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                  L A T I N   A M E R I C A

         Thursday, February 1, 2001, Vol. 2, Issue 23



ROSARIO ARDEOL: New Owners To Reopen Plant
TELEFONICA DE ARGENTINA: Completes Renegotiation Of Bonds


CERJ: S&P Upgrades Local Currency Rating
COPENE: Selling Party Probably Opts To Sell As A Whole
COSIPA: Assured With Position Over Legal Action Threat
DAIMLER-CHRYSLER: To Halt Production In Parana
SABESP: To Improve Returns Before Sale


CHRYSLER: To Shut Down Three Plants Over The Next Two Years
CINTRA: In Selection Process For Agent To Handle Sale
GRUPO BITAL: Atlantico Acquisition Problems May Be Resolved
GRUPO INVERLAT: Scotiabank Talking With IBM On Outsourcing Deal
ICA: To Sell $270M Worth Of Assets This Year
IMSA: Announces Reduction Of Debt By $151M


WIESE SUDAMERIS: 79-Percent Drop In Fourth Quarter Earnings


CANTV: 34 Percent Of Workforce Take Early Reduction Plan
SIVENSA: Releases First Quarter  01 Results

     - - - - - - - - - -


ROSARIO ARDEOL: New Owners To Reopen Plant
Operations at the former cold storage plant of Rosario Ardeol will be restarted
after it was forced to shut down because of bankruptcy, South American Business
Information reported Monday. The new owner, Matievich, acquired Ardeol's
building and machinery in an auction for US$800,000. The plant is sited in
Puerto San Martin near the city of Rosario and is expected to bring about 40
jobs in its first stage of operations. Additionally, it will be able to
slaughter about 200 head of cattle daily.

TELEFONICA DE ARGENTINA: Completes Renegotiation Of Bonds
Telefonica de Argentina and Compania Internacional de Telecomunicaciones
(Cointel), its main shareholder, said they have successfully concluded the
negotiable bonds shareholders' meeting, South American Business Information said
Tuesday. The favorable result will see a financial restructuring of over
US$1,500mil. The petitions for renegotiation, previously sent to holder of bonds
issued by Telefonica de Argentina expiring in 2001, 2002, 2004 and 2008, were
approved during these meetings. As reported, negotiable bondholders received
compensation, equaling 75 percent of the principal amount.


CERJ: S&P Upgrades Local Currency Rating
Standard & Poor's today upgraded Companhia de Eletricidade do Rio de Janeiro's
(CERJ's) local currency rating to double-'B' from double-'B'-minus. At the same
time, Standard & Poor's affirmed its double-'B'-minus foreign currency rating on
CERJ. The local currency and foreign currency outlooks are stable.

The upgrade reflects the determination that CERJ's financial debt protection
measures have bottomed out, and will improve steadily as a result of sales
growth, tariff increases and gradual debt paydown. Internal loans from
shareholders have also mitigated CERJ's external debt burden; BrR262.5 million
of convertible debentures are expected to be converted into equity at or prior
to maturity in November 2003. The family block of Endesa S.A.
(single-'A'-plus/Watch Pos/'A-1'), Enersis S.A. (local currency
single-'A'/Stable/ -- and foreign currency single-'A'-minus/Stable/--), and
Chilectra S.A. (local currency single-'A'/Stable/ -- and foreign currency
single-'A'-minus/Stable/--) own a combined total of 79.95% of CERJ, with
Electricidade de Portugal S.A. (EDP; double-'A'/Watch Neg/'A-1'-plus) owning
virtually all of the remaining shares.

The CERJ's ratings reflect the challenges of operating in the Federative
Republic of Brazil. CERJ is one of two major distribution utilities in the state
of Rio de Janeiro. CERJ was particularly hard hit by the 1999 devaluation of the
real, and attendant increase in local interest rates because it had recently
incurred debt to finance its investment in COELCE, another distributor. In
addition, CERJ has had commercial difficulties with its customers, in terms of
energy theft and uncollectable receivable accounts. Offsetting these weaknesses
are a stable, residential customer base and a monopoly franchise to distribute
electricity. While regulation has been supportive thus far, the electricity
industry remains in transition.

