TCRLA_Public/010213.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

         Tuesday, February 13, 2001, Vol. 2, Issue 31



CORMINE: Likely To Sell Assets By July


CAEMI: BHP Seen Acquiring Controlling Stake This Week
VESPER: Will Not Reduce Expansion Investments


BANCO DE CHILE: Luksic Group Launches IPO For A 5-Percent Stake
BESALCO: Commences Restructuring
GENER: To Put Chilean Port Assets On The Block


BANCRECER: Dresdner-IPAB Auction Controversy Brewing
BANCRECER: IPAB To Sell Past-Due Mortgage Portfolio
GRUPO DINA: Agrees To Increase Employees' Salary By 16 Percent
HOUSE PRODUCTS: Shuts Down Plant; Cuts Workers' Pay to 70%
XEROX CORP.: Fitch Downgrades To `BB'; CP To `B'; Off Watch


SIDERPERU: Posted 6.9 Percent Increase In Sales In 2000

T R I N I D A D   &   T O B A G O

CARONI LTD: Workers Bring End To Strike

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CORMINE: Likely To Sell Assets By July
Provincial mining director Martin Palacios said in a report released Friday that the dissolution of
Neuquen province state mining company Cormine should be approved
by the Argentinean government this month. Afterwards, a
consultancy firm should have everything ready to launch the sale
of the firm's assets.

"We think we could be in a position to transfer all these mining
assets to the private sector by July," Palacios remarked.

According to him, a consulting firm contracted through the PASMA
mining assistance program will organize the national and
international tender process, evaluate the assets based on
existing information, prepare documents and invite bids, which
should take two to three months. The cost of the consultancy work
is estimated at US$100,000. The decision on how the transfer of
assets should happen lies in the hands of the government.


CAEMI: BHP Seen Acquiring Controlling Stake This Week
The Frering brothers, who own 60 percent of the voting stock in
iron ore producer Caemi, will finalize negotiations this week for
the sale of their control to Australian mining company BHP,
according to Gazeta Mercantil. Negotiations will be completed
after the contractual clauses designed to protect BHP against
potential environmental debts and other hidden liabilities are
established. Once the Frering brothers sell their 60 percent
voting capital to BHP, a second round of negotiations will begin
to define the shareholding structure of the company, wherein CVRD
will negotiate with BHP and Mitsui. The three companies may seal
an accord giving each one a 33 percent stake in the common stock.

Japan's Mitsui Mining Co. owns the remaining 40 percent of
Caemi's voting equity.

VESPER: Will Not Reduce Expansion Investments
Velecom chairman David Leonard announced that the Brazilian long
distance carrier Vesper would not reduce its investments in
Brazil, South American Business Information reported Friday.
Rather, it wants to expand its operations. To date, the company,
which is controlled by Velecom, has 550,000 installed lines in 80
municipalities. Half of these lines are installed in the state of
Sao Paulo. According to Leonard, Velocom is currently trying to
close a deal with Bell Canada over the acquisition of part of the
group's shares in Vesper.


BANCO DE CHILE: Luksic Group Launches IPO For A 5-Percent Stake
The Luksic group launched an IPO Friday for a 5 percent stake in
Banco de Chile to close February 28, 2001, reported South
American Business Information. The IPO is reportedly being
managed by Larrain Vial Corredores de Bolsa, Banchile Corredores
de Bolsa and Bancedwards. Luksic is offering 60 pesos per SM-
Chile B share. The group, which already holds a 47-percent stake
in the Chilean bank, aims to up its position to 51 percent.
Widespread reports suggest that Banco de Chile will be merged
with Banco Edwards as of next April. As a result, both banks
together would hold a 20 percent share in the market.

BESALCO: Commences Restructuring
Besalco of Chile launched a restructuring effort to save about
600 million pesos per year, South American Business Information
said Friday. Part of the plan is to change management procedures
in the construction, real estate, machinery and investment areas.
Last year, the company registered sales of 74.164 billion pesos,
down from 99.597 billion pesos in 1999, while profits fell from
4.744 billion pesos in 1999 to 566 million last year.

Besalco S.A. is engaged in real estate activities, public works
and construction related projects including highway, bridge,
tunnel, residential and non-residential building constructions.
The company is also involved in the construction of water and
sewer mains, pipelines and work for the mining industry.

GENER: To Put Chilean Port Assets On The Block
Gener announced it would sell off its assets in the Puerto
Ventanas port, the Deposito Aduanero Ventanas deposit, the
Portuaria Cabo Feoward port operator, the CCNI water
transportation company, Agunsa and Pacsa, all in Chile, South
American Business Information reported Friday. The Von Appen
group, Copec and national and foreign groups reportedly, are
among the parties interested in the assets which have an equity
capitalization of US$220 million.

