TCRLA_Public/010209.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

         Friday, February 9, 2001, Vol. 2, Issue 29



COTEL: Auction Abandoned In The Absence Of Offers


CVRD: Gets New Software To Solve Logistics Problem
ERITMO: Lays Off Undisclosed Number Of Workers
FURNAS: Anticipates Posting $300M Profit For 2000
FURNAS: New Privatization Plan Still At An Early Stage
VESPER: Global Telecom Fallout Likely To Affect Investments


ENTEL: To Raise US$332M With New Equity


GRUPO BITAL: Atlantico Acquisition Suffers Setback
MINERA AUTLAN: Trading Of Shares Temporarily Suspended
XEROX: Dismissed Employee Files Lawsuit
XEROX: Dividends Declared On Stock
XEROX: Looks To Sell Certain Assets To Raise Cash


BANCO NUEVO/NBK Bank: BNP Paribas Wins Contract As Adviser

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COTEL: Auction Abandoned In The Absence Of Offers
The auction of a controlling stake in Bolivia's largest fixed
line operator Cotel was abandoned when none of the 15 registered
bidders presented an offer, reported Wednesday.

According to government appointed manager Rene Bustillo, it was
very unlikely that another attempt would be made to find an
investor prior to full market deregulation this November 11. He
attributed the failure to the social and economic conditions in

"Local telephony service in La Paz apparently is not attractive
under the given conditions. We have done everything possible to
carry out this process and we have to admit no one is interested
in the cooperative," Bustillo explained.

Cotel, intervened in August last year after a nine-day strike by
employees protesting corruption and staff cuts jeopardized
service, needs financial backing of a foreign investor to ensure
its future. The company is saddled with debts nearing US$43
million and has only 165,000 lines in service out of a total line
capacity of nearly 220,000.

"From my point of view it will be very difficult for the company
to stay afloat without a radical change and heavy investment",
Bustillo said. He is expected to meet with Telecommunications
Superintendent Guido Loayza to discuss alternatives. Bustillo's
management period ends on February 13, after which, Cotel will
likely be returned to shareholder management.


CVRD: Gets New Software To Solve Logistics Problem
Inteligencia Computacional Aplicada (ICA) has developed a
software for Companhia Vale do Rio Doce (CVRD) to solve logistics
problems at the Port of Tubarao, Vitoria, Espirito Santo state,
South American Business Information said Wednesday. S4 Shipment
Scheduler & Simulation System, as the software is known, can make
25,000 simulations in three minutes supplying information for
planning, according to Mr. Marco Aurelio Pacheco from PUC-Rio.
The company did not reveal the amount it invested for the
development of the said software.

ICA, a department from Brazilian university PUC-Rio, has also
developed softwares to Souza Cruz, Eletrobras/Copel, Embratel,
Petrobras/Cenpes and Light.

ERITMO: Lays Off Undisclosed Number Of Workers
Francisco de la Torre, Chief Executive Officer at Miami-based
music site Eritmo (, said in a
report that the company has laid off an undisclosed number of
staff and is entering a "cybernation period to cope with these
difficult financial market conditions."

Torre's response comes after a recent article published in an
Internet magazine Punto-com stated an anonymous former Eritmo
employee said the company had run out of cash and was closing
down. Although he declined to provide further details about the
company's current state or future plans, he maintained that the
company is still operating and negotiating with potential

FURNAS: Anticipates Posting $300M Profit For 2000
Officials of Rio-de-Janeiro based power utility Furnas announced
in a Reuters report released Wednesday that the company should be
posting a record profit of around 600 million reais ($300
million) for 2000. The said profit is seen likely to surpass
previous year's result by 70 percent, according to Furnas
President Luiz Carlos Santos as quoted by his spokesman. Furnas
financial director Paulo Pinto attributed the projected record
2000 profits to higher revenues, in part due to a 15 percent
electricity rate hike in mid-2000.