Brazil's regulatory system is unique in the global privatization arena because
several Brazilian utilities have been privatized before the final definition of
the overarching industry structure and regulatory rules under which they
operate. Rate increases, and pass through of purchased power have approximated
the tenets of the concession contracts; CERJ's rates will rise in two steps
resulting in a 17.8% increase effective February 2001. However, two developments
pose a generic risk for distributors in Brazil. One is the development of a
transparent and systematic approach to the reset of distribution tariffs, which
will be addressed for CERJ in 2003. The second is the ability to pass on
purchased power costs after initial contracts are ramped down (by 25% per year)
from 2003-2006. Newly signed contracts must approximate an established reference
price (VN) to be passed through to customers. However, since incremental power
will be gas fired -- in contrast to the current predominate hydro system -- it
is unclear if changes in commodity price and currency prices would entirely be
passed on to customers.

The majority of CERJ's debt is an intercompany loan from Enersis, and
convertible securities that were purchased by the four shareholders. To date,
EDP has converted its share of this latter instrument to equity. Treating the
convertible debentures as equity, cash interest coverage could exceed 4 times in
2001. Overall demand in CERJ's concession area has historically expanded faster
than Brazil's GDP growth, although growth has been stagnant in 2000. Under the
current tariff regime, CERJ benefits from having a relatively high concentration
of its sales to residential customers (about 45%), which allows for high


The stable outlook reflects some progress in reducing energy losses and
improving other operating parameters over the past several years. However,
further spending may only achieve diminishing returns. As a result, financial
performance may fall somewhat short of company expectations. The rating reflects
conservative assumptions that Standard & Poor's believes are achievable.

COPENE: Selling Party Probably Opts To Sell As A Whole
Flávio Cunha, the central bank intervenor at Banco Econômico, expressed doubts
that Copene, Polialden, Proppet and Politeno would be sold separately. The
assumption is made based on a devaluation brought about by the loss of a
majority interest in Copene, Brazil Financial Wire said Tuesday. Copene is the
most attractive asset in the package. It is the supplier of raw materials at the
Camaçari petrochemical hub, in the northeastern state of Bahia.

Odebrecht, Mariani, Conepar (former Econômico), Suzano, Itochu and Sumitomo, the
selling party, are expected to release auction rules by February 5, and then
announce the bidding call on February 12. The sale auction is expected to happen
on March 31.

COSIPA: Assured With Position Over Legal Action Threat
Luiza Mello, Cosipa spokesperson, told in a report released
Tuesday that the Sao Paulo-based flat-steel company is confident and comfortable
with its position on any legal action against it following its restructuring.

"I know nothing of that. Only one individual shareholder is taking action, as
far as Cosipa is aware," Mello commented in response to a certain report stating
that the 7,500-member employees' investment club has filed suit.

Cosipa has a restructuring agreement with flat-steel producer Usiminas giving
the latter the right to convert debentures for up to 93 percent ownership as and
when it wishes. Belo Horizonte-based flat-steel producer Usiminas currently
holds a 31.8-percent stake of Cosipa.

According to Mello, minority shareholders fear they will lose out. But when the
agreement was signed, they had first refusal - at R$0.25 per 7,200 shares. None
took up the offer, saying it was too expensive.

"Usiminas and ourselves have done everything according to the law, and have
received approval from Brazil's [stock market regulatory body] CVM. So we feel
confident and comfortable that we have done everything right in this," she said.

Usiminas was advised by investment bank Flemings and two Brazilian attorneys,
Mello added.

DAIMLER-CHRYSLER: To Halt Production In Parana
Part of DaimlerChrysler's restructuring plan is to suspend the production of
pickup truck Dakota in Campo Largo-based plant (Parana), South American Business
Information said Tuesday. Daimler received many incentives to set up the plant
in the Parana state. These include the exemption of the ICMS tax, on land and
infrastructure. About US$315 million was invested in the unit, which was
inaugurated in July 1998.

