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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

            Monday, April 23, 2001, Vol. 2, Issue 79

                           Headlines



A R G E N T I N A

AEROLINEAS ARGENTINAS: SEPI Reaffirms Plan To Axe Jobs
BANCO DE CORDOBA: Privatization Could Be Cancelled


C H I L E

STARMEDIA: Restructures Operations At Chilean Subsidiary


C O L O M B I A

AVIANCA: Merger With Aces Postponed Until June


M E X I C O

ALO.COM: Bank Of America To Acquire 30-Percent In Holding Company
CINTRA: Congress Passes Amendment To Prevent Breakup
CINTRA: IPAB Believes Now Is The Right Time For Cintra Sale
EMPAQUES PONDEROSA: Sells 3 Subsidiaries To Fellow Mexican Firm
GOODYEAR: Management, Union Representatives Meet To Rescue Plant
GRUPO TMM: Plans to Webcast 1Q01 Earnings Conference Call
MATTEL: 1Q01 Results - Sales Up But Takes Derivative Losses
QUEPASA.COM: Announces Agreement in Principal for Merger
TELEVISA: Union Leader Confirms Staff Cuts, TV Channel Closure
TV ANDINA: Meeting Leaves Telecom To Decide On Future
XEROX: First Quarter Earnings - Loss Exceeds Expectations


P A R A G U A Y

ANTELCO: Government Wants Privatization Completed By December


V E N E Z U E L A

ING BANK: To Close One Of Venezuelan Business Areas


    - - - - - - - - - - -

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A R G E N T I N A
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AEROLINEAS ARGENTINAS: SEPI Reaffirms Plan To Axe Jobs
-------------------------------------------------------
Spanish state industrial holding company Sociedad Estatal de
Participaciones Industriales (SEPI) reaffirmed plans to eliminate
1,200 jobs at Aerolineas Argentinas. The move would discard
existing union claims that such a plan would harm operations at
the already ailing airline, according to an AFX-Europe report
Thursday. SEPI's decision came after a collapse in the obligatory
government-sponsored conciliation talks between it and the unions
representing cabin staff and ground crews. Sources close to SEPI
revealed that the holding company is determined to implement the
job cuts and change collective employment contracts as a first
stage in its recovery program for the airline, regardless of
union approval for the measures.


BANCO DE CORDOBA: Privatization Could Be Cancelled
--------------------------------------------------
Cordoba Provincial Governor Jose Manuel De la Sota said that
local government would have to assume the debts of Banco de
Cordoba, standing at US$1 billion minimum, in order to clean up
the bank's balance sheet, Business News Americas said Thursday.
As a result, the bank's privatization could be called off.

"It's a big problem and we are looking at what to do," De la Sota
said. "I would like to have a good bank, but we cannot continue
to inject money into a bottomless pit," he added. De la Sota has
not yet scheduled a date for the privatization of the bank
because of its delicate financial situation. The World Bank has
already approved the sale of 87 percent of the bank to the
private sector and 12 percent to the employees, with the
provincial government retaining a so-called "golden" share.

Banco de Cordoba is the largest retail bank and has a strong
brand name in the economically important province. Under the
privatization scenario, the winning bidder for the bank would
receive an exclusive contract to handle the provincial
government's accounts for a fixed number of years.



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C H I L E
=========

STARMEDIA: Restructures Operations At Chilean Subsidiary
--------------------------------------------------------
New York-based access and content provider Starmedia, which
reported a 2000 net loss of US$205 million on US$61 million
revenues, announced it has restructured its Chilean operations,
Business News Americas reported Thursday. The move, which
entailed the dismissal of an undisclosed number of workers, is
part of a cost-cutting strategy launched in September 2000 to
bring the company to breakeven in 4Q01. CEO and Chairman Fernando
Espuelas referred to the restructuring maneuvers as a "normal
course of business." He shunned rumors that the company's Chilean
branch would meet the same fate as the Chilean subsidiary of its
Brazilian rival UOL, which was completely shut down last year.

"That's completely ludicrous. We're confident that Chile along
with the rest of our local operations will be breakeven by the
end of this year and profitable next year," said Espuelas.

"We have a real business in Chile with a real audience base,
something that UOL, because it came so late to the market, could
never achieve. We have a sizeable operation, which I believe is
bigger than UOL's was at its peak. We're committed to Spanish-
language Internet. We're not a Brazil-owned company like UOL, so
we have a different business model," he commented, referring to
UOL's model, which was born in Brazil and then replicated
throughout the region, while Starmedia initiated operations with
a regional focus.

