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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

            Friday, December 28, 2001, Vol. 2, Issue 253

                           Headlines



A R G E N T I N A

BANCO BANSUD: Banco Macro Acquires 59% Stake For $65M
BANCO NACION: Chairman Supports New Argentine Currency
DISCO SA: Projects Argentine Crisis Won't Affect Results
RADIO RIVADAVIA: Files Bankruptcy After Failing To Settle Debts
ARGENTINE BANKING: ForEx Holiday To Last Until Early January


B R A Z I L

CESP/LIGHT: Shares Up On Strengthening Real, Less Rationing


C H I L E

ENERSIS: Antitrust Ruling Will Clear Way For Endesa Buyout


C O L O M B I A

AVIANCA: Starts Share Issue To Prepare For Merger With Aces
EMCALI: Needs Immediate Capital Boost To Secure Future
EMCALI: Breakdown In Finances May Prompt Default


J A M A I C A

KJBC: Pulls Down Kaiser's Fourth Quarter Performance


M E X I C O

AHMSA: Maintains 3M-Ton Output Despite Steel Industry Downturn
EMPRESAS ICA: Shares Almost Double Despite Loss Expectations
STARMEDIA NETWORK: Milberg Weiss Files Class Action Lawsuit


N I C A R A G U A

ENITEL: Swedish-Honduran Firm Formally Assumes Controlling Stake


     - - - - - - - - - -


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

BANCO BANSUD: Banco Macro Acquires 59% Stake For $65M
-----------------------------------------------------
Banco Macro SA announced the purchase of a 59.58-percent
shareholding and 76.17 percent of the voting rights in Banco
BanSud SA from Citigroup Inc unit Banco Nacional de Mexico SA
(Banamex) for $65 million, says AFX.

The deal, which is subject to approval by the Argentine central
bank and competition authorities, includes 11.23 million class A
five-vote shares, and 27.15 million class B one-vote shares.

Subsequently, Banamex will cede irrevocable subscription rights
in the capitalization in BanSud related to Banamex's $120-million
term deposit plus interest, a subordinated loan of $30 million
plus interest, a repo operation of $45 million and securities
issued by ABN Amro Bank's Argentine branch.

Furthermore, Banamex will also give up subscription rights
related to a $60-million cash injection made by Banamex on
account of future share issues.

Recently, Moody's Investors Service lowered Banco Bansud's long-
term foreign currency deposits to `Ca' from `Caa3' due to the
rapidly-deteriorating economic, financial and social conditions
in Argentina.

At the end of September, the bank's consolidated assets totaled
1.522 billion pesos, with deposits of 1.042 billion pesos. It
posted a nine-month net loss of 69.7 million pesos.


BANCO NACION: Chairman Supports New Argentine Currency
------------------------------------------------------
David Exposito, state-owned Banco de la Nacion Argentina's newly
appointed chairman, said he backs the new third currency, known
as the the Argentino, that the government plans to launch,
reports AFX.

"Today we have a hyper-deflation problem, and thus my
recommendation is to inject money (into the system)," said the
chairman of Argentina's largest commercial bank.

"A liquidity shock is needed, and this is what the new currency
will do," Exposito said.

The new Argentine government announced Wednesday that the new
Argentino currency would start circulating in January alongside
the peso and the dollar.

According to officials, the move is a way to inject needed money
into the nation's bruised economy without dismantling a law that
pegs the peso at one-to-one parity with the dollar. More
immediately, it would put cash in the hands of Argentines
hardest-hit by a nearly four-year recession and 18 percent
jobless rate.

However, the announcement raised fears of a currency devaluation
that could return Argentina to the spiraling inflation that tore
apart South America's second largest economy in the 1980s.

Banco de la Nacion Argentina recently had its long-term foreign
currency deposits downgraded by Moody's Investors Service to `Ca'
from `Caa3' due to deteriorating economic, financial and social
conditions in the country.


DISCO SA: Projects Argentine Crisis Won't Affect Results
--------------------------------------------------------
The current situation in Argentina will not have an impact on the
results of Disco SA, said Royal Ahold NV spokesman Hans Gobes in
a report released by AFX.

Disco SA is Ahold's Argentine supermarket joint venture with
Velox Group.

"Sales are under pressure in comparison to last year but we have
lowered our costs accordingly," he said.

According to Gobes, the Company has stepped up security measures
at its supermarkets in Argentina and has received no reports of
looting.

Moody's Investors Service recently downgraded the ratings of
Disco SA to `Ca' from `Caa3.' The ratings agency instigated the
cuts after it downgraded Argentina's foreign currency ceiling to
`Ca' from `Caa3.'