A report in the TCR-LA last week suggested that shareholders of
Gener agreed to sell the company's Argentine power assets.
However, the said approval was just a mere formality since U.S.
power giant AES Corp. controls 95.67 percent of Gener, which it
acquired through a public tender offer and share swap.


BANCRECER: Dresdner-IPAB Auction Controversy Brewing
Dresdner Bank in Mexico said it plans to exercise an option it
holds to buy a 3.5-percent stake in Afore Bancrecer, a pension
fund manager owned by government-intervened Bancrecer, according
to a Reforma/Infolatina Friday edition. This move could create
conflict since IPAB, the Mexican bank bailout agency, wants to
auction off 51 percent rather than the 47.5 percent that would
remain should Dresdner be allowed to exercise its buy option.
Conventional wisdom says there would be little interest from
bidders in acquiring a minority stake in the pension manager.
Citibank Mexico is expected to be among the bidders if a majority
stake survives to be offered.

BANCRECER: IPAB To Sell Past-Due Mortgage Portfolio
A portfolio of home mortgages held by government-intervened
Bancrecer valued at 4.066 billion pesos will likely be sold
before the end of March, Mexican bank bailout agency IPAB
disclosed in a Reforma/Infolatina Friday report. IPAB is now
preparing to sell off the troubled portfolio, which consists of
past-due loans, including 11,000 separate mortgages denominated
in pesos or inflation-indexed investment units, known as UDIs.

"The sale of the past-due mortgage portfolio is scheduled to
occur during the first quarter, and on the basis of the work
that's been done so far, it will be ready in March," sources at
the agency said.

The separate sale of Bancrecer's 700-branch retail banking
operation will also be conducted in March. Grupo Financiero
Banamex Accival (Banacci) denied reports hinting it wants to bid
for the bank.

GRUPO DINA: Agrees To Increase Employees' Salary By 16 Percent
Management and union representatives at struggling Grupo Dina
agreed early Wednesday to a 16-percent salary increase, reported
El Economista/Infolatina Thursday. Chief Executive Officer
Gamaliel Garcia said that the company wanted to offer a fair
contract to all workers but it cannot give in to the union's
demand of a 40-percent wage increase, referring to it as wildly
unrealistic. According to Garcia, the company has no choice but
to implement measures aimed at reducing outlays and costs as much
as possible if it hopes to restore financial health.

Garcia attributed the company's serious financial pressure to the
unsolicited cancellation of a major contract it had with Western
Star Trucks.

HOUSE PRODUCTS: Shuts Down Plant; Cuts Workers' Pay to 70%
On Feb. 1, House Products Limited Mexico ceased production at its
home appliances manufacturing operation in the central Mexican
city of Queretaro, revealed plant union leader Carmen Hernandez
in a Reforma/Infolatina Friday edition. Consequently, about 2,400
workers were placed on 70-percent pay. According to Hernandez,
the union believes the move is a prelude to large-scale staff

Production at the factory, where irons, electric ovens and
coffee-makers are made mainly for export to the United States, is
expected to resume March 1. House Products Limited Mexico is a
subsidiary of U.S.-based Black & Decker acquired in 1998.

XEROX CORP.: Fitch Downgrades To `BB'; CP To `B'; Off Watch
Fitch has downgraded Xerox Corp. and its subsidiaries' (see
below) senior unsecured debt rating to `BB' from `BBB-' and the
company's U.S. commercial paper (CP) program to `B' from `F3'.

The company's ratings are removed from Rating Watch Negative. The
Rating Outlook is Stable. The rating actions reflect the
company's declining financial performance, limited financial
flexibility, execution risk surrounding the company's operating
strategy and significant cost reduction programs, and the
prospect of overall weaker economic conditions. The outlook
reflects the company's improved liquidity situation, which
provides some cushion for operational shortfalls as the company
continues to execute on its turnaround strategy. However,
significant challenges remain in executing these plans.

Fitch does recognize the company's improved near-term liquidity,
the progress made in asset dispositions and its $1 billion cost
cutting program, its strong, technologically competitive product
line and business position, its effort to improve its working
capital management, and the company's commitment to continue its
turnaround program, including exiting the financing business,
which should benefit long-term cash flow.

Xerox reported a financial loss for the fourth quarter of 2000,
historically its strongest quarter, as gross margins and
operating expenses continued to be pressured. The company
experienced strong competition and pricing pressures as well as
lingering sales force productivity issues, resulting from the
1999 realignment from a geographic perspective to an industry
solutions focus. However, management has stated that sales force
turnover has decreased the last two quarters and 96% of all sales
territories have been filled. Ongoing customer administrative
issues as well as higher bad debt provisions for some of its
Latin America operations, including Mexico, continue to affect
the company. The Securities and Exchange Commission investigation
into Xerox's Mexican accounting issues and other accounting
matters is ongoing and remains a concern.

