/raid1/www/Hosts/bankrupt/TCRLA_Public/020109.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

            Wednesday, January 9, 2002, Vol. 3, Issue 6

                           Headlines


A R G E N T I N A

BANCO BANSUD: Banamex Exits Argentina, Reducing Exposure
COMPANIA MEGA: Note Exchange Leaves `CC' Rating Unchanged
EDENOR: Devaluation Prompts Rework of Concession Agreements
GATIC SA: To Define Adidas License Renewal By Mid-January
IMPSA: Moody's Withdraws Ratings
SCOTIABANK QUILMES: Analyst Predicts Parent May Lose Subsidiary
SCOTIABANK QUILMES: Parent Refuses To Speculate On Exposure


B R A Z I L

EMBRAER: To Acquire Celsius Aerotech's Nashville Operations
EMBRAER: Regional Jets Conform To Europes New RVSM Rules
EMBRATEL: Shares Prices Indicate Sales Speculation
TRANSBRASIL: Must Resume Operations Again In June or Lose Rights
VARIG: Travel Agency To Open 65 New Shops


C O L O M B I A

SEVEN SEAS: Completes Fourth Successful Development Well


M E X I C O

BANCA QUADRUM: Shareholders To Vote On $99M New Capital Plan
GRUPO DESC: Fitch Assigns `BBB-' LC, `BB+' FC Debt Ratings
KVAERNER ASA: Company Profile
STARMEDIA NETWORK: Rabin & Peckel Commences Class Action Suit
XEROX CORP: Fitch Rates Senior Note Offering `BB'


N I C A R A G U A

ENITEL: Telia-Swedtel Plans To Raise $100M In 1Q02
ENITEL: Government Initiates Sale of 10% Stake To Employees


P A R A G U A Y

CORPOSANA: Two Companies Pre-qualify For Tender


     - - - - - - - - - -


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

BANCO BANSUD: Banamex Exits Argentina, Reducing Exposure
--------------------------------------------------------
The financial turmoil in Argentina has claimed yet another
victim. Mexico's Banamex bank, a unit of U.S.-based Citigroup
Inc., said Monday it has sold its majority stake in Argentina's
Banco Bansud, the Associated Press reports.

Banamex said it signed a contract with Argentina's Banco Macro SA
Dec. 19, 2001 to sell the 59.58 percent stake, but no details
were given of the price of the sale, or whether it was in cash or
stock. However, a statement from the Buenos Aires Stock Exchange
listed the value of the transaction at $65 million.

The controlling stake carries 76.17 percent voting rights,
Banamex said in a statement.

Jose Ortiz Izquierdo, a spokesman for Banamex in Mexico City,
said the sale was carried out "to reduce the (bank's) risk
exposure" in Argentina, where the government has defaulted on
public debt, devalued the currency and limited bank withdrawals.

Ortiz Izquierdo said he had no immediate information on whether
the sale price represented a significant lowering of the value of
assets, or whether Banamex would report a loss on its Argentina
holdings for the year.

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

CONTACT:  Banco Bansud S.A.
          Sarmiento 401
          1041 Buenos Aires, Argentina
          Tel: (54-11) 5222-6500 / 5222-7800

          INVESTOR RELATIONS:
          Jorge Vaz-Ferreira
          Phone: (5411) 5222-6797
          Fax: (5411) 5222-6887
          E-mail: investor@bansud.com.ar

          Alejo Treachi (5411) 5222-7899

          Mariano Garcia (5411) 5222-8939


COMPANIA MEGA: Note Exchange Leaves `CC' Rating Unchanged
---------------------------------------------------------
Standard & Poor's said Monday that Compania MEGA S.A.'s (MEGA;
CC/Watch Neg/--) exchange of notes will not have any impact on
the rating and CreditWatch until the final documents are
reviewed. As contemplated in the financial documents, the company
had to perform an exchange of the outstanding notes by December
31, 2001.

MEGA performed the transaction upon the sponsors' provision of
new guarantees. The rating on the exchanged notes (secured
floating rate notes series D and E, and secured fixed-rate notes
series G) is pending final documentation.

CONTACT:  Standard & Poor's, Buenos Aires
          Matias Badia, (54) 114-891-2129
          or
          Lidia Polakovic, (54) 114-891-2130


EDENOR: Devaluation Prompts Rework of Concession Agreements
-----------------------------------------------------------
Empresa Distribuidora y Comercializadora Norte SA (Edenor), a
unit of Electricite de France (EDF), "wants to renegotiate
concession agreements" with Argentina, said Edenor's managing
director, Henri Ducre, in an AFX report.

"The situation has changed. There is a problem. The new situation
has to be worked on in order to find a balance between declining
fees and the Company's legitimate concern for profitability,"
Ducre related.

According to the official, the concession deals were negotiated
in US dollars. However, the new Argentine administration has
voted in favor of putting an end to the 11-year old peso-dollar
peg.

A new round of negotiations would last two months, Ducre said,
while noting that converting fees to pesos without increasing
them would not be a viable solution.

Edenor, Ducre said, has agreed on deferred payment plans with its
clients to allow them to honor their commitments.