The following ratings were affected:

- $100 million 9.125% senior notes, due 2003
- $250 million 9.875% senior notes, due 2008


RADIO RIVADAVIA: Files Bankruptcy After Failing To Settle Debts
---------------------------------------------------------------
Failure to settle liabilities, which have totaled between $60 -
$70 million, prompted Radio Rivadavia to file for bankruptcy
protection from creditors, according to a report by South
American Business Information.

Radio Rivadavia, the fantasy name of Radio Emisora Cultural, is
92-percent controlled by investor Luis Cetra and 8-percent by
Jorge Tassara.

The Company, which employs 200 people, turns over between $7
million - $8 million annually.

Rivadavia may be the first of a series of radio broadcasting
companies to face financial problems.

Cash flow difficulties are now affecting FM Millenium and El
Mundo.


ARGENTINE BANKING: ForEx Holiday To Last Until Early January
------------------------------------------------------------
The suspension of Argentina's banking and foreign exchange
transactions, which was decreed last Friday, will last until
early in January, according to Argentina's New Economy Minister
Rodolfo Frigeri.

In a report by Xinhua, Frigeri disclosed that the country's net
reserves amount to 3.3 billion U.S. dollars, which allows the
banking and foreign exchange holiday to extend until January 2.

"People can undertake some transactions, such as collecting
salaries or pensions, but there will be no clearings until next
week," he added.

The suspension was decreed amid widespread social turmoil, which
resulted in the resignation of President Fernando De la Rua.



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

CESP/LIGHT: Shares Up On Strengthening Real, Less Rationing
-----------------------------------------------------------
Shares of Brazil's third-biggest power generator Cia. Energetica
de Sao Paulo (Cesp) rose 3.7 percent to 16.40 reais, while shares
of Brazilian electricity distributor Light Servicos de
Eletricidade SA rose 1.7 percent to 119 reais, reports Bloomberg.

"Cesp and Light are rising because of the real's strengthening
and also because of higher rain levels that eases the scenario
for power rationing in the country," said Ronaldo Caravieri, fund
manager for Banco BNL do Brasil in Sao Paulo.

Sales of power utilities in Brazil are being affected by power
rationing introduced in June after insufficient investment in
generators and drought reduced the supply of electricity. Most of
Brazil's electricity is from hydroelectric generators.

Shares of Cesp and Light are also moving up due to the real
currency's strengthening against the U.S. dollar. Part of the
debt of Light and Cesp is dollar denominated, lowering the
service costs when the real strengthens. The real gained 0.9
percent against the dollar Wednesday and has accumulated a 15
percent increase this quarter, making it the best performing
currency in a basket of 56 followed by Bloomberg.



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

ENERSIS: Antitrust Ruling Will Clear Way For Endesa Buyout
----------------------------------------------------------
It won't be long before energy holding company Enersis SA can
proceed with buying out minority shareholders in Chilean
electricity generator Endesa SA.

According to a report by Bloomberg, Chile's antitrust commission
is expected to rule within a few weeks that the Chilean unit of
Spain's Endesa SA eliminated a monopoly over the electricity
business by selling transmission company Transelec SA last year.

This ruling would then allow Enersis to buy the 40 percent of
Endesa of Chile that it doesn't already own.

Analysts have long speculated that Madrid-based Endesa is looking
to merge the two Chilean units to cut costs and ease Enersis'
debt load.

Enersis has about $9.6 billion in debt from its acquisition of
stakes in Endesa of Chile and other companies across Latin
America in the 1990s. According to analysts, that debt curtails
profit and makes it harder for the Company to buy additional
companies.



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

AVIANCA: Starts Share Issue To Prepare For Merger With Aces
-----------------------------------------------------------
Colombian airline Avianca on Wednesday began a planned $218
million stock offering, which controller Valores Bavaria approved
in November as part of the plans to ensure that the Company's net
assets turned positive, says Reuters.

Avianca's assets at the time totaled negative $216 million.

According to Avianca, it would issue 500 billion shares at a
price of one peso (US$0.0004) each and that the final
subscription date would be March 26, 2002.

Existing Avianca shareholders will have preference for buying the
new shares, up to a limit of 3.12 new shares for each share
already owned. The Company currently has 159.86 billion shares in
circulation.

Valores Bavaria is expected to exercise its right to buy the new
shares.

The share issue is aimed at recapitalizing the firm as it
prepares to merge with its local rival ACES.

Earlier in December, Colombia's government approved Avianca's
plans to merge with ACES.


EMCALI: Needs Immediate Capital Boost To Secure Future
------------------------------------------------------
Empresas Municipales de Cali (Emcali), Colombia's second largest
diversified utility may have to be liquidated by April if it
doesn't get a capital boost injection, reports Bloomberg.

According to Diego Humberto Caicedo, Colombia's public services
regulator, the city-owned utility needs at least 600 billion
pesos (US$260 million) in additional capital to continue
operating.