"The (profits) results are still provisional, the final figure
may be bigger or smaller," he warned. Company officials could not
provide any electricity production or revenues data.

It's still not clear when the results would be published after
Eletrobras said on Tuesday it would adjust the books of the unit
to meet rigid U.S. accounting standards as part of preparations
for Furnas privatization later this year.

The company also announced it has signed a partnership agreement
with Argentina's Gener power firm, controlled by Chile's Gener --
a unit of U.S.-based AES Corp. -- allowing Brazil to build
transmission lines and import energy from neighboring Argentina.
Under the agreement, Argentine's Gener should be supplying Furnas
with 400 megawatts of energy in 2002, rising to the project's
full capacity potential to 1,200 megawatts in mid-2003.

FURNAS: New Privatization Plan Still At An Early Stage
The new plan to privatize Furnas, which the government wants to
sell to a wide shareholder base, is still at its early phase,
Brazil Financial Wire reported Wednesday.

The central government which controls the electricity generator
and transmission company will be hiring firms to model the sale
of the company and advise on a tentative restructuring plan. The
advising firms will be responsible for overseeing a management
overhaul, accounting and planning models at Furnas, and, more
importantly, they will be in charge of preparing the company to
comply with international good governance practices. Adjusting
accounting methods to the norms of the U.S. Securities and
Exchange Commission will be essential to launch an international
IPO. Before the government can sell stocks in Furnas to a wide
shareholder base, it must first float the company. The readership
is reminded that Furnas is not publicly traded in Brazil or

Firmino Sampaio, president of federal electric holding for the
power sector Eletrobras, emphasized that even if the
administration fails to divest Furnas this year, the company will
stand to benefit from the accounting and management practice

VESPER: Global Telecom Fallout Likely To Affect Investments
The global telecom fallout is seen likely to affect the near-term
investment strategy of Brazilian long distance carrier Vesper,
according to a report released by Brazil Financial Wire
Wednesday. However, long-term plan remains unchanged, assured
Velocom president David Leonard after he met with Anatel
president Renato Guerreiro. Velecom is the company that controls

Leonard refused to comment on the size of Vesper's near-term
investment but he said that the company intends to act in a
rational and controlled manner. He also assured that Velocom is
still interested in buying Bell Canada's stake in V,sper.
According to him, despite the collapse of negotiations, talks are
still under way.


ENTEL: To Raise US$332M With New Equity
Entel said it would raise nearly US$332 million in equity capital
by next June, according to a South American Business Information
Tuesday Edition. The company is taking this action to fund
investments, which will vary from US$300 million to US$400
million in the short-term, both in Chile and abroad. Part of the
newly issued shares will correspond to ADR's. Currently, Entel's
cash is only at US$100 million to back its investments because
the US$65-million syndicated loan taken out last December was
used to by a 25-percent stake in Entel Telefonia Personal (PCS)
from Motorola.


GRUPO BITAL: Atlantico Acquisition Suffers Setback
Even if bank bailout agency IPAB and Bital immediately strikes an
agreement on how to share the costs of recapitalizing Atlantico,
the completion of Bital's acquisition of government-intervened
Banco Atlantico would still be delayed by a further two months.
This was announced by Grupo Financiero Bital top executive Jaime
Ruiz Sacristan in an El Economista/Infolatina report released
Tuesday. Sacristan explained that the postponement would be a
result of legal and corporate procedures required to close the
transaction. As a result, an equity issue and a debt issue
planned by Bital would also be delayed by several months.

MINERA AUTLAN: Trading Of Shares Temporarily Suspended
The National Securities and Banking Commission issued a 60-day
suspension of trading of Monterrey-based Compania Minera Autlan's
shares in Mexico's stock exchange effective Feb. 2, Mexico's
bourse said in a Reuters report Tuesday. The action was taken
after the Mexican manganese and iron alloys producer defaulted on
its $7-million debt due last week. The company said it has
already met with creditors to discuss restructuring some $74
million in debt, $60 million of which, according to strategic
planning sub-director Hector Cacho, will come due this year.
Company executives hope to have a debt-restructuring plan in
place by June, Cacho added.