SABESP: To Improve Returns Before Sale
Ariovaldo Carmignani said in a Bloomberg report Tuesday that State-owned Cia. de
Saneamento Basico do Estado de Sao Paulo (SABESP) in which he is president, is
planning to increase profit and reduce debts. If results prove to be favorable,
then the Sao Paulo government will sell part of its 88 percent stake in SABESP,
Latin America's largest water and sewage company. According to the state's
planning department, the government is reportedly studying a plan to sell shares
exceeding the minimum necessary for the state to maintain control of the

"We want to increase the company's profitability to levels that meet our average
capital cost," Carmignani said, adding, "the constitution requires the state has
to control SABESP. But the state could sell shares that exceed 51 percent of the

No exact date for a possible sale of a portion of the utility has been set yet.
However, Marcos Severine, a power utility analyst at Banco Sudameris's brokerage
in Sao Paulo, said the state may sell a stake in Sabesp as soon as the stock
price reaches 270 reais. Other analysts believe that it could also happen as
early as this year, following government improvements to water and sewerage
industry regulations.

"The state is just awaiting the new regulation to sell the company," Severine


CHRYSLER: To Shut Down Three Plants Over The Next Two Years
As part of a worldwide effort to restructure the company and restore
profitability, automaker Chrysler, a subsidiary of U.S.-German giant
DaimlerChrysler will be shutting down three of its Mexican plants over the next
two years. According to a report published Tuesday by Reforma/Infolatina, these
three plants include the transmission plant located in Toluca, the company's
engine plant, also in Toluca, and its light-truck and van assembly operations in
Mexico City. The first will be closed later this year, while the second and
third plants are scheduled to shut down next year. The company plans to reduce
its workforce in the country by 2,600.

CINTRA: In Selection Process For Agent To Handle Sale
Mexican bank bailout and deposits insurance agency IPAB is still in the process
of selecting an agent to handle the breakup and sale of airline holding company
Cintra, according to a report released Tuesday by Reforma/Infolatina. The agency
has reportedly approached Citibank, Goldman Sachs and UBS Warburg.

With Goldman Sachs and UBS Warburg, the agency likely would be looking to take
advantage in some way of the presence of former senior bureaucrats on the
potential agents' staff. Finance ministry former senior official Martin Werner
works at Goldman Sachs, and former Communications and Transport ministry top
official Jorge Silberstein has joined UBS Warburg.

GRUPO BITAL: Atlantico Acquisition Problems May Be Resolved
A move by the government could probably help Grupo Financiero Bital resolve its
problem within the next few weeks regarding its 1998 acquisition of the Mexican
bank Atlantico, according to a Reuters report published Tuesday. According to
Jonathan Davis, president of the National Banking and Securities Commission, the
government was considering injecting additional funds into Atlantico.

Since its acquisition of Atlantico in 1998, Bital has not been able to complete
its integration due to a disagreement with authorities over over the amount the
government would allocate to clean up the bank's balance sheet. Officials from
the bank have said the government did not inject enough cash into collapsed
Atlantico from the $100 billion bank bailout fund it created to avert a
financial meltdown.

Davis said Bital had presented government bank deposit guarantee agency IPAB,
charged with overseeing the bank rescue, with a request for the amount it
calculated was still needed to cleanup Atlantico, although he declined to
specify that.

GRUPO INVERLAT: Scotiabank Talking With IBM On Outsourcing Deal
Scotiabank Inverlat, which just weeks ago successfully acquired Grupo Financiero
Inverlat from Mexican bank bailout agency IPAB, is currently in talks with U.S.
computer giant IBM's Mexican subsidiary. In a report published by
Reforma/Infolatina Tuesday, the Canadian bank is trying to close a possible
outsourcing deal with IBM, under which, IBM will operate the entire
telecommunications network at Scotiabank Inverlat bank. IBM already has an
outsourcing contract with the bank to handle its computer services system.

