance accounts in
Celesc to accelerate its sale."

If Celesc can raise cash, it will be able to pay off $61.2
million in euronotes that expired last June. The company is
paying a 15 percent interest rate per year on the delayed
payment, Schuhmacher said. Besides that, Celesc had another 425
million reais debt on the books in June.


CESP: Shares Rise 20% On Optimism Of Sale
-----------------------------------------
Shares of Cia. Energetica de Sao Paulo (Cesp) soared 20 percent
and are up 60 percent this week as investors expect the
government to make a third attempt to sell Brazil's third-largest
power generator, Bloomberg revealed Friday.

Sao Paulo state's government called off two previous Cesp sales
in the last year on concern the power producer's high level of
dollar debt combined with the real's decline made the offering
price too high.

"At the beginning of this week, there was a rumor the government
was preparing to put the company up for sale and shares started
rising," said Marcos Severine, a power utility analyst at Banco
Sudameris SA's brokerage in Sao Paulo.

However, the government of Sao Paulo, Brazil's richest state, may
find it difficult to sell Cesp, according to analysts.

Cesp's total debt in June stood at about 8.1 billion reais ($2.96
billion), of which, 6.5 billion reais was dollar denominated,
Severine said. The real's 34 percent decline since June 2000,
when the company's minimum price was first set, has increased its
domestic debt load.

Analysts expect that the government will have to set a lower
minimum price for Cesp.

"Selling the utility for a lower price would be too harmful for
the governor who wants to run for reelection next year -- I don't
think he would take that risk," Severine said.

"We will probably see some sell off of Cesp" when investors
realize the sale is not likely to happen soon, he said.



CVRD: Concludes Negotiation with Baosteel; New Company Formed
-------------------------------------------------------------
In a company press release, Companhia Vale do Rio Doce (NYSE:
RIOpr) (CVRD) reports that, having fulfilled all terms and
conditions established in the contracts signed on August 21 of
this year with Shanghai Baosteel Group Corporation (BAOSTEEL),
both companies formalized proceedings on October 18, 2001, for
implementing a business partnership. This includes the creation
and co-management of a company in Brazil, BAOVALE MINERACAO S.A.,
as well as a long-term iron ore supply contract between CVRD and
BAOSTEEL, the largest steel mill in the People's Republic of
China.

As previously announced in the August 21, 2001 press release,
CVRD is expected to earn a total revenue of US$ 2 billion over
the next twenty years as a result of this business deal.

CVRD'S role in the Asian market has become stronger and more
significant through this transaction, considered by both
corporations to be a historic benchmark in business relations
between Brazil and the People's Republic of China.

CONTACT:  Roberto Castello Branco: castello@cvrd.com.br
          +55-21-3814-4540

          Andreia Reis: andreis@cvrd.com.br
          +55-21-3814-4643

          Barbara Geluda:  geluda@cvrd.com.br
          +55-21-3814-4557

          Daniela Tinoco: daniela@cvrd.com.br
          +55-21-3814-4946


EMBRAER: Shares Jump 9.4% On Favorable WTO Ruling
-------------------------------------------------
Shares of the world's fourth-largest maker of jet airplanes
Empresa Brasileira de Aeronautica SA (Embraer) jumped 9.4 percent
to 11.40 reais, Bloomberg reported Friday.

The World Trade Organization ruled Friday in favor of Brazil in a
complaint against Canada's offer of a low-interest loan to U.S.
airline Air Wisconsin Airlines Corp. after the company agreed to
buy $1.68 billion of Bombardier Inc. aircraft, passing over
Embraer.

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

CONTACT:  Anna Cecilia Bettencourt
          +55 12 345 1106
          acecilia@embraer.com.br

          Milene Petrelluzzi
          +55 12 345 3054
          milene.petrelluzzi@embraer.com.br



FAZENDA REUNIDAS: Firing 20% Of Workforce In Bid To Settle Debts
----------------------------------------------------------------
Approximately 300 employees or 20 percent of the total workforce
of Fazenda Reunidas Boi Gordo are expected to lose their jobs as
the company attempts to settle a debt with 1,200 investors in
Brazil, South American Business Information reported Friday. The
company, which is currently in a bankruptcy process, reportedly
has debts totaling R$780 million.



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

EDELNOR: Mirant Updates Sales Process for EDELNOR
-------------------------------------------------
Mirant (NYSE: MIR) announced Friday that it continues to seek
potential buyers for its affiliate, Empresa Electrica del Norte
Grande S.A. (EDELNOR) after Electroandina and AES recently
withdrew their competitive tender offers for the loan
participation certificates of the Chilean company. Mirant remains
committed to seeking a buyer for its interest in EDELNOR.

AES and Electroandina, recently offered as much as US$380 per
US$1,000 of face value for the outstanding loan participation
certificates of EDELNOR via competing tender offers. According to
the extension notices published by AES and Electroandina, US$ 8.4
million and US$33.42 million were tendered respectively from the
total of US$ 340 million in loan certificates. Neither AES nor
Electroandina has submitted a firm, non-contingent offer to
purchase EDELNOR from Mirant.

"Mirant has written off its entire investment in EDELNOR, and
actively continues to pursue a sale of the company. Additionally,
Mirant does not plan to commit any new capital to EDELNOR," said
Ray Hill, Mirant's chief financial officer.

With these developments, EDELNOR's liquidity continues to be a
problem, and no assurance can be given that the Dec. 15 loan
interest payment will be made.

Mirant is one of the world's leading competitive energy
providers. Headquartered in Atlanta, the company has integrated
energy operations in North and South America, Europe and Asia. A
leader in energy risk management and marketing of power, natural
gas and other energy commodities, Mirant has one of the
industry's largest energy commodity trading floors. We see the
opportunity to change the world with our energy. Come see how at
www.mirant.com .