GATIC SA: To Define Adidas License Renewal By Mid-January
---------------------------------------------------------
The sporting goods & shoes manufacturer Gatic, which filed for
protection from creditors in October 2001 after accumulating $340
million in debt, is still negotiating the renewal of its license
with Adidas.

The alternatives prospects to local manufacturing are not very
promising for Adidas, since imports from China are controlled,
and imports from Brazil could be protected by the Argentine
government. Plans are to define the license renewal in the middle
of this month.

Late last month, Gatic decided to temporarily shut down seven
plants and layoff 3,200 workers for a period of one month due to
Argentina's current economic crisis. According to the company,
the financial turmoil in the country has hit the clothing and
footwear industries especially hard.

CONTACT:  Luis Pagani, CEO
          Av. Presidente Per›n 2535.
          CP B1650ISG - San Mart­n
          Provincia de Buenos Aires - Argentina.
          Tel. 4724-7200 Fax.4724-7676


IMPSA: Moody's Withdraws Ratings
--------------------------------
Ratings agency Moody's Investors Service has withdrawn the
ratings for Industrias Metalurgicas Pescarmona S.A. (IMPSA), a
Buenos Aires-based auto parts, heavy equipment and waste
management company.

The rated debt issues included $150 million of 9.5 percent Global
Notes maturing May 31, 2002 and a Global MTN Program, which
according to Moody's, has a negligible balance outstanding.

IMPSA missed paying an (approximate) $7 million bond interest
payment for the Global Notes that was due on November 30, 2001.
In addition, the company could not pay $8 million in interest and
principal on an issue of commercial paper that matured at the
beginning of December 2001.

IMPSA attributed the missed payments to central bank limits on
transfers of capital abroad. Moody's says the company's operating
cash flow has substantially weakened over the past year.

CONTACTS:  MOODY'S INVESTORS SERVICE (New York)
           Tom Marshella, Managing Director
           Corporate Finance Group
           JOURNALISTS: 212-553-0376
           SUBSCRIBERS: 212-553-1653

           Lisa B. Matalon
           Vice President - Senior Analyst
           Corporate Finance Group
           Moody's Investors Service
           JOURNALISTS: 212-553-0376
           SUBSCRIBERS: 212-553-1653

CONTACTS:  IMPSA
           Roberto Arancibia
           RodrĄguez Pe¤a 2451 (5503)
           Godoy Cruz, Mendoza, Argentina.
           Tel: +54-261 4131300
           Fax. +54-261 4131416 - 4131423
           arancibi@impsa.com.ar

           Julio Bermant
           Av. Eduardo Madero 940, piso 19 (1106)
           Buenos Aires, Argentina.
           Tel.: +54 11 50770888
           Fax: +54 11 50770835
           bermant@impsa.com.ar


SCOTIABANK QUILMES: Analyst Predicts Parent May Lose Subsidiary
---------------------------------------------------------------
The high-stakes poker game addage of "know when to hold `em and
when to fold `em" will be a recurring theme in Argentina for many
companies with interests there. As will many banks in the region,
Sociabank's Argentine presence is feeling the pressure of
escalating financial turmoil, compounded by currency devaluation.

An industry analyst at Bank of Nova Scotia suggested that the
bank should consider selling its subsidiary in Argentina on
concern that it may not be able to recover its investment given
the country's worsening economic crisis, says Bloomberg.

Scotiabank has reportedly invested $205 million in Scotiabank
Quilmes SA, a wholly owned subsidiary. According to Kevin
Choquette, an analyst at Scotiabank's investment-banking arm,
Scotia Capital, the bank may lose as much as 40 Canadian cents
(25 cents) per share if Quilmes has to write down all its assets.

"The current economic and political uncertainty seems to make the
exit strategy the most likely outcome," Choquette wrote in a
report to clients.

Choquette said a "very viable strategy" is to sell Quilmes to a
buyer such as HSBC Holdings Plc, though Toronto-based Scotiabank
could choose to hold onto the assets as a long-term investment.

Meanwhile, Gerald Vincent, who helps manage C$430 million at
Davis-Rea Ltd. Investment Counsel in Toronto, which owns
Scotiabank shares, said Scotiabank should try to hold on to
Quilmes if it can.

"No one likes to own a bank stock that has any non-performing
assets, (but) strategically if they can weather (Argentina's
troubles), it would be far more beneficial in the long term,"
Vincent said.

CONTACTS:  Alan Macdonald
           Chief Executive Officer
           Phone: (54-11) 4338-8000
           Fax: (54-11) 4338-8033
           Mail: 6th Floor
           Gral. J.D. Peron 564
           (C1038AAL) Buenos Aires

           Roy D. Scott
           Vice-President and Managing Director, Latin America
           Phone: (54-11) 4394-8726
           Fax: (54-11) 4328-1901
           Mail: P.O. Box 3955
           C1000WBN Correo Central
           Buenos Aires, Argentina
           E-mail: scotiarep@sinectis.com.ar


SCOTIABANK QUILMES: Parent Refuses To Speculate On Exposure
-----------------------------------------------------------
Diane Flanagan, spokeswoman at the Bank of Nova Scotia, said that
Canada's fourth-largest bank, which operates Scotiabank Quilmes,
Argentina's 12th-largest bank, is still monitoring developments
before deciding how to handle its exposure to the financial
crisis in Argentina, says Reuters.