XEROX: Dismissed Employee Files Lawsuit
James F. Bingham, a former assistant treasurer at Xerox Corp.,
filed a lawsuit against his former employer claiming that he got
terminated after he warned that the company's accounting
irregularities stem from its headquarters in Stamford and not in
Mexico City.

In an Associated Press report published Tuesday, Bingham stated
that Xerox used improper assumptions and other techniques to
inflate revenue from leasing copiers and other office equipment
to customers. He claimed that Xerox improperly set aside a $100-
million reserve from a 1997 deal to artificially boost future
profits. And he said the company had been reporting revenues and
profit that it shouldn't.

According to him, the same practices are followed in other
divisions of the company and concluded there was a high
likelihood that Xerox had issued misleading financial statements,
citing a copy of his Aug. 28 presentation to Xerox executives.
While saying he could not calculate an exact number, Bingham
estimated errors of various kinds had boosted Xerox's pretax
income by as much as $1.2 billion in the five years through 1999,
a period in which it had reported pretax income from continuing
operations of $8.7 billion.

Bill McKee, a spokesman from Xerox, refused to discuss the
specific reasons for Bingham's termination. However, he assured
it wasn't in retaliation for any activity. Greg Tayler, Xerox
Controller, considers the firing an unfortunate situation but
said the allegations were presented to the company's auditors,

"We took a look at the issues he raised," Tayler said, adding,
"we believe they are factually without merit."

XEROX: Dividends Declared On Stock
Xerox Corporation's (NYSE:XRX) Board of Directors today declared
the regular quarterly dividends on the company's common and
preferred stock, both unchanged from the previous quarter and
payable April 1, 2001 to shareholders of record March 2, 2001.

Payments will be 5 cents per share on the common stock and
$1.5625 per share on the Series B convertible preferred stock
issued in connection with the Xerox employee stock ownership

XEROX: Looks To Sell Certain Assets To Raise Cash
Xerox Corp., which is seeking to dispose certain assets in order
to raise cash to reduce its heavy debt load, met with at least
three leveraged-buyout firms, sources close to the situation
related in The Wall Street Journal Monday.

Among the firms, which the officials of the struggling copier
have reportedly met with, are San Francisco buyout firm Texas
Pacific Group; the New York firms Kohlberg Kravis Roberts & Co.
and Clayton Dubilier & Rice; and Silver Lake Partners, of San

Xerox, which has posted steep losses, has announced plans to
raise as much as $4 billion from the sale of certain assets, one
of which is half of its 50-percent stake in Fuji Xerox Co., which
it intends to sell to Japan's Fuji Photo Film Co. Credit Suisse
First Boston analyst Gibboney Huske said it was unlikely that the
entire company would become a candidate for a takeover by a
leveraged-buyout firm.


BANCO NUEVO/NBK Bank: BNP Paribas Wins Contract As Adviser
BNP Paribas SA, France's biggest bank, won the contract to advise
Peru on selling two retail banks, beating Fleming Latin Pacific
Peru SA and J.P. Morgan Chase & Co., Bloomberg reported
Wednesday. The French bank is given 90 days to devise a sales
strategy and drum up investor interest for Banco Nuevo Mundo and
NBK Bank, which were seized by the government after it run on
deposits in December.

As of Nov. 30, NBK had assets of 2.04 billion soles ($583
million) and deposits of 840 million soles, while Nuevo Mundo's
assets totaled 2.63 billion soles and deposits 940 million soles.
However, both private banks were unable to meet their obligations
after clients withdrew deposits in mid-December on speculation
that the banks faced a cash shortage after former President
Alberto Fujimori's government collapsed in November. The
government appointed administrators and named other banks to
cover deposits in soles to the equivalent of as much as $20,000.

Peru will likely close the banks if it can't find buyers,
analysts said.

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, Editors.

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

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