TCRLA_Public/010403.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, April 3, 2001, Vol. 2, Issue 65

                           Headlines


B R A Z I L

ARAUCARIA/INTERPART: Liquidated By Central Bank
VARIG: Increased Operating Income But Deepens Net Losses in 2000


C O L O M B I A

AVIANCA: Seeks Strategic Partnership In Europe's Cargo Market


M E X I C O

AHMSA: To Implement Downsizing Strategy
ATLANTICO: Bital To Conclude Acquisition Immediately
GRUPO VITRO: Will Not Boost Production
XEROX: Considers Moving Out From Current Headquarters By Year-End
XEROX: To Transfer Serra Activities To Resende Unit
XEROX: Completes $1.3 Billion Cash Sale Fuji Xerox Stake


P A R A G U A Y

ANTELCO: Doesn't Have Cash To Meet Government Obligation


V E N E Z U E L A

EDC: Considers 100M Euro-Denominated Bonds


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B R A Z I L
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ARAUCARIA/INTERPART: Liquidated By Central Bank
-----------------------------------------------
The Brazilian Central Bank has liquidated two smaller banks from
Curitiba and Sao Paulo. Araucaria, of Curitiba, was closed down
with 41.9 million reais in cash deposits and another 43.7 million
in term deposits. The bank was suspected of money laundering.

The other bank, Interpart of Sau Paulo, which has 40 million
reais in debts to BNDES (Banco Nacional de Desenvolvimento
Economico e Social) and 45 million in receivables, was closed
down with 4,000 reais in deposits. There are another 151 million
reais in deposits, which belong to individuals or companies
linked to the bank.


VARIG: Increased Operating Income But Deepens Net Losses in 2000
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Varig, Latin America's largest airline, ended 2000 with an
operating income of R$228 million ($105 million), a 573-percent
increase over 1999, Financial Times reported Sunday. Gross
revenue increased by 19 per cent to R$5.1 billion, half of which
came from international operations. Economic recovery last year
drove up domestic sales by 26 per cent and revenue from cargo
transport by 17.2 per cent. In addition to strong domestic sales,
Varig benefited from new international destinations, particularly
its flights to Munich and Los Angeles, which it inaugurated in
July 2000.

However, because of higher financial costs, largely on its
dollar-denominated debt and losses from a weaker local currency,
Varig posted a net loss for the third consecutive year. Its net
loss in 2000 totaled R$179 million ($83 million), more than
tripling its loss in 1999, which amounted to only $50 million
($23 million). Varig said it was now looking to launch aircraft
maintenance and airport management services.



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C O L O M B I A
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AVIANCA: Seeks Strategic Partnership In Europe's Cargo Market
-------------------------------------------------------------
Colombian airline Avianca announced on Friday it is seeking a
strategic alliance with Air France and Cargolux International
Airlines to increase its distribution of cargo to Europe, Reuters
reported.

"In 2001, we hope to celebrate strategic alliances with Air
France and Cargolux, allowing us to distribute cargo from and to
Paris and Luxembourg, respectively," said Leonor Montoya,
president of the industrial conglomerate Valores Bavaria,
Avianca's majority shareholder. Montoya refused to give further
details on the proposed alliance but she said that the airline's
ultimate goal was to establish a cargo distribution network
throughout Europe.

Previous reports stated Avianca is looking to merge with Aces,
another Colombian airline, however, it needs to resolve its cash
flow problems first. It ended year 2000 with cumulative losses of
P$548,841mil and is operating under threat of liquidation.
Conventional wisdom says the airline is in need of a US$210-
million capital injection, a sum that is being negotiated with
Valores Bavaria.



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M E X I C O
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AHMSA: To Implement Downsizing Strategy
---------------------------------------
Due to ongoing financial problems, including a year-long
suspension of payments, and a slump in steel demand and prices,
Mexican No. 2 steelmaker Altos Hornos de Mexico plans to
implement a downsizing strategy. In a Reuters report released
Friday, the steelmaker disclosed it would cut 1,200 jobs this
year.

The company, in the wake of the Asian economic crisis in 1998,
announced a plan to cut as many as 3,000 jobs, of the 17,000 it
had filled at the time. The company had already let go some 1,800
workers by early last year but suspended the program until this
year.

"The second phase (of cuts) began in January," AHMSA spokesman
Francisco Orduna said.


ATLANTICO: Bital To Conclude Acquisition Immediately
----------------------------------------------------
Mexico's Grupo Financiero Bital is eager to wrap up its drawn-out
acquisition of government-intervened Atlantico within the next
two weeks, South American Business Information revealed Friday.
The urgency to finish the process will enable Bital to consider
getting into the race for Bancrecer, another government-
intervened bank, which the bank bailout agency IPAB is planning
to put on the auction block in several weeks' time.

As reported, Bital Chairman Antonio del Valle revealed that the
bank is planning to inject $100 million into Atlantico right
away, followed by a $200 million injection later in the year.