"We continue to monitor the situation very carefully in terms of
the devaluation, details, and further announcements continued to
be made by the Argentine government on a regular basis," said
Flanagan.

"Until all the details and facts are in, it would be
inappropriate to speculate on the impact," she added.

"We will do the right thing at the right time, but for now it
means monitoring it closely," said Flanagan.



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

EMBRAER: To Acquire Celsius Aerotech's Nashville Operations
-----------------------------------------------------------
In an official release, Embraer - Empresa Brasileira de
Aeron utica S.A., the world's fourth largest commercial aircraft
manufacturer, announced January 4 the signing of an agreement to
acquire the Nashville operating assets of Celsius Aerotech, Inc.,
from Reliance Aerotech, Inc, a privately held company. The
acquisition is subject to the satisfaction of certain conditions
to the closing of the sale, including the consent of the Airport
Authority of Nashville, Tennessee.

Celsius Aerotech in Nashville is widely recognized as a leader
within the maintenance, repair and overhaul industry and as one
of the largest providers serving Regional Aviation, with more
than 200 employees. It offers full service maintenance, repair
and overhaul capability including scheduled inspections, airframe
repairs, aircraft painting and comprehensive component repair
capability.

The acquisition will be made by Embraer Aircraft Maintenance
Services, Inc., a wholly owned subsidiary of Embraer Aircraft
Holding, Inc, which was established as a U.S. based wholly owned
subsidiary of Embraer, as part of a restructuring effort of
Embraer operations in the United States, in response to
continuing business growth and associated demands for improved
levels of quality, timing and costs.

Embraer Aircraft Maintenance Services, Inc. plans to operate out
of Nashville, performing aircraft maintenance and refurbishment,
as well as components repair and overhaul in the U.S., bringing
the total number of Embraer employees in the U.S. to almost 600
and becoming the company's second owned and operated aircraft
maintenance facility. Embraer also operates a full service FAR
Part 145 certified center at its Sao Jos‚ dos Campos
manufacturing facility in Brazil.

MaurĄcio Botelho, Embraer's President and CEO stated: "We are
extremely excited about the acquisition of Celsius Aerotech's
Nashville operations. The acquisition, when completed, will offer
us the opportunity to better serve the needs of our customers in
the United States. Celsius Aerotech's Nashville operations will
be a strong complement to our other operations in the U.S. and is
expected to be part of a total solution to support the commercial
and corporate aircraft markets". Artur Coutinho, Embraer's
Executive Vice President for Customer Services, commented on the
significance of this potential deal: "When the acquisition of the
assets of Celsius Aerotech's Nashville operations is closed, it
will add significantly to our capability to service our
customers. Celsius Aerotech has a world-class facility, an
outstanding reputation and a highly skilled and motivated
workforce that, when combined with Embraer's product knowledge,
will enable us to establish a high standard of maintenance
services to be offered in the U.S. market. Upon completion of the
acquisition, Embraer intends to continue to service Celsius
Aerotech's current customers and to add new customers, through
the incorporation of new facilities to that location, as
required".

Subject to the satisfaction of certain conditions, the
acquisition is currently expected to close in February 2002.

Embraer currently has commercial and corporate aircraft
marketing, product support and engineering services offices in
Florida, Texas and Georgia.

ABOUT CELSIUS AEROTECH INC.:

Celsius Aerotech Inc. located in Nashville, TN is an FAA
authorized repair station that serves primarily the regional
airline market. Celsius has been in business since 1991 and is
recognized as one of the top maintenance organizations serving
this market.

Celsius Aerotech Inc. offers full service maintenance, repair and
overhaul capability including scheduled inspections, airframe
repairs, aircraft painting and comprehensive component repair
capability. It has extensive experience working on Embraer 120
turboprop aircraft and the Embraer ERJ145 family of regional
jets, the Saab 340, the ATR 72, British Aerospace Jetstream
products, Bombardier Dash 7/8 and Canadair Regional Jets.

CONTACTS:  EMBRAER
           Bob Sharp, Press office mgr.
           bob.sharp@embraer.com.br
           OR
           Wagner Gonzalez, Press officer
           wagner.gonzalez@embraer.com.br
           Phone +55 12 3945 1311
           Fax + 55 12 3945 2411


EMBRAER: Regional Jets Conform To Europes New RVSM Rules
---------------------------------------------------------
Embraer announced Thursday that most of the ERJ 135/145 aircraft
in operation over Europe are fully compliant with European new
Reduced Vertical Separation Minimum (RVSM) requirements.
Presently, only 21 Embraer regional jets, out of one hundred
forty seven total, fall short of the new regulation that
establishes minimum vertical separation for flight levels above
29,000ft as 1,000 ft, down from 2,000ft before. The goal of
Eurocontrol, by reducing vertical separation, is to allow more
planes in the same airspace as to relief the crowded, time-
consuming European skies.

The timely compliance of the remaining Embraer regional jets to
the new European regulation, to be effective in January 24, 2002,
will be assured by ongoing field actions performed by three
Embraer Customer Support teams upon agreements taken late
November with Europe's JAA and United Kingdom's CAA certification
authorities.


