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       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

            Thursday, April 19, 2001, Vol. 2, Issue 77

                           Headlines



A R G E N T I N A

AEROLINEAS ARGENTINAS: SEPI Struggles To Save Airline
LUCCHETTI: To Reduce Debts By Selling Argentinean Subsidiary


B R A Z I L

BANESPA: Santander To Implement Discretionary Dismissal Program
CESP: State Privatization Council Publishes Bid Call
CVRD: To Spend US$927M For Ferteco And Caemi Stakes


M E X I C O

AEROVOX: First Quarter 01, FY 2000 Results; Net Loss Doubles
GOODYEAR: Mexican Plant Awaits Permanent Closure
GRUPO DINA: Workers Agree To 40% Staff Reduction, Work Stoppage
MOTOROLA: UBS Warburg Says Company Not Facing Liquidity Crisis
TELEVISA: To Close Down Subsidiary Before June
TMM: Clarifies $35 Million Securitization of Receivables


P A R A G U A Y

ANTELCO: Conatel Director Recommends Prompt Privatization


     - - - - - - - - - -


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A R G E N T I N A
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AEROLINEAS ARGENTINAS: SEPI Struggles To Save Airline
-----------------------------------------------------
Spanish state industrial holding company SEPI is faced with a
difficult task in rescuing the technically bankrupt Argentine
airline, Aerolineas Argentinas SA, according to a Global Newswire
report Sunday edition. SEPI controls 85 per cent of the airline's
capital. During the past ten years, it has never seen a return on
its investment, which already amounts to Pta$375 billion. The
figure is Pta$11.559 billion more than the amount that SEPI has
received from the recent sale of its stake in leading Spanish
airline Iberia. The Argentine airline is reportedly in need of a
monthly capital injection of some Pta$6.5 billion. SEPI devised
and approved a rescue plan last year to save Aerolineas and its
subsidiary Austral. However, the implementation of the plan has
been deterred due to strong opposition coming from three of the
airline's seven trade unions. SEPI intends to cut 1,100 of
Aerolineas current 5,700 staff, simplify employee
classifications, increase productivity, cut costs and reduce
wages.


LUCCHETTI: To Reduce Debts By Selling Argentinean Subsidiary
-------------------------------------------------------------
Struggling to cut its debts some US$80 million by the end of this
year, Lucchetti, the food processing arm of Luksic group, is to
sell-off its Argentinean subsidiary, according to a South
American Business Information report published Tuesday. Lucchetti
Argentina, as the subsidiary is known, will be sold to the local
Molinos Rio de la Plata in a US$44.7 million transaction,
including a US$35 million new-capital offering. At the end of
last year, Lucchetti registered debts totaling US$167 million, 70
percent of which were short term. With the reduction of debt, the
company foresees annual debt service savings of US$4 million in
2001 and US$8 million in 2002, thus improving the company's
performance. Lucchetti showed losses of P$9.988 million by end
2000, 21 percent less than 1999. Restructuring undertaken over
the last two years included divestments and an 18-percent
reduction in its workforce. The company is planning to sell a
vegetable oils plant in Talca and move a soup plant from San
Bernardo to Vicuna Mackenna, in Santiago.



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B R A Z I L
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BANESPA: Santander To Implement Discretionary Dismissal Program
---------------------------------------------------------------
Spanish bank Banco Santander Central Hispano (BSCH), which took
control of Banco do Estado de Sao Paulo (Banespa) in November
2000, announced on Tuesday a discretionary dismissal program for
Banespa's 18,000 employees, Brazil Financial Wire reported.
Banespa currently has 22,100 employees.

"As (with) every dismissal program, this one should also cause
some discomfort (among employees), but that's a common thing,"
Miguel Jorge, vice-president for corporate affairs at Banco
Santander Central Hispano (BSCH), said in reference to a
demonstration of Banespa workers scheduled to take place later
Tuesday.

Santander acquired 97.1 percent stake in Banespa in November 2000
in an all-cash deal worth about $1.2 billion. Just recently, it
successfully concluded its public share offer for outstanding
minority shares of Banespa with 95 percent acceptance for
ordinary shares and 96 percent for preferred shares. As a result,
it now holds 98.3 percent of the shares with voting rights
(ordinary shares) and 97.1 percent of the economic capital
(preferred shares).