Credit protection measures for 2000 show Xerox's leverage,
measured by total debt (including the financing segment) to
EBITDA, increasing to greater than 10 times (x) compared to 4.6x
at Dec. 31, 1999. Similarly, Xerox's core net leverage (defined
as core non-financing debt minus cash divided by core EBITDA)
also increased for the year to more than 3.7x from 1.5x at year-
end 1999. The company's total and core leverage has been trending
upward since 1997. For the same time period, Xerox's interest
coverage ratio (including the financing segment) declined to less
than 2.0x from 4.2x at Dec. 31, 1999. The company's core interest
coverage (defined as core EBITDA divided by core interest
expense) is estimated to be less than 3.5x times at the end of
2000, compared to 8.8x at the end of 1999. Due to seasonally weak
results expected for the first half of 2001, Fitch anticipates
overall and core credit protection measures will continue to be
challenged for at least the next two quarters, despite the
benefits of potential asset dispositions and the anticipated cost
reductions from the company's ongoing restructuring programs.

The removal of the Rating Watch Negative is due to the
improvement in the company's near-term liquidity. A dividend
reduction of 75% resulting in annual cash savings of $400
million, the sale of its Xerox China operations for $670 million
(including the assumption of $120 million in debt), $435 million
in financing from General Electric Capital Corp. (GECC) secured
by a portfolio of Xerox lease receivables in the United Kingdom,
and the complete drawdown of its $7.0 billion committed bank
revolver has generated a cash balance of more than $1.7 billion
at year-end 2000. The company's revolver expires in October 2002
and Xerox is currently in compliance with all covenants. However,
based on preliminary fourth quarter financial results, the
cushion for the company's tangible net worth covenant has
declined from the $1.1 billion at the end of the third quarter of
2000. Xerox is expected to complete the sale of half of its stake
in Fuji Xerox in the first quarter, which should strengthen the
cushion and the company's liquidity. The company is also actively
working on the disposition of additional assets as part of its
turnaround strategy, including the sale of Xerox Engineering
Systems and certain manufacturing assets, equity investments in
Xerox PARC and the company's ink-jet division, and an alliance
for the company's European paper division. The ratings
incorporate the expectations that asset dispositions continue on
schedule, Xerox completes its restructuring programs without
interruption, and core EBITDA shows sequential improvement
(especially in the second half of 2001).

Fitch believes Xerox has sufficient liquidity for the near term
and the company has made strides in managing its working capital.
This improvement is expected to continue and should assist the
company in requiring less cash usage for the first half of 2001.
Approximately $2.6 billion of maturities are due in 2001, with
$500 million due in the first quarter and $900 million due in the
second quarter. However, with limited access to capital markets
Xerox is dependent on asset sales, securitizations, secured
loans, and operating cash flow to fund operations. Given this
limited financial flexibility, it is crucial that Xerox execute
its cost cutting programs in order to return to profitability.

In addition to Xerox Corp., the ratings affected are: Xerox
Credit Corp. and Xerox Capital (Europe) plc's rated senior debt,
Xerox Corp.'s $7.0 billion CP program, which is shared with Xerox
Credit Corp. and Xerox Capital (Europe) plc, and Xerox Capital de
Mexico, S.A. de C.V.'s $200 million U.S. CP program.


SIDERPERU: Posted 6.9 Percent Increase In Sales In 2000
Below are the results for the year 2000 posted by Peruvian iron &
steel company Siderperu in a South American Business Information
report Friday:

- Sales of US$145.4 million, up 6.9 percent from the previous

- Exports to the Chilean mining sector was up by 51 percent, to
US$23.8 million;

- Net Profit of US$2.6 million vs. losses of US$8.8 million from
the previous year

- Reduced current liabilities and non-current liabilities by
US$11.1 million and US$15.3 million, respectively. As a result,
the company's financial expenses were reduced from US$16.1
million in 1999 to US$13.4 million in 2000.

T R I N I D A D   &   T O B A G O

CARONI LTD: Workers Bring End To Strike
Approximately 7,000 sugar workers in the country saw an end to
their strike after the government released funds to help state-
owned sugar company Caroni Ltd. meet its financial to workers and
farmers. In a Caribbean News Agency report Sunday edition,
workers agreed late Friday to go back to work on the condition
that a more permanent solution is reached concerning their
outstanding wages.

Company management was scheduled to meet meet with Finance
Minister Gerald Yet Ming and Enterprise Minister Mervyn Assam to
formulate plans for honoring Caroni's obligations including
payment of wages for the rest of the year.

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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