EMBRATEL: Shares Prices Indicate Sales Speculation
--------------------------------------------------
Embratel Participacoes SA's preferred shares rose 3.6 percent to
11.19 reais, accumulating a 13 percent gain in seven days, says
Bloomberg. The move may reflect investors' perception of a
possible future deal. The country's largest long-distance phone
company is currently controlled by WorldCom Inc.

"There's some speculation Embratel could be sold to another group
or could diversify its business," said Lincoln Yamanaka, equity
manager at Isoldi SA brokerage in Sao Paulo.

Furthermore, the news that telephone companies in Brazil are
preparing a national registry of phone clients pushed Embrate's
shares up.

"With the new registry, Embratel may be able to reduce default as
the company claims it's difficult to charge some defaulted
clients as the information Embratel gets from other phone
companies are not updated," said Raphael Biderman, an analyst at
Uniao de Bancos Brasileiros SA in Sao Paulo.

CONTACTS:  Rua Presidente Vargas, 1012
           Centro - Rio de Janeiro - RJ
           CEP: 20179-900
           Tel: 2519 9662
           Fax: 2519 6388
           E-mail: invest@embratel.com.br

           Silvia Pereira
           Investor Relations Manager
           silvia.pereira@embratel.com.br

           Marcos Baptista
           marcos.baptista@embratel.com.br

           Graziela Fortunato
           graziela.fortunato@embratel.com.br

           Marcio Debellian
           debellian@embratel.com.br


TRANSBRASIL: Must Resume Operations Again In June or Lose Rights
----------------------------------------------------------------
Brazilian airlines regulator DAC (Departamento de Aviacao Civil)
has given cash-strapped airline Transbrasil until June to resume
its flights, reports Jornal do Commercio.

Should Transbrasil fail to bounce back within that period of
time, its operations will be suspended, DAC warned.

Several companies, such as Transportes Aereos Regionais SA (TAM),
Gol and Varig, have expressed interest in taking over control of
the company's assets and flight routes.

Transbrasil, which has a R$910-million debt, from which R$25
million with its employees, halted flights late last year after
failing to come up with enough cash to buy fuel.

TRANSBRASIL CONTACT:  Antonio Celso Cipriani, CFO
                      Rua Geral Pantaleao Telles, No. 4,
                      Jardim Aeroporto
                      04355-040 Sao Paulo, Brazil
                      Phone: +55-11-533-7111
                      Fax: +55-11-543-9083


VARIG: Travel Agency To Open 65 New Shops
-----------------------------------------
Brazilian Varig group's tourism agency Varig Travel is planning
to open between 60 to 65 new shops in the country, says Gazeta
Mercantil. The tourism agency has plans of reaching an income of
R$200 million and aims to take half of the domestic market by
June of this year. Varig Travel was launched in November 2001,
when Varig took over Panexpress Tour.

VARIG CONTACT:  Legal Department:
                Rua 18 de Novembro nr. 800 Navegantes
                Zip : 90240-040
                City : Porto Alegre / RS - Brazil
                Telephone numbers: (51) 358-7039/7040
                                   (51) 358-7010/7042

                INDEPENDENT ACCOUNTANTS
                Arthur Andersen S/C
                Rua Alexandre Dumas 1981
                Cep: 04.717-906 - Centro / Sao Paulo / S P-
                Brazil
                Tels.: (11) 5504-8200
                Fax:  (11) 5504-8373

                INVESTOR RELATIONS MANAGER/STOCKHOLDER SERVICES
                Leir s  Stortti
                E-mail: leir.stortti@varig.com.br
                Av. Almte. Silvio de Noronha, n  365 -
                Bloco "A" - s/416
                Centro - Rio de Janeiro - RJ
                Cep.:  20021-010
                Tels.: (21) 3814-5401/5402/5403/5415
                Fax:  (21) 3814-5543



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

SEVEN SEAS: Completes Fourth Successful Development Well
--------------------------------------------------------
In an official press release, Seven Seas Petroleum Inc. (AMEX:
"SEV") announced that the Tres Pasos 6-N well, the fourth
development well of the Guaduas Oil Field, has been completed and
is producing approximately 3,000 barrels of oil per day. The
addition of this well will increase Guaduas Oil Field gross
production to approximately 11,000 barrels per day (5,000 barrels
net to Seven Seas). Gross oil production continues to be
temporarily curtailed by approximately 1,500 barrels per day due
to high gas-oil ratios on certain wells and may continue to
fluctuate until excess gas production can be re-injected into the
field. The facilities required for gas re-injection are expected
to be complete in March or April 2002.

The Company has commenced drilling of a fifth development well,
the Tres Pasos 6-E well, to a total measured depth of
approximately 6,900 feet. This well will be drilled from the same
surface location as the Tres Pasos 6-N, which is located 1.5
kilometers northwest of the surface location of the El Segundo 1-
E Guaduas Oil Field discovery well.

The Company also announced that the Escuela 2 subthrust
exploration well is currently drilling at a depth of 7,506 feet.

"We are looking forward to an eventful and productive 2002 with
the drilling of the Escuela 2 well and additional development
wells that will continue to increase pipeline production," stated
Robert A. Hefner III, Chairman and CEO of Seven Seas.