With regard to future restructuring plans, Espuelas stressed "I
know that the climate is such that people are sensitive to it,
but we have to run the company for long-term success so we're
constantly analyzing how to do things better. The moment we
assume we've reached some level of perfection, I think that's the
first step towards losing that market."  



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C O L O M B I A
===============

AVIANCA: Merger With Aces Postponed Until June
----------------------------------------------
According to a government official in a Reuters report released
Thursday, the merger of Colombia's two largest airlines, Aces and
Avianca, will take at least until June while authorities study
documentation. This recent announcement contradicts a statement
made by Aces President Juan Emilio Posada in early March that the
merger of Colombia's two largest airlines would be ready by April
19. According to reports, an official at the Industry and Trade
Superintendency had requested additional documentation to study
the deal, thus causing the postponement.

"We asked for more documents to carry out the appropriate study.
The companies have two months as of March 30 to deliver them,"
said the official, who asked not to be named. Once it has
received the documents, the Superintendency will have 30 working
days to approve or reject the merger.

In recent years, the two airlines have struggled to remain
profitable in the face of increasing competition by international
airlines prompted by deregulation policies in the mid-1990s.



===========
M E X I C O
===========

ALO.COM: Bank Of America To Acquire 30-Percent In Holding Company
-----------------------------------------------------------------
Bank of America is to acquire a 30-percent stake in Alo.com
holding company Novamedia Holdings, according to a report in
Reforma/Infolatina published Thursday. Terms for the acquisition
were not revealed in the report. Alo.com is widely believed to be
facing financial difficulties. Just recently, it implemented
staff reductions, and is reportedly seeking to divest two of its
subsidiaries, according to Alo.com top executive Guillermo Canedo
White. One of the companies is La Factoria, an Internet
advertising agency, and the other one, so far unnamed, is a firm
that provides integrated Internet services to corporations.


CINTRA: Congress Passes Amendment To Prevent Breakup
----------------------------------------------------
The opposition-controlled Mexican Congress apparently doesn't
find it favorable to sell the assets of government-owned airline
holding company Cintra separately as recommended last year by the
country's antitrust agency, the Federal Competition Commission
(CFC). According to a Reforma/Infolatina report, the Congress on
Thursday was set to pass an amendment to the federal Economic
Competition Act, which could likely force President Vicente Fox's
administration to sell the company's assets as a single package.
The amendment, which declares commercial aviation an area of
"national priority" and, as such, not subject to normal antitrust
regulations, is widely believed to have the support of all
opposition parties in the Congress.

Cintra was established in the mid-1990s by the government to save
Mexico's airlines from the brink of bankruptcy. It currently
corners more than 70 percent of the country's air transport
market.


CINTRA: IPAB Believes Now Is The Right Time For Cintra Sale
-----------------------------------------------------------
In stark contrast to the Federal Competition Commission, Mexican
banking institute IPAB believes that now is a good time to put
government-owned airline holding company Cintra on the auction
block. Citing a 15 percent growth in the aviation sector, IPAB
believes timing could be ideal a South American Business
Information said Thursday. Chairman of the chamber of deputies'
communications commission Jesus Orozco Alfaro is optimistic that
the sale process, which should kick off in June, will attract
Mexican private capital. However, he would like to see government
intervention over tariffs since revenue fell 0.5 percent in 2000
(per production unit). Growth has rather been measured observing
the opening of new routes such as Aeromexico's daily flights from
New York to Monterrey and Guadalajara and its deals with Delta
(over Atlanta-Cozumel services), Taca Peru, Aerolineas Argentinas
and United Airlines (code-sharing to the US) plus internal
shuttle flights.


EMPAQUES PONDEROSA: Sells 3 Subsidiaries To Fellow Mexican Firm
----------------------------------------------------------------
Mexican packaging firm Empaques Ponderosa, which is owned by
Monterrey-based Grupo Pulsar, sold three of its subsidiaries to
fellow Mexican firm OEM in a transaction valued at $285 million,
Reforma/Infolatina reported Thursday. Accordingly, the companies
sold are Cartones Ponderosa, Ecofibras Ponderosa and Ponderfibers
Corporation. Reports suggest that $151 million generated from the
sale will be used to liquidate Empaques Ponderosa liabilities,
while the remaining balance will be used to reduce debts of
Pulsar agro-biotechnology subsidiary Sabia, which amount to $894
million.  Apparently some of Pulsar's creditors are dubious about
the group's capacity to meet its debt obligations.


