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

            Wednesday, April 4, 2001, Vol. 2, Issue 66



CESP: Sale Terms Could Force Buyer Into Building New Power Plants
LOJAS AMERICANAS: Mounting Debt Creates Another Problem


AVIANCA: Major Shareholder Promises To Inject US$210M Cash


ATLANTICO: Bital To Receive US$1.3B Cash Injection
CAZE/GAM/SANTOS: Government Intervention Is Likely Next Step
GRUPO SIDEK: Fails To Close Sale Of A Package Of 8 Hotels
HYSLAMEX: One of Four Foreign Firms To Start Due Diligence
XEROX: Delays Filing Of Year 2000 10-K Report


EDC: Fitch Rates Proposed EUR100 Million `BB-'
SIVENSA: Orinoco At Risk Of Closure
SIVENSA: Orinoco Gets Favorable Report From VA Tech

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CESP: Sale Terms Could Force Buyer Into Building New Power Plants
According to a Valor Economica report published Monday, an
unheard-of clause requiring the buyer of the Brazilian power
generator Cia. Energetica de Sao Paulo to construct new
facilities to assure growth in electricity production may be
included in the terms of the sale. However, the plan is still
subject to a study by the Sao Paulo state Governor Geraldo
Alckmin and the state's Energy Secretary Mauro Arce. Carlos
Augusto Kirchner, director of the Sao Paulo state engineers
union, stressed that the requirement will force CESP's new owners
to invest in new thermoelectric plants besides completing the
construction of Porto Primavera hydroelectric plant. Sao Paulo
state, which owns a 38.7 percent controlling stake in the
utility, plans to sell the company in the second half of May, and
is expected to release the terms of the sale as early as this

LOJAS AMERICANAS: Mounting Debt Creates Another Problem
As it struggles to resolve the financial situation at its dotcom
business, the Brazilian retail chain Lojas Americanas battles
with another problem, South American Business Information
reported Monday. Market Analysts suggest that the chain will have
to ask for a waiver as it is facing indebtedness of 246 percent
of its net worth and it also owes US$40 million worth of
eurobonds. Lojas ended year 2000 with negative financial results
of R$47 million compared to a positive result of R$90 million in

On the other hand, registered 8-percent growth in
sales in 2000 and is currently outlining new strategies to boost
sales., which was launched in 1999, required some
R$11 million in marketing investments. The company projects a
R$70-million turnover in 2001, besting the R$25.2 million reached
in 2000. expects to reach "break-even" by 2002.
The company got a US$40-million injection in June last year.


AVIANCA: Major Shareholder Promises To Inject US$210M Cash
The Colombian national carrier Avianca is likely to resolve its
cash flow problems soon. The company's majority shareholder,
Valores Bavaria, has offered to inject US$210 million in cash,
according to South American Business Information Monday. The
offer is dependent on the airline's debt renegotiations and its
forthcoming merger with Aces, another Colombian airline. Avianca
is currently working on debt renegotiations on three fronts - (1)
its pensions debt (US$250 million); (2), its fleet rental costs
(where it is looking to save US$25 million annually)and; (3) a
debt restructuring program to extend debt maturities to seven
years with four years free from commitments. A large portion of
the money promised by Bavaria is designated to pension
commitments, which amounts to 250 billion pesos.


ATLANTICO: Bital To Receive US$1.3B Cash Injection
Mexico's fourth biggest financial services/banking entity Bital
is likely to get cash injection worth US$1.3 billion, South
American Business Information reported Monday. The
capitalization, which would be funded by the Mexican state,
together with the bank's shareholders contributing between US$200
million and US$300 million, will be used to pay debts linked to
Bital's acquisition of Banco del Atlantico.

CAZE/GAM/SANTOS: Government Intervention Is Likely Next Step
Caze, GAM and Santos are three of Mexico's largest sugar
companies likely to be candidates for government intervention,
Reforma/Infolatina disclosed Monday. The looming event is seen
part of the emergency financing measures to be implemented by the
administration of Mexican President Vicente Fox for the country's
ailing sugar companies. An official announcement regarding the
matter could come out this week. Sources in the industry believe
that many sugar mills likely will be closed over the next two
weeks if the government will not step in. On the other hand, some
observers expect that the Finance ministry could call in loan
guarantees for some sugar producers, taking control of the

GRUPO SIDEK: Fails To Close Sale Of A Package Of 8 Hotels
Grupo Sidek, S.A. de C.V. (OTC-GPSAY and OTC-GPSBY) announced
that the transaction for the sale of a package of 8 hotels to AMX
Resort Holdings LLC, scheduled to close on March 30; did not
close on such date.

HYSLAMEX: One of Four Foreign Firms To Start Due Diligence
El Economista/Infolatina revealed in a report Monday that
Hyslamex, Mexico's third-largest steelmaker, has attracted four
foreign-owned companies interested in acquiring or buying into
the struggling steelmaker. The names of these firms have not yet
been revealed but one of them will reportedly begin due diligence
proceedings this week. The said proceedings are expected to last
for four months.