Seven Seas Petroleum Inc. is an independent oil and gas
exploration and production company operating in Colombia, South
America. The Company's primary emphasis is on the development and
production of the Guaduas Oil Field and exploration of the
Subthrust Dindal Prospect, both of which are located in
Colombia's prolific Magdalena Basin.

CONTACT:  SEVEN SEAS PETROLEUM INC.
          Bryan Sanchez, Investor Relations
          5555 San Felipe, Suite 1700
          Houston, TX 77056
          infossp@sevenseaspetro.com
          Phone: 713-622-8218
          Fax: 713-621-9770

          Robert A. Hefner III
          Chairman and Chief Executive Officer
          Phone: 713-622-8218
          Fax: 713-621-9770

          Ronald A. Lefaive
          VP of Finance, CFO & Corporate Secretary
          Phone: 713-622-8218
          Fax: 713-621-9770



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

BANCA QUADRUM: Shareholders To Vote On $99M New Capital Plan
------------------------------------------------------------
Banca Quadrum, S.A. announced on December 31, 2001, that its
Board of Directors has called a general ordinary and
extraordinary shareholders' meeting scheduled to be held at 10:00
a.m., local time, on February 15, 2002, at the Company's office,
located at Boulevard Manuel Avila Camacho No. 76, Second Floor,
Colonia Lomas de Chapultepec, 11010 Mexico, D.F.

On August 21, 2001, Mexican banking authorities took control of
the Company due to their concerns about the adequacy of the
Company's capital. The Mexican Stock Exchange, on May 3, 2001,
suspended trading of the Company's shares due to the Company's
failure to file its annual report for the calendar year ended
December 31, 2000 with the Mexican Banking and Securities
Commission as required by Mexican corporate law.

During August 2001, Nasdaq delisted the Company's American
Depositary Shares due to the Company's failure to file its annual
report for the calendar year ended December 31, 2000 on Form 20-F
with the Securities and Exchange Commission as required by NASD
Marketplace Rule 4310c(14).

At the meeting, shareholders will be asked to review and approve
(i) the Board of Director's annual report and the Company's
audited financial statements for the calendar year ended December
31, 2000 and (ii) the Company's unaudited financial statements
for the period January 1, 2001 through November 30, 2001.  The
Company's financial statements reflect total capital losses in
the amount of 733,886 thousands of Mexican pesos (approximately
U.S. $79.2 million).  Shareholders will also be asked to (i)
approve the Company's total capital losses and (ii) consider a
proposal to raise 918,875 thousands of Mexican pesos
(approximately U.S. $99.1 million) in new capital for the
Company.  If shareholders do not vote in favor of the proposal to
raise new capital, or if shareholders vote in favor of the
proposal to raise new capital but the Company is unable to raise
sufficient new capital, the Company's authorization to operate as
a Mexican bank will be revoked and the Company will be liquidated
in accordance with Mexican law.

CONTACT:  Ernesto Rodriguez, Investor Relations
          Tel. 52-55-5284-5693
          erodrigu@quadrum.com.mx


GRUPO DESC: Fitch Assigns `BBB-' LC, `BB+' FC Debt Ratings
----------------------------------------------------------
Fitch has assigned a 'BBB-' senior unsecured local currency debt
rating to Desc S.A. de C.V. (Desc). In conjunction with this
rating action Fitch has assigned a 'BB+' senior unsecured foreign
currency rating to Desc. The Rating Outlook for the foreign
currency rating is Stable and the Rating Outlook for the local
currency rating is Negative.

The ratings are supported by Desc's diversified revenue stream,
strong business position in its main business sectors, joint
ventures and strategic alliances with international industry
leaders and the generation of a majority of revenues in US
dollars or US dollar-indexed terms. The ratings are also
supported by a solid financial profile and management's
commitment to its preservation.

Desc's exposure to a weakening U.S. economy and to international
commodity prices are also contmplated in the newly-assigned
ratings. The Negative Rating Outlook on the local currency rating
is based on the continued uncertainty surrounding the recovery of
the U.S. and Mexican economies and on the significant impact that
further macroeconomic weakness has on revenues at both the
autoparts and chemical businesses.

Starting in the second half of 2000, Desc's performance has been
negatively affected by lower demand in its autoparts and chemical
business due to economic weakness in the U.S. and Mexico, coupled
with a strong peso. In 2000, sales grew by 2.1% to reach US$2.4
billion. EBITDA declined by 14% to reach US$350 million. For the
nine months ended Sept. 30, 2001, revenues, in dollar terms,
declined by 7% and EBITDA declined by 16%.

Despite a very difficult economic environment, management has
been able to achieve a reduction in net debt of US$170 million
for the nine months ended Sept. 30, 2001. During 2001, Desc sold
non-core and/or non-productive assets which include Unik's heavy
and medium duty clutch unit, its 51% stake in the Santa Fe
Shopping Center and the Four Seasons Hotel in Punta Mita, and
applied all cash proceeds to repay debt. At Sept. 30, 2001, total
debt reached US$1.126 billion, representing a reduction of US$140
million from Dec. 31, 2000. The debt profile improved throughout
2001 and was as follows: 29% in short-term debt and 71% in long-
term debt, as well as 78% in dollar-denominated debt and 22% in
peso-denominated debt. The dollar-denominated portion of the debt
is hedged with Desc's export revenues, which in 2000 reached over
US$1 billion. Desc has also reduced significantly its capital
expenditures and working capital, and implemented cost and
expense control programs, supporting the debt repayment program
with strict cash preservation policies.