"We want some funds from the government to get the Company's
house in order so that we can attract private capital," said
Caicedo.

Emcali also needs to restructure and extend payments on some of
its $500 million in borrowings, he added.


EMCALI: Breakdown In Finances May Prompt Default
-------------------------------------------------
Failure to strengthen Emcali's finances may shut down public
services in Cali, Colombia, suggests Bloomberg.

Furthermore, it may also prompt Emcali's energy supplier,
TermoEmcali, to default on a $165-million dollar bond coming due
in 2014. TermoEmcali is 42 percent owned by Emcali and 58 percent
by U.S.-based InterGen.

Colombia's public services regulator Diego Humberto Caicedo took
over Emcali, which manages waterworks, telecommunications and
power supplies, in April last year after Cali councilors voted
against selling off assets to pay down debt.

The central government has proposed selling off part of the
Company, while the city council wants the central government to
bail out the utility.

This year, Emcali paid about 100 billion pesos to TermoEmcali,
Caicedo revealed.

According to Caicedo, since its takeover in April 2000, Emcali
spent 80 billion pesos to meet debt payments to the Inter-
American Development Bank, the Export-Import Bank of Japan and
finance construction of a water treatment plant.

For this year, Emcali plans to spend only 17 billion pesos to
service its debt, down from 111 billion pesos in 2000, he said.

The central government would spend 110 billion pesos this year to
subsidize the Company's operations, down from 168 billion pesos
in 2000, Caicedo added.



=============
J A M A I C A
=============

KJBC: Pulls Down Kaiser's Fourth Quarter Performance
----------------------------------------------------
Kaiser Aluminum Corporation is likely to report a net loss per
share ranging from $.35 to $.45 (excluding unusual items) for the
fourth quarter due to a variety of unfavorable operating issues.
Accordingly, the company expects to report negative operating
cash flow (defined as operating income plus depreciation).

The company said its updated view of the fourth quarter reflects
the following:

-- Continuing weak demand in general for aluminum products and
markedly weaker demand for aerospace products after September
11, along with unfavorable cost impacts associated with lower
shipment levels;

-- Low average market prices for primary aluminum, partially
offset by the company's hedging activities;

-- Slower than planned improvement in cost performance at the
Gramercy, La., refinery due to startup issues. Attainment of
full efficiency is expected by the end of the first quarter of
2002. Gramercy has routinely operated at above 90% of its new
annual rated capacity of 1.25 million metric tonnes during the
fourth quarter, although the full quarter average may be
modestly below 90%.

-- Poor performance by the company's 49%-owned KJBC bauxite
mining operation in Jamaica in the first two months of the
fourth quarter of 2001 due to weather and other issues;

-- Higher maintenance costs at the company's 20%-owned QAL
refinery. A major improvement in maintenance costs is not
expected until mid-2002; and

-- Slower than expected reductions in ongoing costs at the
company's curtailed aluminum smelters in the Pacific
Northwest. The company expects to realize additional cost
reductions beginning in the first quarter of 2002.

The company's view of financial results for the fourth quarter of
2001 reflects, among other things, current expectations regarding
the timing of commodity shipments, which are subject to quarterly
variation. The company indicated that the operating issues cited
above may also affect financial results beyond the fourth quarter
of 2001.

Kaiser Aluminum is a leading producer of alumina, primary
aluminum and fabricated aluminum products. MAXXAM Inc. (AMEX:MXM)
directly and indirectly holds approximately 62 percent of Kaiser
Aluminum Corporation.

CONTACT:  Kaiser Aluminum, Houston Scott Lamb, 713/267-3826



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

AHMSA: Maintains 3M-Ton Output Despite Steel Industry Downturn
--------------------------------------------------------------
Debt-laden Mexican steelmaker Altos Hornos de Mexico (AHMSA)
revealed it kept 2001 production at around 3 million tonnes,
despite a downturn in the economy and global industry crisis,
says Reuters.

"It's been a particularly difficult year due to the global steel
crisis," said AHMSA Finance Director Jorge Ancira.

The crisis, exacerbated by the recession in the United States,
led to the sharpest drop in steel prices of the past 20 years --
to more than 35 percent below normal averages, said Ancira.

AHMSA, which has been undergoing a tortuous debt restructuring
process for several years, recently met a payment of 255 million
pesos for savings plans and bonuses for its 17,000 employees.


EMPRESAS ICA: Shares Almost Double Despite Loss Expectations
------------------------------------------------------------
Shares of Mexico's leading construction company Empresas ICA
Sociedad Controladora SA rose 2.4 percent to 3.80 pesos,
Bloomberg reported without citing any reasons behind the rise.