CESP: State Privatization Council Publishes Bid Call
----------------------------------------------------
On Tuesday, the Sao Paulo state privatization council released
the bid call for the sale of the Brazilian power utility Cia.
Energetica de Sao Paulo (CESP), Brazil Financial Wire said in a
report. The bid call states that about 36.23 billion shares in
the power generator will be put up for sale, 29.91 billion of
which being common stock (voting), and 6.32 billion being
preferred stock (non-voting). The calculation for the minimum
asking price (R$ 1.739 billion, or R$ 48 per 1,000 share-lot) was
based on an economic and financial evaluation of the generating
asset that was carried out by consultants whom the Sao Paulo
state hired for the job. According to the bid call, Cesp will be
auctioned at 9am/12GMT on the Sao Paulo Stock Exchange (Bovespa)
on May 16, and the successful bidder will be awarded a 30-year
concession contract.

CESP is Brazil's third largest energy generator, supplying power
to the industrial hub of Sao Paulo. The government of Sao Paulo
failed in its first attempt to sell the utility when all
qualified bidders pulled out just hours before the auction,
citing concerns about environmental and financial risk.


CVRD: To Spend US$927M For Ferteco And Caemi Stakes
---------------------------------------------------
Should Mitsui decide not to exercise its right of first refusal,
Brazilian miner Cia Vale do Rio Doce (CVRD) will spend US$927
million in the acquisition of a 100-percent controlling stake in
Ferteco and a 50-percent stake in Caemi, South American Business
Information reported Tuesday. Ferteco will demand an amount of
US$650 million, excluding a US$130-million debt, while a 50-
percent stake in Caemi will command a price of US$277 million.
Mitsui may also pay a premium of 50 percent increasing Vale's
disbursement. Vale expects to get US$1bil in the sale of its
paper and woodpulp assets.



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M E X I C O
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AEROVOX: First Quarter 01, FY 2000 Results; Net Loss Doubles
------------------------------------------------------------
Aerovox Incorporated (Nasdaq/ NM: ARVX) today reported results
for the first quarter ended March 31, 2001 and the year ended
December 30, 2000.

Results for the Quarter Ended March 31, 2001 (unaudited)

Net sales for the quarter were $28.2 million, $2.0 million less
than the first quarter of 2000, but not unexpected given the
slowness of the telecommunications and internet infrastructure
market segments. Gross margin was 18.1% of net sales, three-
quarters of a point better than was posted for the first quarter
of 2000. As a result, gross profit, at $5.1 million, ran nearly
even with 2000 reflecting improved operating efficiencies and a
lower overhead structure achieved through relocations and plant
consolidations undertaken in 2000.

"Aerovox achieved an improved gross margin compared with the
first quarter of 2000 on sales seven percent below last year,"
said F. Randal Hunt, chief financial officer. "Both of our
Mexican plants are operating more efficiently after the
consolidations than we had budgeted and we have returned to, or
improved upon, the pre-move efficiencies that were a benchmark
for our new manufacturing facility in New Bedford, Massachusetts.
Our U.K. operation continues to carry a strong backlog and is
operating at capacity.

"The challenges we face for the rest of this year are the
significant slowdown in telecom and internet infrastructure
markets and the heavy debt service cost that resulted from our
relocation to our new facility in New Bedford and consolidation
of our Mexican operations," Mr. Hunt added.

Operating expenses, which include research, development, selling,
general and administrative expenses, came in under the 2000
spending level, resulting in earnings before interest and taxes
(EBIT) of $1.2 million or 4.4% of net sales, 16% above the first
quarter of 2000. As a result of increased debt, interest expense
was $0.8 million for the quarter compared with $0.4 million last
year. Income taxes reflect the tax provision for foreign
locations. Net income, at $0.1 million or $0.02 per share-basic,
compares with last year's first quarter of $0.4 million or $0.08
per share-basic.