These measures have contributed to the stability of credit
protection measures since the end of 2000, despite sharp declines
in revenue and EBITDA. Interest coverage remains strong at
slightly above 3 times (x) and total debt-to-EBITDA reached 3.7x
for the nine months ended Sept. 30, 2001.

Desc will continue to face a challenging environment in 2002.
Production cutbacks by original equipment manufacturers (OEMs)
will continue to exert pressure at Unik. The chemical business
will also remain under pressure due to the weak economic
environment in the U.S. and Mexico coupled with excess world
capacity. In 2002, Desc plans to implement a company-wide program
to reduce administrative costs, achieving synergies with the
administrative areas. The recent merger into Desc of the chemical
operations, formerly held by Girsa S.A de C.V. (Girsa), a holding
company wholly owned by Desc, is part of such a centralization
plan and other Desc's subsidiaries may follow. Management also
intends to continue to divest non-core assets in 2002 and apply
proceeds for debt repayment. Under such conditions, and assuming
a recovery of the U.S. economy starting by mid-year 2002, Fitch
expects credit protection measures to remain at current levels.
Under a delayed economic recovery scenario, Fitch expects to see
a weakening in credit protection measures during 2002.

Desc is a diversified holding company and one of Mexico's largest
industrial conglomerates, with operations in the autoparts,
chemical, food, and real estate businesses. Desc is controlled by
the Senderos family. Desc has been listed in the Mexican Stock
Exchange since 1975 and in the NYSE (via ADRs) since 1994. In
2000, DESC had sales of US$2.4 billion, EBITDA of US$350 million,
exports of US$1.0 billion and net income of US$29 million.

Unik, Desc's autoparts division, is the leading business segment,
accounting for 47% of sales in 2000 and 63% of EBITDA. Unik
oversees 26 plants, (one of which is located in Tennessee, U.S.)
manufacturing 42 different types of automotive products. Unik is
the largest Mexican independent autoparts manufacturer and North
America's second largest producer of manual transmissions. Unik
sells its products to original equipment manufacturers (OEMs) for
installation in new cars and trucks and to distributors for
resale in the automotive parts after-market. Desc's petrochemical
and consumer goods division, formerly held by Girsa, accounted
for 34% of sales and 24% of EBITDA in 2000. Desc manufactures
petrochemicals, phosphates, animal feed pigments and additives,
particleboard and laminates, and consumer products (such as
adhesives, glues, waterproofing additives and sealant, all of
which are household brands in Mexico). The food operations
accounted for 15% of total sales and 7% of EBITDA in 2000 and
comprise the production and sale of pork, shrimp and shelf-stable
branded food products. The real state operations accounted for 4%
of total sales and 7% of EBITDA in 2000 and comprise the
acquisition and development of land for upper income commercial,
residential, and tourism use.

CONTACTS:  Fitch
           Giovanna Caccialanza, 212/908-0898, New York
           Guido A. Chamorro, 312/368-5473, Chicago

           DESC, S. A. DE C. V.
           Paseo de los Tamarindos # 400-B
           Mexico, D.F. 05120
           Phone: (5255) 261-80-00
           Fax: (5255) 261-80-96
           desc@mail.desc.com.mx

           Arturo D'Acosta RuĄz, Chief Financial Officer
           Tel: (5255) 261 8000

           Alejandro de la Barreda, Investor Relations
           Tel: (5255) 261 8000 ext 2806
           abarredag@mail.desc.com.mx

           Adriana Estrada Vergara, Investor Relations
           Tel: (5255) 261 8000 ext 2846
           aestradav@mail.desc.com.mx


KVAERNER ASA: Company Profile
-----------------------------
NAME:  Kvaerner ASA
       Prof. Kohtsvei 15
       1325 Lysaker
       Norway

TELEPHONE: +47 67 51 30 00

FAX: +47 67 51 30 80

WEBSITE: http://www.kvaerner.com/group/

TYPE OF BUSINESS:  Kvaerner is a world-class international
                   engineering and construction Group. The
                   Group's activities are currently organised in
                   two core business areas: E&C (Engineering and
                   Construction) and Oil & Gas. Kvaerner has
                   annual revenues in excess of US$6 billion,
                   with some 35,000 permanent staff located in
                   almost 35 countries throughout Europe, Africa,
                   Asia and the Americas.

SIC: Engineering and Construction

EMPLOYEES: 35,000

ANNUAL REVENUES: US$6 billion

TRIGGER EVENT:  Kvaerner ran up huge debts after an over-
                optimistic expansion in the 1990s, including the
                acquisition of British conglomerate Trafalgar
                House. The company diversified into businesses
                including cruise lines and a scheme for launching
                space rockets from a converted oil platform in
                the Pacific Ocean.

