---

       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, November 14, 2001, Vol. 2, Issue 223

                           Headlines


A R G E N T I N A

BANCO DE CORDOBA: BGN's Takeover Suffers 30-Day Setback
SOCIEDAD COMERCIAL: Protection Filing Yields Positive Results


B R A Z I L

EMBRAER: Shares Plummet On Expectation Of Order Drop
EMBRATEL: Faces Glitch On Exclusive Right To Use Brand Name
ENRON: Dynegy To Pay $8B for Assets, Assume $15B Debt
GAZETA MERCANTIL: Commences Restructuring
GE-CELMA: Introduces Voluntary Dismissal Program
SOLETUR: Largest Creditors Named
TRANSBRASIL: Sinks Deeper Into Financial Trouble
VESPER: Introduces New Telephone Service


C H I L E

MUSIMUNDO: Three Firms Interested In Sale Of Chilean Assets
TELEFONICA CTC: Ernst & Young Study Clears Billing System
TELEX-CHILE: Board Has Until Nov. 23 To Decide Chilesat's Fate


D O M I N I C A N   R E P U B L I C

CDE: Privatization Backfires


M E X I C O

GRUPO MEXICO: Subsidiary Defaults On US$84M Loan Payment
SANLUIS: Banamex Pronounces Company Essentially Dead
SAVIA: ING Insurance Group Seals 99.91% Ownership Of Subsidiary
XEROX: EU Clears Flextronics' Purchase Of Equipment Business
AEROMEXICO: Funds To Support Airlines To Be Approved This Week


V E N E Z U E L A

DIGITEL: Supreme Court Blocks Move To Increase Capital


      - - - - - - - - - -


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

BANCO DE CORDOBA: BGN's Takeover Suffers 30-Day Setback
-------------------------------------------------------
Argentine bank Banco General de Negocios' (BGN) takeover of Banco
de Cordoba is in the middle of a one-month delay after initially
setting November 1 as its takeover target, BGN CEO Julio Barroero
revealed in a Business News Americas report. Barroero blamed the
setback on two factors.

The first reason is that BGN is acquiring the healthy portion of
Cordoba's loan portfolio, with the remainder staying in a
provincial deposit. However, BGN and the province have failed to
agree on loan ratings, with provincial analysts placing more
companies in the higher categories that BGN would inherit. This
is due in part to the problems in the local economy.

"There are companies that up to five or six months ago were fine
but are now struggling," he said.

The second reason for the delay has to do with personnel. The
terms of the sale state that BGN will take on 1,750 Cordoba
employees, with the remainder being given other jobs within the
provincial administration. However, according to Barroero, the
Central Bank has yet to complete this integration process.

Despite these problems BGN and the World Bank, which is
overseeing the sale, expect to complete the transaction sometime
in the next 30 days. "We can't put an exact date on it due to the
current situation in Argentina," Barroero said.

BGN was the sole bidder in last month's privatization auction of
Banco de Cordoba, submitting Cordoba province officials a US$117-
million offer.


SOCIEDAD COMERCIAL: Protection Filing Yields Positive Results
-------------------------------------------------------------
Oil and entertainment conglomerate Sociedad Comercial del Plata
SA managed to reverse last year's first nine-month loss. The
company managed to turn a profit for the same period this year
after it filed for protection from creditors late last year, AFX-
Europe said in a report.

According to the report, the company posted a net profit of 9.06
million pesos in the first nine months of this year in contrast
to a 96.35-million loss in the comparable period of the previous
year.

The result of the filing for protection from creditors was a
13.9-million-peso gain on the reversal of loss provisions, while
financial earnings were 3.53 million pesos, compared with charges
for 63.96 million pesos a year ago.

Chairman Santiago Soldati disclosed that significant cost
reductions led to efficiency gains in all areas, with business
units posting a net profit of 10.4 million pesos, compared with a
loss of 60.6 million a year earlier.

Due to operating efficiencies and favorable oil prices this year,
the company's oil and gas business moved to a net profit of 26.9
million pesos from a loss of 18.6 million a year earlier, he
added.

Its entertainment business narrowed losses to 15.5 million pesos
from 40.5 million a year earlier.

According to Soldati, the company still posted important
restructuring losses "due largely to the persistent recession the
Argentine economy is passing through, whose effects are reflected
in attendance levels at shopping centers and the Parque de la
Costa" funfair.