Results for the Year Ended December 30, 2000

Consolidated net sales for 2000 were $111.7 million versus $110.4
million in 1999, an increase of 1.1%. Net sales for at BHC
Aerovox, the Company's U.K. operation, increased 12.2% to $24.1
million in 2000 from $21.5 million in 1999 due to strong demand
in Europe for DC electrolytic capacitors. Sales of products
manufactured in North America decreased by 1.5% to $87.6 million
in 2000 from $88.9 million in 1999. This is the net effect of a
full year of sales contribution by CGE Aerovox, the Company's
Mexico City operation, offset by continued pricing pressures on
capacitors used in motor applications.

Gross profit on sales decreased to $15.4 million (13.8% of net
sales) in 2000 from $19.8 million (17.9% of net sales) in 1999
due primarily to labor inefficiencies and production line startup
expenses incurred during 2000 totaling approximately $3.7
million. The largest contributor to the high level of expenses
was the EPA-mandated closing of the Company's New Bedford,
Massachusetts, plant and the resulting relocation of its
operations into a new facility, also in New Bedford.
Additionally, the Company consolidated its two plants in Juarez,
Mexico, and moved a major electrolytic capacitor production line
from Juarez to Mexico City, Mexico. Although accomplished with
minimal or no disruption to customers, the relocations had
significant negative impacts on gross profits, operating income
and cash flows in 2000.

In addition to the $3.7 million noted above, the Company incurred
expenses of $1.9 million in 2000 to clean equipment of PCB
contamination in New Bedford and to move physical assets in New
Bedford and Mexico. This amount has been reported in a separate
caption on the earnings statement. In total, the Company recorded
nonrecurring expenses of $5.6 million related to the relocations
and plant consolidations.

Mr. Hunt explained, "We were fortunate to have built sufficient
inventories to ensure a steady flow of goods to our customers,
most of whom were unaffected by our relocation activities.
Inventories peaked at $22.9 million in the third quarter and were
drawn down to $19.0 million by year end and continued declining
over the first quarter of 2001. However, we now face a very
difficult financial picture, including defaults on certain of our
loan agreements, which is thoroughly described in the Company's
Form 10-K filed yesterday."

Selling, general and administrative expenses increased to $14.9
million in 2000 from $14.5 million in 1999 as a result of legal
expenses related to the Company's patent infringement lawsuits.

Interest expense for 2000 of $2.4 million was higher by $0.7
million compared with $1.7 million in 1999 as a result of
increased borrowings and higher interest rates. The provision for
income taxes included net deferred tax liabilities in Mexico and
the U.K. of $1.3 million and current income taxes of $0.3
million.

Net loss for the year was $7.2 million, or $1.33 per share,
compared with a loss of $3.5 million, or $0.64 per share in 1999.

Aerovox manufactures film, paper and aluminum electrolytic
capacitors. The Company sells its products worldwide, principally
to original equipment manufacturers as components in electrical
and electronic equipment. In addition to its plant in New
Bedford, Massachusetts, Aerovox has operations in Huntsville,
Alabama; Juarez and Mexico City, Mexico; and Weymouth, England.


GOODYEAR: Mexican Plant Awaits Permanent Closure
------------------------------------------------
Goodyear's plant in Tultitlan, in central Mexico, faces permanent
closure after management and union representatives failed to
reach an agreement regarding a union plan to keep the company
operating, Infolatina reported Tuesday. Executives of the
tiremaker are pushing for the permanent closure of the plant and
the dismissal of its 1,559-strong workforce, according to Gonzalo
Ugalde, a union representative. Goodyear, which is widely
believed to owe a significant debt with Mexican tax authorities,
decided to close the plant because it was cheaper to import tires
for sale in Mexico than to manufacture them locally.


GRUPO DINA: Workers Agree To 40% Staff Reduction, Work Stoppage
---------------------------------------------------------------
Workers at the debt-laden Mexican truck and bus manufacturer
Consorcio G Grupo Dina have agreed to a 40 percent staff
reduction and a temporary work stoppage that will expire on Oct.
31, 2001, Reuters said in a report Tuesday. The company, in turn,
also agreed to an 8 percent salary increase to avoid a threatened
strike.

Dina has been weighing debt restructuring options after
defaulting in mid-February on a scheduled $6.5 million interest
payment due on its 8 percent convertible subordinated debentures,
which mature in August 2004.