Hyslamex is a subsidiary of Grupo Alfa and is currently facing
liabilities totaling 1.3 billion dollars.

XEROX: Delays Filing Of Year 2000 10-K Report
Xerox Corporation (NYSE: XRX) today said that the filing of its
year 2000 10-K report would be delayed. This delay relates to an
internal review begun last week by the company's Audit Committee,
in cooperation with the company's auditors, KPMG. This will
permit a fuller audit review than previously contemplated and a
sign-off on the company's 2000 financial statements.

The company and its Audit Committee stated that they believe that
the company's accounting policies and procedures are appropriate
and consistent with generally accepted accounting principles.
However, in light of the previously disclosed investigation by
the Securities and Exchange Commission, the Audit Committee and
the auditors believe that a fuller review is appropriate.

KPMG has advised the company that it believes that such fuller
review is needed for it to satisfy its auditing responsibilities,
and that it will work with the Audit Committee and the
Committee's counsel to complete the review as quickly as


EDC: Fitch Rates Proposed EUR100 Million `BB-'
Fitch has assigned a rating of `BB-' to the proposed EUR100
million senior unsecured notes to be issued by C.A. La
Electricidad de Caracas (EDC). The rating is based on EDC's
foreign currency credit rating, which is constrained by
Venezuela's sovereign foreign currency rating. The proceeds from
the sale of the notes will be used for general corporate
purposes, including making intercompany or affiliate loans,
financing EDC's planned capital expenditures and refinancing
outstanding indebtedness.

EDC's foreign currency credit rating is constrained by the `BB-'
sovereign ceiling and is supported by the company's long history
as a profitable, reliable private entity, developing legal and
regulatory framework, strong financial performance, low leverage
and its acquisition by AES Corp. in June 2000. The rating also
reflects the uncertainties regarding government adherence to the
electricity law and timeliness and magnitude of required tariff

EDC's operating history in Venezuela provides comfort to the
company's ability and willingness to meet its financial
obligations in the event of material adverse events. The new
electricity law and the industry's developing regulatory
framework are constructive, yet new and untested. In both 1999
and 2000, the actual residential tariff adjustments lagged the
requisite adjustment as determined by the regulations.
Positively, in each year EDC successfully negotiated with the
government to reduce the effect on earnings through price
reductions on primary energy purchases from state-owned

Financial performance is expected to remain solid in a base-case
scenario, supported by expected tariff adjustments, cost
reductions and improved efficiency. Debt-to-capital was
approximately 31% as of December 2000, up from approximately 20%
in 1999. Debt levels increased by approximately $400 million
following AES' acquisition, as funds were used for primarily for
the stock buyback program, initiated by previous management, and
the voluntary retirement program.

SIVENSA: Orinoco At Risk Of Closure
Orinoco Iron plant, an equally-owned joint venture between
Siderurgica Venezolana Sivensa SA's subsidiary International
Briquettes Holding (IBH) and Australia's The Broken Hill
Proprietary Company (BHP), may have run up debts of US$300
million in the first half of the fiscal year 2000-2001. Partners
of IBH and BHP made the announcement in a South American Business
Information report published Monday. Both companies have already
invested nearly $900 million in the plant. Even so, it has barely
operated at one-fourth capacity since it began production in
August 2000. Since that time, the plant has been hit by various
negative market forces which caused increased costs and reduced

According to IBH's calculations, Orinoco needs between US$220 and
US$240 million to ensure continued operations. So far, neither
the company, nor any third party is prepared to commit to such an
investment. Worse, BHP is prepared to give up on the US$489
million it has invested in its Venezuelan project.

SIVENSA: Orinoco Gets Favorable Report From VA Tech
Struggling to continue operations amid financial strife,
Venezuela's hot-briquette iron (HBI) plant Orinoco Iron has
received a favorable technical report from specialists at
Austria's VA Technology. According to a Business News Americas
report published Monday, VA Technology wrote:

"For longer than a month one train has been producing hot-
briquetted iron of excellent quality. The average daily
production reached a level of 1,766t HBI and thus substantially
exceeds the nominal capacity of 1,680t. The consumption figures
of the train currently in operation are better than specified."

"These operational results demonstrate the functionality and
reliability of the FINMET technology," VA added, citing the
registered fine-ore reduction process based on fluidized bed
technology jointly developed by Fior (Venezuela) and VA's parent
company Voest-Alpine.

"This favorable report shows there are no problems with the
process or the technology. The problem is that more money is
needed to complete the plant," said Sivensa spokesperson Isabel

VA Technology issued the report as talks continue between the
plant's 50/50 owners - Sivensa and BHP - and banks to find an
estimated US$220mn to keep Orinoco Iron going. The US$220 million
sought will go towards working capital, debt servicing, spare
parts and completing the last of the four production trains.
Delays in reaching the 2.2Mtpy nominal production capacity rate
and the need to fine-tune the process have meant Orinoco Iron has
surpassed its estimated US$600 million capital cost.

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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