CONTACT:  Jason Cuevas, +1-678-579-6017,
          or Sean Murphy, +1-678-579-6974,
          both of Mirant Corporation


EDELNOR: Shares Slip On Withdrawal Of Two Potential Bidders
-----------------------------------------------------------
Edelnor saw its shares tumble 10.20 percent, to 22 pesos, Reuters
reported Friday. The market is apparently reacting to trouble in
the proposed sale of the company's debt.

According to analysts, Edelnor's shares are still suffering the
blow of the withdrawal of offers made by Chilean electricity
distributor Electroandina and the U.S. power giant AES, to buy
all the debt held by the loss-making firm.



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

OSPINAS Y CIA: Restructures Debts; May Emerge from Protection
-------------------------------------------------------------
Colombian construction firm Ospinas y Cia, which has been
operating within the shelter of Law 550 since October 2000, has
at last managed to restructure its debts, South American Business
Information revealed Thursday.

Approximately 83 percent of its creditors have agreed initially
to a definitive accord, but Ospinas is hopeful it can raise that
figure to 95 percent in the next few days. Certain creditors have
pumped in fresh capital to the tune of 1.5 billion pesos.

Ospinas S.A., which plunged into crisis in 1997, is one of
Bogota's most traditional construction groups. The company is
aiming to grow from a small base via outsourcing. Ospinas also
has three big projects on the drawing boards: a shopping center
on Calle 80 with Avenida Boyaca in the capital, social housing
developments in southern Bogota's Ciudadela Milenio plus export-
related project development in Costa Rica.



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

ALESA: Rigida OK's Settlement With Creditors; Management Deal
-------------------------------------------------------------
Belgian bicycle rim manufacturer Alesa, which operates plants in
China and Mexico, received permission from its Dutch parent
Rigida to apply for a compulsory settlement with creditors, De
Financieel Ekonomische Tijd reported Thursday. Managing director
August van der Kerken is still waiting for written confirmation
before filing for creditor protection to the court.

Schoten-based Alesa has been battling with liquidity problems and
has stopped delivering goods since Tuesday. According to the
report, van der Kerken is formulating a rescue plan for Alesa
involving a management buy-out.


HYLSAMEX: To Lodge Anti-Dumping Case Against Exporters
------------------------------------------------------
Hylsamex, along with two other Mexican steel companies, Grupo
Imsa and Zincacero, are now preparing an anti-dumping case
against exporters from Europe and South Korea to go before the
country's Economy Ministry early next year, Mexico City daily
Reforma reported Thursday.

Mexico's Steel Industries Chamber Director, Jose Antonio
Canacero, denied a role as presenter of the case on the
plaintiffs' behalf. Rather, Canacer explained, it is not the
Chamber's policy to present such cases, only to advise.

Arcadio Herrera, Imsa commercial director, cited official figures
saying steel imports from Europe increased by 40 percent from
1999-2000, and an additional 17 percent so far in 2001 compared
to last year. Meanwhile prices have dropped by up to 81 percent
for some steel products in Mexico, he said. Herrera blamed
"constantly falling prices and irregular conditions" of imports
as the reason for the anti-dumping action.



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P E R U
=======

NBK/NUEVO MUNDO: NBK To Go Ahead With Sale; Fierro Drops Plans
--------------------------------------------------------------
While Peruvian bank NBK's sell-off proceeds smoothly as
Ecuadorian bank Pichincha's continues with its purchase plans,
Nuevo Mundo's breakup has been a failure, Business News Americas
revealed in a report.

Peruvian industrial group Fierro decided to withdraw its planned
purchase of Nuevo Mundo. The Nuevo Mundo intervention has turned
into a legal squabble, in which former shareholders claim
Fujimori and former spy-chief Vladimiro Montesinos contributed to
the bank's demise in order to rid the financial system of smaller
operators.

The legal battle and its effect on the bank's assets caused Grupo
Fierro to drop the acquisition.

NBK and Nuevo Mundo were intervened late last year after a run on
deposits stemming from President Alberto Fujimori's abrupt
departure to Japan. The government sought to sell off the two
banks to avoid liquidation.



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T R I N I D A D   &   T O B A G O
=================================

BWIA: To Discuss Government Financial Aid Later This Week
---------------------------------------------------------
Seeking to recover losses incurred after the September 11
terrorist attacks in the US, BWIA West Indies Airways is expected
to meet with government this week, The Trinidad Guardian said in
a report.

BWIA had earlier requested financial assistance, having
quantified its losses in the first four days following the
attacks when all US routes were closed. That amount, according to
company president, Conrad Aleong, stood at US$1.4 million.

Moreover, BWIA wants its government to consider absorbing the
US$5 surcharge which BWIA has added to the ticket cost on its
domestic route. Aleong was optimistic the Government would help
the airline. He said already the airline has cut back its flights
by 10 per cent.




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
co-published by Bankruptcy Creditors' Service, Inc., Trenton, NJ,
and Beard Group, Inc., Washington, DC. John D. Resnick and Edem
Psamathe P. Alfeche, Editors.

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

This material is copyrighted and any commercial use, resale or
publication in any form (including e-mail forwarding, electronic
re-mailing and photocopying) is strictly prohibited without prior
written permission of the publishers.

Information contained herein is obtained from sources believed to
be reliable, but is not guaranteed.

The TCR Latin America subscription rate is $575 per half-year,
delivered via e-mail.  Additional e-mail subscriptions for
members of the same firm for the term of the initial subscription
or balance thereof are $25 each.  For subscription information,
contact Christopher Beard at 240/629-3300.


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