Accordingly, ICA is the best performing stock on the index this
year, having risen nearly 100 percent.

However, the Company expects "significant" fourth-quarter
operating and net losses on provisions and 2.16 billion pesos
($235 million) in write-offs.

ICA has not made a profit for at least three years.

Just recently, Fitch placed on Rating Watch Negative the
Company's senior unsecured long-term foreign currency and senior
unsecured local currency debt ratings of `BB-` reflecting ICA's
continued low financial flexibility and stressed credit
protection measures.


STARMEDIA NETWORK: Milberg Weiss Files Class Action Lawsuit
-----------------------------------------------------------
The law firm of Milberg Weiss Bershad Hynes & Lerach LLP
announced Wednesday a class action lawsuit was filed on November
20, 2001, on behalf of purchasers of the securities of StarMedia
Network Inc. ("StarMedia" or the "Company") (NASDAQ:STRM) between
April 11, 2000 and November 19, 2001, inclusive (the "Class
Period").

A copy of the complaint filed in this action is available from
the Court, or can be viewed on Milberg Weiss' website at:
http://www.milberg.com/starmedianetwork/

The action is pending in the United States District Court for the
Southern District of New York, located 500 Pearl Street, New
York, NY 10007, against defendants StarMedia, Fernando J.
Espuelas (CEO and Chairman) and Steven J. Heller (Chief Financial
Officer).

The complaint charges that defendants violated Sections 10(b) and
20(a) of the Securities Exchange Act of 1934, and Rule 10b-5
promulgated thereunder, by issuing a series of material
misrepresentations to the market between April 11, 2000 and
November 19, 2001 concerning the Company's financial performance.
The complaint alleges that StarMedia reported artificially
inflated financial results in press releases and filings made
with the SEC by improperly recognizing revenue in violation of
Generally Accepted Accounting Principles ("GAAP"). Specifically,
the complaint alleges that two of the Company's primary
subsidiary, AdNet S.A. de C.V. and StarMedia Mexico, S.A. de C.V,
had engaged in improper accounting practices which had the effect
of materially overstating StarMedia's reported revenues and
earnings by at least $10 million. On November 19, 2001, as
alleged in the complaint, Starmedia issued a press release
announcing that based on the "preliminary" results of an internal
investigation into its accounting practices, it expects to
restate its financial statements for fiscal year 2000 and the
first two quarters of 2001 and that those financial statements
should not be relied upon. The Company further reported that its
Chief Financial Officer had "resigned." Immediately following the
announcement of the restatement, the NASDAQ Stock Market halted
trading in StarMedia stock, pending the receipt of additional
information from the Company. StarMedia stock last traded at
$0.38 per share, which is 98.5% less than the Class Period high
of $25.50, reached on April 11, 2000.

If you bought the securities of StarMedia between April 11, 2000,
and November 19, 2001, you may, no later than January 21, 2002,
request that the Court appoint you as lead plaintiff. A lead
plaintiff is a representative party that acts on behalf of other
class members in directing the litigation. In order to be
appointed lead plaintiff, the Court must determine that the class
member's claim is typical of the claims of other class members,
and that the class member will adequately represent the class.
Under certain circumstances, one or more class members may
together serve as "lead plaintiff." Your ability to share in any
recovery is not, however, affected by the decision whether or not
to serve as a lead plaintiff. You may retain Milberg Weiss
Bershad Hynes & Lerach LLP, or other counsel of your choice, to
serve as your counsel in this action.

CONTACT:  Steven G. Schulman or Samuel H. Rudman
          One Pennsylvania Plaza, 49th fl.
          New York, NY, 10119-0165
          Phone number: (800) 320-5081
          Email: starmedianetworkcase@milbergNY.com




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N I C A R A G U A
=================

ENITEL: Swedish-Honduran Firm Formally Assumes Controlling Stake
----------------------------------------------------------------
Telia Swedtel AB/EMCE, the Swedish-Honduran consortium that won
the bid for Enitel in August, finally sealed its 40% stake in the
telephone firm after a long wait marred by politics.

According to Reuters, the consortium formally assumed its
controlling positiokn in the Nicaraguan firm last week.  It plans
to form a seven-member board of directors in the coming weeks.

The group offered US$83.1 million in August to acquire the stake,
but the deal got tied up in politics after the city of Managua
demanded US$33 million in back taxes.  The Supreme Court later
validated the sale.

Legal representative Oswaldo Quiroga says the group has already
paid the US$33 million for the stake.  The balance will be paid
in the next five years at US$10 million annually.

The government still holds 60 percent of the company but it is
selling its holding in three years.  Meanwhile, employees are
assured of a 1 percent stake, plus the option to buy 10 percent
more, making the consortium the biggest single shareholder of the
phone company.




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

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