"It's indispensable that the company reduce expenditures and
operating costs to the maximum if it wants to conserve its
financial health and have the chance to move beyond this
difficult moment," General Director Gamaliel Garcia said.

The Mexican Securities and Exchange Commission suspended trading
of the company's securities in Mexico while the New York Stock
Exchange suspended trading of its American Depository Receipts.


MOTOROLA: UBS Warburg Says Company Not Facing Liquidity Crisis
--------------------------------------------------------------
Although the current challenging operating environment and the
high probability that its credit ratings will be downgraded near
term will limit Motorola's short-term financial flexibility,
Motorola Inc. is not facing a debt or liquidity crisis, according
to a UBS Warburg analyst in an AFX-UK report Tuesday issue.

"While we do not anticipate material upside for the stock until
the second half of 2001, we see limited downside risk," analyst
Jeffrey Schlesinger said after hosting a conference call with the
company.

Schlesinger reiterated a 'buy' rating and price target of US$21.
UBS Warburg predicts Motorola to have over US$1.5 billion in cash
even after paying off all its outstanding commercial paper, which
stood at US$3.1 billion on April 6. In addition to that, UBS
Warburg anticipates that the company will have a positive
operating cash flow by the fourth quarter, barring a further
deterioration of global end-user demand.


TELEVISA: To Close Down Subsidiary Before June
----------------------------------------------
Mexican media giant Grupo Televisa plans to shut down its
subsidiary Empresa de Comunicaiones Orbitales (ECO) before June,
Reforma/Infolatina said Tuesday. The move is part of a cost
cutting measure that the company will be implementing to shave
some $50 million in costs this year to offset lower advertising
sales resulting from a slower economy in the United States. The
company's board of directors expects that the company will save
about 25 million dollars per year with the closure of the ECO
pay-TV news channel.

ECO is a television news production company originally founded by
Televisa news anchorman Jacobo Zabludovsky. Many of ECO's
employees will be relocated to other areas of Televisa news
production but some will lose their jobs.


TMM: Clarifies $35 Million Securitization of Receivables
--------------------------------------------------------
Grupo Transportacion Maritima Mexicana, S.A. de C.V. (NYSE: TMM,
TMM/A), the largest Latin American multi- modal transportation
and logistics company and owner of the controlling interest in
Mexico's busiest railway, TFM, elaborated on its previously
announced securitization package. This program refers to ongoing
receivables from long-standing TMM customers, and is expected to
be closed and funded next week.

As discussed in the company's fourth quarter earnings release,
TMM has received commitments from a group of banks jointly led by
JP Morgan Chase and Banc of America Securities for a $35 million
securitization of receivables that will enable the company to
reduce debt cost and have access to significant amounts of
working capital as it continues to fund an increasing percentage
of its working capital with cash from ongoing operations.

The company emphasized that the securitization transaction is a
sale of present and future receivables and that JP Morgan Chase
and Banc of America Securities are the joint lead arrangers for
the transaction. Finally, a second tranche of approximately $25
million will be securitized by the two lead arrangers on a best
effort basis.



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P A R A G U A Y
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ANTELCO: Conatel Director Recommends Prompt Privatization
---------------------------------------------------------
Victor Bogado, director of telecom regulator Conatel, suggested
that Paraguay must privatize state-run telecom operator Antelco
immediately or it could face being left behind the rest of the
world, Business News Americas reported Tuesday.

"There is still time to turn the company around and to do that we
need everyone's help. The government, private investors and
(Antelco) employees have to reach an agreement," Bogado said,
adding that the uncertainty surrounding Antelco's fate has caused
legal problems for Conatel.

"We have to open the market as soon as possible in order to
comply with the Telecommunications Law that prohibits monopolies.
In other words, we have to license a mirror operator," Bogado
related.

Meanwhile, Paraguay's National Reform Secretariat (SNRE), which
is responsible for organizing the privatization of state assets,
is currently selecting an international investment bank to find a
buyer for the ailing telco. The first attempt to contract an
investment bank was abandoned in February after the auction
winner, Morgan Stanley Dean Witter, backed out.




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

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