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

EMBRAER: Shares Plummet On Expectation Of Order Drop
----------------------------------------------------
Shares of Empresa Brasileira SA plunged on concern airlines may
order fewer jets after an airplane crashed in New York City, two
months after the September 11 terrorist attacks in the United
States, Bloomberg reported.

Accordingly, Embraer, the world's fourth-largest maker of jet
aircraft, fell 6 percent to 10.15 reais. Further concern about a
slowdown in global air travel doesn't necessarily have to pull
down Embraer's share price, said Fabio Zagatti, an analyst with
HSBC Investment Bank Brazil in Sao Paulo.

"Even if Embraer cuts by a half their current production to seven
aircraft per month, the fair price we estimate would be 10
reais," Zagatti said.


EMBRATEL: Faces Glitch On Exclusive Right To Use Brand Name
-----------------------------------------------------------
Brazil's largest long-distance telephone company Embratel may
face trouble on its exclusive right to use the DDI ((Discagem
Direta Internacional) brand name in relation to its international
long distance service, Valor Economico reported.

Embratel, whose strategy is reportedly to hamper competitor
Intelig's promotional campaign for its service, claims exclusive
use of the brand based on a copyright registration made in 1986.

However, Intelig announced it would challenge the decision that
gave Embratel this exclusive right, pointing out that the
copyright registration was made when Embratel had a monopoly on
long distance service and that DDI has become a common reference,
even being used by Anatel (Agencia Nacional de Telecomunicacoes)
in its literature.


ENRON: Dynegy To Pay $8B for Assets, Assume $15B Debt
-----------------------------------------------------
Dynegy Inc. is going to acquire embattled Enron Corporation for
$8 billion in stocks and assume its $15 billion debt, according
to a report in The Christian Science Monitor.

The report did not give any details other than the participation
of Chevron Texaco in the deal by providing the $1.5 billion
needed to purchase the company.  

Chevron Texaco, which owns 27 percent of Dynegy, will then
provide an additional $1 billion when the deal is completed, the
report said.

However, Dynegy admitted that the proposed deal still faces
several hurdles, but officials remained confident the deal was
"doable."

Steve Bergstrom, Dynegy president, said the most regulatory
scrutiny the deal could face would come from the Federal Energy
Regulatory Commission but that he expected all antitrust hurdles
would be cleared within the next six to nine months.

In an article Monday, the Troubled Company Reporter-Latin America
said the talks between the two companies had been centered on the
company's debts that have been kept off its balance sheet.

Enron faces litigation as a result of this non-disclosure of
debts, a significant contributor to its current problems.

The company operates power plants and transportation services in
Brazil, Argentina, Australia, and Europe. Collectively, they are
contributing an average of 15 percent returns on equity for Enron
and up to $700 million of annual earnings.



GAZETA MERCANTIL: Commences Restructuring
-----------------------------------------
Gazeta Mercantil newspaper's management began an extensive
company restructuring which was proposed by the WorldInvest
consulting firm, Valor Economico reported.

In its first phase, some 400 employees will be laid of as a
result of the consolidation of regional editions, alterations of
formats and the closing of some administrative areas.

The company aims to cut costs by 30 percent, a projected savings
of R$6 million per month. The company is also looking for
partners.

Gazeta Mercantil was forced to carry out the restructuring
because of its dire financial situation.


GE-CELMA: Introduces Voluntary Dismissal Program
------------------------------------------------
The crisis faced by air transportation market has eventually led
to a reduction in the demand for the maintenance of turbines. As
a result, GE Celma announced a voluntary dismissal program in its
Petropolis facility, Rio de Janeiro state, Gazeta Mercantil
reported.

GE Celma, which generates about US$200 million in revenues
annually, employs 1,300 people in the facility. The company
dismissed 130 workers last month.


SOLETUR: Largest Creditors Named
---------------------------------
The major creditors of Soletur, the travel agency, which filed
for bankruptcy protection in October, have been named, Valor
Economico informed.

The airlines form the largest group among the creditors, with Rio
Sul, Varig and TAM being owed R$7 million. Banks make up a close
second at R$6.9 million, followed by national hotels at R$5.6
million and international hotels at R$6.5 million.

The company has declared assets of R$25 million, including
payments due from credit card companies and other financial
operations.

Speculation continues among bankruptcy specialists that the
creditors may see very little of the money owed. Brazilian
bankruptcy laws call for a slow sale of assets, which are usually
auctioned off at below market prices.