GOODYEAR: Management, Union Representatives Meet To Rescue Plant
----------------------------------------------------------------
Management and union representatives at tiremaker Goodyear were
scheduled to meet on Thursday in a last-ditch attempt to close a
deal aimed at rescuing an ailing plant according to an Infolatina
report. The closure of the plant sited in Tutitlan, Mexico, would
result to a loss of 1,559 jobs. Employees at the said plant have
threatened to lodge a strike on April 26 unless an agreement is
reached. According to union leader Gonzalo Ugalde, the chances
ofreaching an agreement were slim, as management hasn't been able
to structure any concrete proposals yet.

The company, which is rumored to be in debt with the Mexican
treasury, said it could no longer compete with lower-priced
imported tires. It will continue to sell tires in Mexico, but
they will have to be imported from countries where production
costs are lower.


GRUPO TMM: Plans to Webcast 1Q01 Earnings Conference Call
----------------------------------------------------------
Grupo Transportacion Maritima Mexicana, S.A. de C.V. (NYSE: TMM
and TMM/A), the largest Latin American multi-modal transportation
and logistics company and owner of the controlling interest in
Mexico's busiest railway, TFM, today announced it plans to
conduct a conference call following the release of financial
results for the first quarter ended March 31, 2001. The company
will release earnings after the market closes on Monday, April
30, 2001. Javier Segovia, Grupo TMM's president, and Mario Mohar,
TFM's president, will host a conference call and analyst
presentation on Wednesday, May 2 at 11:00 a.m. Eastern Daylight
Time. The delay between the release of earnings and the
conference call is due to fact that the Bolsa Exchange is closed
for the May Day holiday on Tuesday, May 1.


MATTEL: 1Q01 Results - Sales Up But Takes Derivative Losses
------------------------------------------------------------
Mattel, Inc. (NYSE: MAT) today reported a 2001 first quarter loss
from continuing operations (excluding one-time charges) of $12.1
million, or $.03 per share, versus a loss of $6.2 million, or
$.01 per share, in the 2000 first quarter. Net sales from
continuing operations were $731.9 million, a 6 percent increase,
or 8 percent in local currency, from $693.3 million in last
year's first quarter. Operating income was up 15 percent at $18.2
million.

"Coming off a very successful fourth quarter, we have remained
focused on our strategies and this effort is reflected in
continued strong operating results for the first quarter," said
Robert A. Eckert, chairman and chief executive officer of Mattel.
"I am also encouraged by our growth in international markets,
improved margins and continued execution of the financial
realignment program."

On a regional basis, sales from continuing operations increased 5
percent in the U.S., and were up 7 percent in international
markets, or up 13 percent in local currency.

Girls

To better align the financial reporting structure with the
current business organization, reporting for the Girls division
will now include Pleasant Company sales. The Girls division,
which includes the Barbie(R), Diva Starz(TM) and American Girl(R)
brands, achieved worldwide gross sales of $338.0 million for the
quarter, an increase of 7 percent. (Excluding Pleasant Company,
the Girls Division achieved sales growth of 5.5 percent.)

Worldwide Barbie sales were flat, or up 2 percent in local
currency. Consumer demand for the brand continues to be strong as
evidenced by healthy growth in over-the-counter sales. U.S.
shipments to customers, however, declined in the quarter due to
changes in retailer buying patterns. This was offset by strong
international Barbie sales. Diva Starz and Polly Pocket(R) also
performed well in the quarter, as did Pleasant Company, with
sales advancing 14 percent.

Infant and Preschool

Continuing on the momentum from the fourth quarter, core Fisher-
Price(R) brands continue to be strong with worldwide sales up 8
percent. Worldwide gross sales for the Infant and Preschool
division, which includes the Fisher- Price, Sesame Street(R) and
Disney(R) character brands, were $243.1 million, or flat for the
quarter, due to weaknesses in licensed character brands sales.

Boys-Entertainment

The Boys-Entertainment division, which consists of the Wheels and
Entertainment categories, achieved worldwide sales of $195.5
million, a 9 percent increase. Led by double-digit growth in both
Hot Wheels(R) and Tyco R/C(R), the Wheels category experienced
growth of 15 percent, while the Entertainment category decreased
by 2 percent.

Financial Realignment Plan

Mattel recorded one-time charges of $7.0 million in the quarter
as part of the $250 million financial realignment plan. These
charges are included in Cost of Sales ($6.6 million), Advertising
($0.3 million), and Selling and Administrative Expenses ($0.1
million) in the consolidated statement of operations. Since the
announcement of the plan in September 2000, Mattel has recorded
$132.2 million in pre-tax charges. The company is on target to
deliver cumulative cost savings of approximately $200 million
over the next three years.