ICA: To Sell $270M Worth Of Assets This Year
Mexican construction company ICA revealed plans to sell $270 million in assets,
Reuters said Tuesday. Aside from selling its holdings in U.S. partner Vulcan
Materials Co., which was announced earlier this month, the company will also
sell off commercial center and land holdings. Both moves are part of the
company's divestment plans.

In addition, ICA announced it would invest $100 million this year to develop the
company, largely with funds generated by projects already underway. "The
programmed investments will be made once ICA's obligations are covered and do
not put at risk the company's financial obligations," Chief Financial Officer
Jose Luis Guerrero Alvarez said.

IMSA: Announces Reduction Of Debt By $151M
In a statement sent to the Mexican Stock Exchange, Mexican steelmaker Grupo IMSA
stated that it has cut its bank debt by $151 million, reducing total company
liabilities to $873 million during the second half of 2000. According to a
report by El Economista/Infolatina released Tuesday, the company stressed that
it has reduced its debt during the period because of improved operating results
and less consumption of working capital.

Marcelo Canales, Company Director of Planning and Finance, says IMSA intends to
continue improving its financial position throughout this year.


WIESE SUDAMERIS: 79-Percent Drop In Fourth Quarter Earnings
Peru's second-largest bank Banco Wiese Sudameris SA reported a 79-percent drop
in earnings in the fourth quarter of 2000 as interest income declined and the
quality of its loan portfolio deteriorated amidst a slowing economy, Bloomberg
said Tuesday.

- Unconsolidated net income declined to 8.8 million soles ($2.5 million), or
0.0033 soles per share, versus a net gain of 41.1 million soles ($11.7 million),
or 0.0226 a share, a year earlier.

- Past-due loans rose to 10.1 percent of total loans in 2000's last quarter
compared with 6.4 percent a year earlier and 9.8 percent in the third quarter.

- Interest income declined to 99.2 million soles in the fourth quarter compared
with 118.5 million soles for the year-ago period and 113.4 million soles in the
third quarter.

- Net income in the fourth quarter rose 52 percent from the previous quarter,
when it reached 5.8 million soles.

- Net income for the full year rose 175 percent to 37.4 million soles from 13.6
million soles a year earlier.

According to investor relations manager Alfredo Dancourt, fourth quarter
earnings were lower mostly because the bank had to do without 20 million soles
in interest income it had raised a year earlier through special transactions.


CANTV: 34 Percent Of Workforce Take Early Reduction Plan
CA Nacional Telefonos de Venezuela, the country's largest telephone company,
announced that 3,752 of the 11,000 workers chose to take early retirement,
according to a Bloomberg report published Tuesday. As a result, the company will
be able to save $85 million this year. The cut, which is equivalent to 34
percent of the total workforce, wouldn't affect key areas such as customer
services, marketing, sales and overall operations.

The company, currently striving to improve efficiency after its domestic
monopoly ended in November, is also trying to reduce losses from a generous
labor contract with its workers. The contract was based on the assumption that
Venezuela's inflation rate would remain high.

SIVENSA: Releases First Quarter  01 Results
Venezuelan Steelmaker Siderurgica Venezolana Sivensa S.A. (Sivensa) released
results for the first quarter of fiscal year 2001, Dow Jones Newswires reported

     Net Profit       (US$24 million)
     Sales             US$116 million
     Operating Loss   (US$6.9 million)

     (Figures in parentheses are losses.)

The poor result, announced during its annual general meeting held Tuesday, was
caused mainly by depressed steel prices, the company said.

Shareholders also approved a motion to convert Sivensa's "B" shares to "A"
shares during the meeting. The "B" class didn't carry the right to vote for
board members. But after Venezuelan capital markets laws were modified in
October 1998 to allow groups with enough votes to do it anyway, Sivensa decided
to unify the two share classes.

Once the securities regulator approves the reclassification, the shares will be

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 Janice Mendoza,

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

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