Soletur voluntarily declared bankruptcy after admitting it could
not pay the R$30-million debt it has accumulated.


TRANSBRASIL: Sinks Deeper Into Financial Trouble
------------------------------------------------
Struggling Brazilian air transportation company Transbrasil is
expected to face a legal suit that fuel company BR Distribuidora
is expected to file, according to a report in Valor Economico.

BR Distribuidora will undertake a legal action against
Transbrasil over a R$14-million fuel debt. It attempted to
negotiate a rollover of this debt with Transbrasil, but the
airline hasn't been able to offer sufficient guarantees.

BR Distribuidora now will only sell fuel to Transbrasil on a cash
basis.


VESPER: Introduces New Telephone Service
----------------------------------------
Vesper has launched Vesper Portatil telephone service as a part
of its strategy to restart its growth after shareholders decided
against investing more in its expansion, Valor Economico
reported.

Losango, the sales promotion company controlled by Lloyds TSB, is
going to finance the customers for this new service.

The Vesper Portatil equipment costs R$295 and allows for both
fixed and cell phone calls. Vesper hopes to sell 30,000 units per
month, of which 20,000 will be financed.

The new product will be sold directly from the company's service
centers and credit will be pre-approved without the physical
presence of the customer, cutting down on fixed costs for stocks
and sales outlets.

Vesper's strategy also includes a plan to buy back a US$1.2-
billion debt from its suppliers.



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

MUSIMUNDO: Three Firms Interested In Sale Of Chilean Assets
-----------------------------------------------------------
Argentina's biggest music retailer Musimundo, which filed for
creditor protection in August with $206.4 million in debts,
attracted the interest of 3 companies in the upcoming sale of its
Chilean assets, El Mercurio reported.

Accordingly, the Chilean companies Playmusic and La Disquera and
the British firm Griffith submitted to the Primera Junta de
Acreedores their proposals to purchase Musimundo.

Neither the value of the offers nor the terms of purchase is
known yet.

The assets to be purchased are basically the merchandise, since
the facilities of the 11 outlets, which are located in La Serena,
Vina del Mar, Concepcion and Santiago, are rented.

Musimundo, controlled by Exxel group, was allowed by the courts
to continue operating, with substantial cuts in personnel (40
percent) and salaries (50 percent).


TELEFONICA CTC: Ernst & Young Study Clears Billing System
---------------------------------------------------------
A study conducted by Ernst & Young revealed that Telefonica CTC
is not levying irregular charges contrary to what its clients
claimed, reported El Diario.

The study, commissioned by Chile's telecommunications department
but paid for by the Company, concluded that the firm did not
commit systematic errors in its November 2000 to August 2001
billing.

According to the study, the phone company's measuring, charging
and billing systems do not make irregular charges, although it
found some minor computer problems in the system.

The company averages about 100,000 complaints a month due to
these allegedly illegal charges, the report said.  About 54
percent of these complaints come from companies using the firm's
"single account" billing system.

The report said that the $200,000-study did not include this
"single account" billing system in its analysis.


TELEX-CHILE: Board Has Until Nov. 23 To Decide Chilesat's Fate
-----------------------------------------------------------------
The board of Chilean telecommunicaions holding company Telex-
Chile has until November 23 to choose one of three offers made by
rival operators Manquehue Net, AT&T Latin America and Grupo GTD
for the company's network and long distance unit Chilesat,
Business News Americas revealed in a report.

These operators have reportedly submitted their purchase offers
to Salomon Smith & Barney, brokers in charge of the transaction.

With the sale of Chilesat, Telex-Chile will clean up its
financial record and look for an investor to bring Telex-Chile
into business again.

However, according to market analysts, Telex-Chile without
Chilesat has no worthwhile operating capacity.

Chilesat defaulted on an US$8.9-million credit facility in April
and the board subsequently recommended Chilesat's sale after
creditors refused to grant a 12-month grace period.



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

CDE: Privatization Backfires
----------------------------
The privatization of the Dominican Electricity Corporation (CDE)
failed to accomplish any of the goals established to sell it to
the Dominicans, DR1 Daily News reported.

According to Andres Dauhajre, president of the National Union of
Businessmen, blackouts have continued, the tariffs have been
increasing instead of declining, and the promised capital has not
been invested.

Dauhajre revealed that the electricity sector is one of the weak
points of the present administration. He criticized the fact that
no Mejia cabinet officer has come forth to defend consumers.