Adoption of Financial Accounting Standard 133

Effective January 1, 2001, Mattel adopted Statement of Financial
Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities." As a result of the adoption
of this statement, Mattel recorded a one-time transition
adjustment of $12.0 million, net of tax, in the consolidated
statement of operations for the quarter, consistent with the
amount disclosed in the SEC Form 10-K for 2000. Additionally, a
$5.5 million pre-tax loss on derivative instruments was recorded
in Other Expense related to the decline in fair value of the
instruments during the quarter.


QUEPASA.COM: Announces Agreement in Principal for Merger
--------------------------------------------------------
Financially troubled quepasa.com, inc. (OTC: PASA.OB) today
announced that it is in final stages of negotiating a merger
transaction with a privately held real estate development
organization that would result in quepasa's shareholders owning
less than 50% of the surviving company. A definitive agreement is
expected to be signed within the second quarter of 2001 upon
completion of audited financial statements of the potential
merger partner. The transaction would be subject to approval by
quepasa's shareholders and would be expected to close in the
second half of 2001.

quepasa also announced that the filing of its 2000 annual report
with the Securities and Exchange Commission would be delayed for
several weeks in order to respond to comments received from the
Commission on its 1999 annual report. The comments, received in
the first quarter of 2001, relate to the accounting treatment and
valuation of certain non-cash items in the 1999 audited financial
statements and do not affect the revenues or cash and investment
balances reported for 1999. quepasa's aggregate cash, cash
equivalents and trading securities were $29.3 million at December
31, 1999, $6.3 million at December 31, 2000 and $6.4 million at
March 31, 2001. Net revenue was $0.6 million for 1999 and $3.5
million for 2000.

quepasa has continued to reduce its expenses and sell assets in
order to conserve its cash while seeking strategic alternatives.
In the first quarter of 2001, the Company terminated most of its
strategic relationships with third party content and service
providers. The Company's workforce will be reduced to three full
time employees and several contract employees at the end of April
2001. In the first quarter of 2001, quepasa sold substantially
all of its office furniture, computer inventory and equipment for
$1.25 million. Also in the first quarter of 2001, the operation
of the quepasa.com and RealEstateEspanol.com web sites was
outsourced and the operation of the eTrato.com and credito.com
web sites were suspended.

quepasa also announced that the Company's Board of Directors had
appointed Michael Weck to the Board in March 2001. Mr. Weck is a
partner and principal owner of the investment banking and
brokerage firm of Richmond-Hillcrest & Co., Inc. in Phoenix. He
has worked in the securities and investment banking industry for
eight years. Mr. Weck filled a vacancy in the Board created by
the resignation of Alan Sokol, Chief Operating Officer of
Telemundo Network Group LLC, in January 2001.

Quepasa had been seeking a buyer since May. Finding none, it
announced in December that it planned to liquidate the business.


TELEVISA: Union Leader Confirms Staff Cuts, TV Channel Closure
--------------------------------------------------------------
Union Sitatyr revealed that Mexican media giant Grupo Televisa
will fire 224 workers and offer voluntary redundancy packages to
another 100 of its employees on April 30, reported
Reforma/Infolatina Thursday. However, there's still no formal
word coming from the company regarding the staff cuts. The move
to reduce staff is due to a slump in US economic activity, which
had impacted the company's earnings, according to Patricio
Flores, Sitatyr leader. Flores confirmed the closure of
Televisa's 24-hour news channel and news production company ECO.
According to him, ECO had been determined to be one of the least-
profitable areas in Televisa's entire range of businesses.


TV ANDINA: Meeting Leaves Telecom To Decide On Future
-----------------------------------------------------
A meeting held Thursday among the board of the national TV
commission (CNTV), the Communications Minister Maria del Rosario
Sintes and Telecom Chairman, Gabriel Mesa, left the executive
board of Telecom to decide whether to inject into TV Andina some
fresh capital worth Pesos$600mil, South American Business
Information said in a report. Telecom is the leading shareholder
of TV Andina, Colombia's leading regional TV channel. TV Andina
will most likely face liquidation if Telecom refuses to back it
financially, as it is widely believed to be in need of a capital
injection worth P$1.2bil. Initially, Telecom said it would not
finance the firm but has recently said it would cover debts as
long as the short-term self-sufficient future of the channel can
be assured.

Meanwhile, the CNTV is to look into a new business plan for the
channel presented by TV Andina that could see CNTV pay TV Andina
out of the Public TV Development Fund it administers.