GRUPO VITRO: Will Not Boost Production
--------------------------------------
Albert Chico, a spokesman for the Mexican steelmaker Vitro SA,
denied newspaper reports which suggested that Vitro would
increase output to compensate for the recent slowdown in
production by its U.S. partner Libbey Inc., Bloomberg said
Friday. Chico stated that the report in the newspaper is
erroneous, saying that there were no plans to boost production.

A previous newspaper report indicated that due to a recent
slowdown in the U.S. economic activity, Vitrocrisa's U.S.-based
partner Libbey was forced to implement production cuts, and
Vitrocrisa, a subsidiary of Vitro, would step in to meet
resulting supply shortfalls at Libbey. Consequently, Vitrocrisa
will see a $6-million boost of its exports this year. The figure
is equivalent to 2.5 percent of Grupo Vitro's annual sales.


XEROX: Considers Moving Out From Current Headquarters By Year-End
-----------------------------------------------------------------
Struggling to resolve the financial problems buffeting the
company due to sluggish sales and a precipitous drop in its stock
price, Xerox is mulling a move out of its current headquarters by
year-end, AP Online reported Friday. Xerox is considering two
options - either to a smaller site in Stamford or another
Fairfield County town.

"We are changing our mix of business, our offerings, the way we
go to market, our culture and our cost base. It's time we had a
new home for a new Xerox," said Anne Mulcahy, Xerox president and
chief operating officer.

The copier maker employs 350 people at its headquarters. The
building, which was completed late in 1978, can hold 630 people
and has a 630-car parking garage. Xerox owns the land and leases
the building in a long-term sale-leaseback agreement. The company
said it plans to divest its interest in the site and expects a
deal with an interested company to happen soon.


XEROX: To Transfer Serra Activities To Resende Unit
---------------------------------------------------
JDR - Vitoria Equipamentos, a plant held by Xerox do Brasil,
announced it would shut down its facility and transfer activities
there to its unit in Resende in the state of Rio De Janeiro,
South American Business Information said Friday. The company had
been reporting negative performance over the last two years, and
in 2000, it turned over just US$4 million. Additionally, the
company, operating at an 80 percent idle capacity in the period,
lost US$100,000 last year. The transfer is expected to generate
savings of US$1.5 million. Xerox had an overall turnover of US$1
billion in 2000 and aims to reduce costs by 20 percent in 2001
boosting its productivity.


XEROX: Completes $1.3 Billion Cash Sale Fuji Xerox Stake
---------------------------------------------------------
Xerox (NYSE: XRX) today confirmed that it has completed the sale
of half of its stake in Fuji Xerox Co., Ltd. to Fuji Photo Film
Co., Ltd. for 160 billion Yen in cash, approximately $1.3 billion
based on the current exchange rate.

Under the agreement, Fujifilm's ownership interest in Fuji Xerox
increases from 50 percent to 75 percent. While Xerox's ownership
interest is decreased to 25 percent, the company retains
significant rights as a minority shareholder. All product and
technology agreements between Xerox and Fuji Xerox will continue,
ensuring that the two companies retain uninterrupted access to
each other's portfolio of patents.

Fuji Xerox, incorporated in 1962, is an $8 billion corporation
with more than 30,000 employees in the Asia Pacific and Pacific
Rim regions.



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P A R A G U A Y
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ANTELCO: Doesn't Have Cash To Meet Government Obligation
--------------------------------------------------------
Antelco, the Paraguayan state-owned telecommunications company
slated for privatization in September, doesn't have the money to
pay US$40 million to the Ministry of Finance. The sum represents
its contribution to the government budget, South American
Business Information reported Thursday. Accordingly, all cash has
been allotted to settle debts that the company owes to cellular
telephone operators, suppliers, and also its external debt.
Antelco, currently under intervention, is pleading its case for
ending the requirement of this contribution.



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V E N E Z U E L A
=================

EDC: Considers 100M Euro-Denominated Bonds
------------------------------------------
Venezuelan company Electricidad de Caracas, which posted a net
loss of 78 billion bolivars in 2000, is planning a euro-
denominated bond issue of at least 100 million euros via Dresdner
Kleinwort Wasserstein and Credit Suisse First Boston. Market
participants revealed the plans in a Reuters report Friday. Most
likely, the five-year maturity bond will be priced between 100 to
150 basis points over the Venezuelan euro-denominated bond curve.

Additionally, company shareholders gave their approval on a bond
issue of up to $400 million in foreign markets with a maturity of
up to 15 years to raise funds to improve its electricity network
and restructure short-term debt. They also approved two debt
issues of up to 60 billion bolivars each, either in local or
foreign currency: one short-term placement of up to 360 days to
finance working capital requirements; the other with no fixed
maturity.

Last week, the company informed its shareholders that it had
suspended payment of quarterly dividends after it posted negative
results for last year. EDC blamed the poor results on redundancy
costs and expenses associated with the previous management's
unsuccessful defense against the AES takeover bid.




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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