ACTING CEO:  Finn Berg Jacobsen
             +44 (0)777 6161168

LEGAL ADVISERS:  Farella Braun + Martel LLP
                 Russ Building - 30th Floor
                 235 Montgomery Street
                 San Francisco, California 94104
                 (415) 954-4400
                 aharris@fbm.com
                 Contact: Al Harris

CREDITOR:  Nordea Bank Norge
           Middelthunsgt. 17
           N-0368 Oslo
           Telephone: +47 22 48 50 00
           Fax: +47 22 48 47 49
           www.nordea.com

INVESTOR RELATIONS  Trond Andresen
CONTACT:            Senior Vice President, Group Communications
                    Tel: +44 (0)207 339 1032

Last TCRLA Headline DATE:  Tuesday, January 8, 2002, Vol. 3,
                           Issue 5


STARMEDIA NETWORK: Rabin & Peckel Commences Class Action Suit
-------------------------------------------------------------
A class action complaint has been filed in the United States
District Court for the Southern District of New York, case number
02 Civ. 0102, on behalf of all persons or entities who purchased
StarMedia Network, Inc. ("StarMedia" or the "Company") securities
(NASDAQ: STRM) between April 11, 2000 and November 19, 2001,
inclusive (the "Class Period").

StarMedia, Fernando J. Espuelas, and Steven J. Heller are named
as defendants in the action.

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.

Plaintiff is represented by the law firm of Rabin & Peckel LLP.
Rabin & Peckel LLP and its predecessor firms have devoted its
practice to shareholder class actions and complex commercial
litigation for more than thirty years and have recovered hundreds
of millions of dollars for shareholders in class actions
throughout the United States. You can learn more information
about Rabin & Peckel at www.rabinlaw.com.

If you wish to discuss this action further or have any questions
concerning this announcement, or your rights or interests, please
contact plaintiff's counsel, Eric Belfi or Maurice Pesso, Rabin &
Peckel LLP, 275 Madison Avenue, New York, NY 10016, by telephone
at (800) 497-8076 or (212) 682-1818, by facsimile at (212) 682-
1892, or by e-mail at email@rabinlaw.com.

CONTACT:  Rabin & Peckel LLP, New York
          Eric Belfi or Maurice Pesso
          Tel. 800/497-8076 or 212/682-1818
          Fax: 212/682-1892
          email@rabinlaw.com


XEROX CORP: Fitch Rates Senior Note Offering `BB'
-------------------------------------------------
Fitch has assigned a 'BB' rating to Xerox Corp.'s (Xerox)
proposed $500 million senior unsecured 144A notes issuance due
2009.

Proceeds will be used for general corporate purposes and debt
reduction. The company's and its subsidiaries' (see below) 'BB'
senior unsecured debt and 'B+' convertible trust preferred
ratings are affirmed. The Rating Outlook is Stable. The outlook
reflects the substantially improved liquidity situation and
improved operational results as the company continues to execute
on its turnaround strategy.

Fitch recognizes the company's improved liquidity, the progress
made in asset dispositions and its $1 billion cost cutting
program, its strong technologically competitive product line and
business position, its continued effort to improve working
capital management, and the commitment to continue its cost
cutting program beyond the initial $1 billion. The ratings also
consider the company's strained credit protection measures,
refinancing risk of its $7.0 billion revolver due October 2002,
the ongoing Securities and Exchange Commission investigation into
Xerox's Mexican accounting issues and other accounting matters,
and overall weaker economic conditions. Although the company's
financial flexibility has improved with forecasted flat to down
revenues, it is crucial that Xerox executes its cost cutting
programs in order to return the core operations to profitability.

As of September 30, 2001, Xerox's cash position was $2.4 billion
with total debt at approximately $16.1 billion, of which more
than half is from customer financing. However, with the current
proceeds from the 144A offering, the recent $1.0 billion
convertible trust preferred securities issuance as well as funds
from several securitizations of its financing receivables with
General Electric Capital Corp. (GECC), the company's cash
position should increase substantially. As of December 28, 2001,
cash was approximately $3.9 billion after approximately $1.1
billion of debt repayment. Debt maturities for the first half of
2002 are estimated to be $1.3 billion. The company's revolver
expires in October 2002 and Xerox is currently in compliance with
all covenants.

Credit protection measures for the latest twelve months ending
September 30, 2001, show Xerox's leverage, measured by total debt
(including the financing segment) to EBITDA, increasing to
greater than 20 times (x) compared to 14x at Dec. 31, 2000. For
the same time period, the company's core interest coverage
(defined as core EBITDA divided by core interest expense)
declined to less than 1.5x from 2.4x at Dec. 31, 2000. Fitch
anticipates core credit protection measures will continue to be
challenged for the near term, despite continued anticipated cost
reductions from the company's ongoing restructuring programs.

Xerox has made significant progress with its turnaround strategy.
Asset sales have totaled more than $2.0 billion, including an
agreement to outsource approximately half of its manufacturing,
the common stock dividend has been eliminated, and the company
exited the ink-jet market, which was a significant cash drain. In
addition, Xerox continues to make progress in exiting the
customer financing business, with GECC eventually being the
primary source of customer financing in the U.S., Canada,
Germany, and France, and De Lage Landen International BV managing
equipment financing for Xerox customers in the Netherlands. The
previously announced $1 billion cost cutting program has been
achieved ahead of schedule, including a 10% headcount reduction
from year-end 2000. The company has indicated that it has
identified further cost cuts of approximately $200 million that
could occur in the next two quarters.