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

GRUPO MEXICO: Subsidiary Defaults On US$84M Loan Payment
--------------------------------------------------------
Grupo Mexico subsidiary Arizona-based Asarco Inc has defaulted on
an US$84-million loan repayment "as a direct consequence of the
steep fall in the market prices of copper and other metals
produced by Asarco," according to a report in Business News
Americas.

The company has requested a meeting with the lender banks to
negotiate "the necessary adjustments ... to redress the
situation," the company told the Mexico City Stock Exchange.


SANLUIS: Banamex Pronounces Company Essentially Dead
----------------------------------------------------
Personal and corporate banking services provider Grupo Financiero
Banamex said Sanluis Corporacion is virtually bankrupt with its
fate now in the hands of creditors.

Mexico's leading financial group believes that the fiscal
structure at the company has already deteriorated, weighed down
by $505 million net debt.

According to the Mexico City daily Reforma, this debt is almost
three times the firm's equity. Third quarter results showed debt
was further increased by about $7 million during the period.  

Credit ratings agency Standard and Poor's has already downgraded
the company's classification after missing an $8.9-million
interest payment despite having the resources to do so.

Oddly, the company recently announced it is close to
restructuring its debts.


SAVIA: ING Insurance Group Seals 99.91% Ownership Of Subsidiary
---------------------------------------------------------------
ING announced Monday that it has successfully closed the tender
offer to purchase the remaining 13 percent of the outstanding
shares of Savia subsidiary Seguros Comercial America, S.A. de
C.V. (SCA).

The transaction has made ING the 99.91 percent shareholder of the
Mexican insurance company, which was de-listed from the Mexican
stock exchange effective November 9, 2001.

Based on sales, the company currently has an 18 percent market
share of the Mexican life and health insurance market and a 39
percent market share for property and casualty insurance.

The Mexican firm is also the fastest growing insurance company in
Mexico with a 10-year average annual growth rate of 23 percent.
With more than 8,000 agents, it has an extensive distribution
network that reaches all key regions in the Mexico.

Purchasing the remaining shares of the Mexican insurance group is
one of the recent examples of ING's commitment to Mexico's
financial services industry.

Another example is the re-branding of ING's retail operations in
Mexico under the name ING Comercial America. The organization's
new name combines the brand equity of ING and SCA to form a
unified ING brand.

This re-branding also includes ING's Afore Bital, one of the
fastest growing pension funds in Mexico.

For more information, contact Ward Snijders of ING Group by
Phone: +31-20-541-6522 (ING)


XEROX: EU Clears Flextronics' Purchase Of Equipment Business
------------------------------------------------------------
Singapore's Flextronics International won permission from the
European Commission on Monday to take over Xerox Corp's office
equipment business, AFX-Asia reported.

Flextronics purchased the manufacturing and assembly portion of
the Office Business segment of Xerox and notified the Commission
on October 11.

According to the Commission, Flextronics is also taking over
Xerox plants in Brazil, Canada, Malaysia, Mexico, the US,
Netherlands and UK.

Xerox has been selling assets to raise much-needed cash.


AEROMEXICO: Funds To Support Airlines To Be Approved This Week
--------------------------------------------------------------
Communications commission official Emilio Goicoechea announced
that the legal initiative to support Mexico's airlines with
approximately 1 billion pesos would be discussed and approved in
the Chamber of Deputies this week, Mexican financial daily El
Economista reported.

According to Goicoechea, once the law is passed, the funds to
support the payment of airlines' increased insurance premiums
will be assigned within 20 days.

The resources for the airlines will come from current spending,
confirmed Finance ministry senior official Agustin Carstens.



=================
V E N E Z U E L A
=================

DIGITEL: Supreme Court Blocks Move To Increase Capital
------------------------------------------------------
Venezuelan mobile phone company Digitel sustained a crushing blow
in its bid to increase capital when the Supreme Court affirmed
the ban against the measure, reports El Nacional.

BBO Servicios Financieros had originally sought the ban after
Telecom Italia Mobile acquired 56.6 percent of Digitel, but
failed to launch a takeover bid for 75 percent of the firm.

Digitel lawyers, however, say BBO sought the ban to force Telecom
Italia to buy its 10 percent stake in the company, which is now
worth $60 million.

It is not clear from the report whether or not the ban is only
temporary.  




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.


* * * End of Transmission * * *