XEROX: First Quarter Earnings - Loss Exceeds Expectations
---------------------------------------------------------
Xerox Corporation (NYSE:XRX) today announced a first quarter
operations loss of 12 cents per share, better than expectations.
Including gains from asset sales and net restructuring charges,
the company reported earnings of 19 cents per share. "Xerox's
performance in the first quarter is evidence of significant cash
and operational improvements as well as the effectiveness of our
turnaround strategy," said Paul A. Allaire, Xerox chairman and
chief executive officer. "Xerox people delivered on a commitment
to improve results by winning customers' confidence and
aggressively reducing costs. We are executing a successful
turnaround that we expect will return Xerox to profitability this
year." "Several of the issues negatively affecting performance in
2000 improved in the first quarter, including a strengthened
North American sales force that captured significant customer
wins and delivered profitable results," said Anne M. Mulcahy,
president and chief operating officer. "Driven by revenue growth
in North America and a stabilization in Europe, our first quarter
results provide a solid foundation for Xerox's turnaround." First
quarter revenue was $4.2 billion, 8 percent lower than the first
quarter of 2000. Pre-currency revenue declined 6 percent,
significantly improving from a double- digit decline in the
fourth quarter. Modest North American revenue growth was offset
by a slight decline in Europe and a 20 percent decline in
developing markets as the company reconfigures its operations in
Latin America to prioritize cash and profitability. Gross margins
in the first quarter stabilized from fourth quarter 2000 despite
adverse performance in developing markets. Black-and-white
production revenues improved from recent trends. Color revenue in
the first quarter grew 16 percent led by continued strong
placements of the DocuColor 12 and 2000 families and Phaser color
printers. Recurring document outsourcing revenues were up 18
percent in the first quarter, reflecting continued growth and
solidifying the company's leadership position in the document
services market. Xerox also reported progress in reducing its
overall cost base. "With selling, general and administrative
expenses down 5 percent and an unprecedented first quarter
reduction in excess of $100 million in inventory, we are clearly
benefiting from the aggressive attack on our cost base and focus
on operational improvements," said Mulcahy. "We are ahead of
schedule in implementing our cost-reduction plans and have taken
actions that account for substantially more than half of our $1
billion year-end target, including the reduction of 4,300 jobs
worldwide in the first quarter." Research and development
spending remained stable from the first quarter of 2000 as Xerox
continued to invest in advanced product technologies and
innovative document solutions. The company also recorded unhedged
currency gains of 5 cents per share. Xerox noted progress on all
elements of its turnaround program, citing the recent $1.3
billion cash sale of half its stake in Fuji Xerox to Fuji Photo
Film and the agreement with Resonia Leasing AB to provide
equipment financing for Xerox's Nordic customers. Xerox is also
selling its Nordic lease receivables to Resonia for approximately
$370 million. As reported, after receiving $285 million from
Resonia, the company's worldwide cash balance was $3.1 billion,
up from $1.7 billion from year-end 2000. Xerox today also filed a
form 8-K with the Securities and Exchange Commission containing
unaudited 2000 basic financial statements and other company
information. Looking forward, Allaire commented that the company
expects an operations loss in the second quarter in line with
first-quarter results. "Our expectation is to return Xerox to
profitability in the second half and for the full year," said
Allaire.



===============
P A R A G U A Y
===============

ANTELCO: Government Wants Privatization Completed By December
-------------------------------------------------------------
National Reform Secretariat (SNRE) director Juan Ernesto
Villamayor announced that the Paraguayan government plans to have
the privatization of telecoms operator Antelco concluded by the
end of the year, Business News Americas said in a report
Thursday. The sale of the telecoms to a private investor was
originally scheduled to take place not later than September 28,
but the sale date was subsequently postponed to the end of
November due to the delays in the selection of an international
investment bank to handle the sale. Funds obtained from the sale
will be used to reduce government deficit.

The SNRE - the government agency responsible for organizing the
sale of state assets - is currently selecting an international
investment bank to organize the sale of Antelco. The first
attempt to contract an investment bank was abandoned in February
after the auction winner, Morgan Stanley Dean Witter, backed out.



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

ING BANK: To Close One Of Venezuelan Business Areas
---------------------------------------------------
Following the recent resignation of three employees in one of its
commercial transaction offices in Venezuela, ING Bank of the ING
Group of Germany has decided to shut it down. The parent company
says it will focus more on corporate finances and assessment
services, according to a South American Business Information
Thursday issue. Three employees in the Venezuelan business have
reportedly given up positions they held which included
negotiating bonds and buying and selling dollars. Also
contributing to the company's decision is the poor economic
performance in the country. ING Group announced that it was
cutting 1,000 jobs worldwide, 300 in Latin America, at the start
of this year.




S U B S C R I P T I O N   I N F O R M A T I O N

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