In addition to Xerox Corp., the ratings affected are: Xerox
Credit Corp. and Xerox Capital (Europe) plc's rated senior debt.

CONTACT:  Fitch, New York
          For info regarding Xerox Corp.:
          Nick P. Nilarp, 212/908-0649 or
          Brendan Buckley, 212/908-0640
          For info regarding Xerox Credit Corp.:
          Philip S. Walker, Jr., CFA, 212/908-0624



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

ENITEL: Telia-Swedtel Plans To Raise $100M In 1Q02
---------------------------------------------------
Telia Swedtel AB/EMCE, the Swedish-Honduran consortium, which
sealed its 40 stake Enitel late last month in Enitel, is likely
to carry out an $80 million - $100 million capital increase this
quarter for the Nicaraguan integrated telco, says Business News
Americas.

The consortium has retained Spanish investment bank Nmas1 to
advise on the process, according to Nmas1 partner Juan Miranda.

Miranda expects the consortium to spend this month refining an
investment plan that would focus on initiating nationwide mobile
operations as a competitor to Bellsouth Nicaragua and Teleglobo.

Telia Swedtel-Emce must also meet fixed line build-out
obligations laid out in the Enitel concession contract. The
eventual obligation is to raise lines in service to 220,000 by
2005 and to achieve 90 percent coverage of population centers of
over 1,000 inhabitants. The Company is set to reach 70 percent
coverage by the end of first quarter 2002.

According to Miranda's estimations, Enitel will require a total
investment of $400 million - $500 million over the next six to
ten years, partly financed by the Company's potential $150
million annual revenues and 45 percent EBITDA, which can be
maximized by tackling management and commercial inefficiencies.

CONTACT:  FINANCIAL ADVISOR:
          Nm s1 Investment Bank
          Padilla, 17
          28006 Madrid
          Phone: 91 745 84 84
          Fax: 91 431 38 12
          E-mail:info@nmas1.com
          Contact: Juan Miranda, Nm s1 Partner


ENITEL: Government Initiates Sale of 10% Stake To Employees
-----------------------------------------------------------
The Nicaraguan government is in the process of selling a 10
percent stake in Enitel to current and former employees, who will
also receive a 1 percent stake free of charge, reports Business
News Americas.

The sale, which began in late-December, should conclude by the
end of February if the workers exercise an option to extend the
deadline by 30 days.

Contradicting local press reports, Nmas1 partner Juan Miranda
informed that employees of the telecoms regulator Telcor are not
eligible to acquire any of those shares

Such a situation would not be in keeping with the transparency
the sale organizers have strived for during the privatization
process, Miranda added.

Telia Swedtel-Emce, which paid $33 million in mid-December for a
40 percent stake in Enitel, is obliged to acquire any shares not
acquired by the company's workers.

The consortium must pay the first of five $10 million yearly
installments for its administration contract in December 2002.



===============
P A R A G U A Y
===============

CORPOSANA: Two Companies Pre-qualify For Tender
-----------------------------------------------
Paraguay's National Reform Secretariat (SNRE) disclosed that two
companies have met the conditions for the purchase of the
country's state-owned water utility, reports EFE.

The two qualifying companies are the French-Spanish consortium
Proactiva Medio Ambiente and Canal de Isabel II. These are the
first companies to register tender offers for the Sanitary Works
Corporation (Corposana).

Proactiva Medio Ambiente is made up of the French Vivendi
Universal and Spain's Fomento de Construcciones y Contratas,
while Canal de Isabel II is a hydraulics company created in 1852
that has been part of the Municipality of Madrid since 1984.

Corposana, the value of which has not yet been calculated, is one
of the three companies the government of Paraguayan President
Luis Gonzalez Macchi said could be privatized.

CONTACTS:  LEGAL ADVISER:
           Baker & McKenzie
           Latin America Regional Council
           c/o Eduardo de Cerqueira Leite - Chairman
           Av. Dr. Chucri Zaidan 920, 8th floor
           Market Place Tower I
           04583-904 Sao Paulo, SP, Brazil
           Tel: (55-11) 3048-6800
           Fax: (55-11) 5506-3455
           Email: info-latinamerica@bakernet.com
           Marketing Manager: Ellen Van-Waveren

           Baker & McKenzie Headquarters:
           1 Prudential Plaza, 130 E. Randolph Dr., Ste. 2500
           Chicago, IL 60601
           Phone: 312-861-8800
           Fax: 312-861-2899
           Bakerinfo.com

           FINANCIAL CONSULTANT:
           Banco Santander Central Hispano
           Plaza de Canalejas,1
           28014 Madrid, Spain
           Phone: +34-91-558-10-31
           Fax: +34-91-552-66-70

           CORPOSANA:
           Emilio Bot­n-Sanz, Chairman
           Angel Corc›stegui Guraya, First Vice-Chairman and CEO
           Jos, Luis del Valle, EVP Finance




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, Edem
Psamathe P. Alfeche and Fe Ong Va¤o, Editors.

Copyright 2002.  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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