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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, May 7, 2001, Vol. 2, Issue 89

                           Headlines



A R G E N T I N A

AEROLINEAS ARGENTINAS: Staff End Strike; Heed Government Demand
EDENOR: EDF Becomes New Majority Shareholder
VAUQUITA: Owners Look To Sell Company Or Brand


B R A Z I L

BANESPA: To Hold Online Auction For US$20M Of IT Equipment
CESP: Only Four Firms Submitted Qualifying Documents For Auction
CESP: Government To Pay $500M Worth Of Debts On May 10
VESPER: Ends 2000 With R$415.15M In Losses


C H I L E

TELEFONICA CTC: Reports $24M Losses In 1Q01


M E X I C O

GRUPO DINA: To Meet With Bondholders To Review Financial Audit
SAVIA: Strikes Preliminary Agreement With Creditors Over Plan


V E N E Z U E L A

EDC: Reports First Quarter Earnings
SIVENSA: Registers US$25.9M Net Loss For Second Fiscal Quarter
SIVENSA: Banks Demand Accelerated Payment From Orinoco Iron Plant


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A R G E N T I N A
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AEROLINEAS ARGENTINAS: Staff End Strike; Heed Government Demand
---------------------------------------------------------------
Aerolineas Argentinas technical staff has accepted a government
demand to heed a 10-day reconciliation period in the airline's
dispute with parent Sociedad Estatal de Participaciones
Industriales SA (SEPI), thus ending their nine-day strike, AFX-
Europe reported Thursday. According to Union leader Rodolfo
Cirielli, the decision was reached because the conciliation
process incorporates the rehiring of about 500 technicians that
have been made redundant in recent days.

Meanwhile, SEPI refuses to comment on the decision.

"We have no comment to make on the news of Aerolineas' technical
staff's decision. If there is any at a later stage, a statement
will be issued," a SEPI spokesman said.

Aerolineas Argentinas is 85 pct-owned by the holding Interinvest,
in which SEPI holds an indirect stake.


EDENOR: EDF Becomes New Majority Shareholder
--------------------------------------------
EDF (Electricite de France) has become the primary shareholder of
Edenor with 81 percent of its capital after it completed the
acquisition of Edenor's Class A And Class B shares, South
American Business Information said Thursday. The shares, which
were estimated to be worth around US$720 million, were owned by
Endesa and Repsol. As a result, Endesa fulfils the resolution of
ENRE (Ente Regulador Electrico) and the request of the
Secretariat of Defense of the Competition to sell its share in
one of the two electricity distribution companies which supply
the Capital Buenos Aires and Greater Buenos Aires.

Now, the share package of Edenor is distributed as follows:

* Electricite de France - 81 percent
* French company Saur - 9 percent
* Employees of the company - 10 percent


VAUQUITA: Owners Look To Sell Company Or Brand
----------------------------------------------
After calling in the receivers in March, the owners of Vauquita,
the candy manufacturer of Buenos Aires province, are looking to
sell the company or the brand, according to a South American
Business Information report Thursday edition. Among the companies
who are interested in the firm are Cadbury, Arcor, Georgalos and
The Exxel Group. Vauquita believes that the company's brand is
valued at between US$3-5 million, while its debts amount to
US$3.4 million.

Vauquita, which is equally-owned by Miguel Angel Mattera and
Ricardo Miyazono, also produces cheese. Revenues of US$2.3
million last year represented a 32 percent decrease from 1999.



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B R A Z I L
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BANESPA: To Hold Online Auction For US$20M Of IT Equipment
----------------------------------------------------------
Banespa, the Sao Paulo state bank, is expected to launch its
first reverse auction for the acquisition of US$20 million in
equipment for the modernization of its technology platform, South
American Business Information said Friday. Banespa is controlled
by Spain's banking giant Banco Santander Central Hispano (BSCH),
which holds about 95 percent of the Brazilian institution.
According to Procura Digital, the technological arm of BSCH,
online tenders allow for savings of up to 11 percent off market
prices.

"Savings are significant," said Procura Digital's Walther
Gon‡alves.

Banespa plans to replace the entire information technology (IT)
infrastructure at its 535 branches over the next five years.

"It's quite a challenge to replace all your equipment in such a
short period of time," said Gon‡alves.

Companies competing for the contract include NEC, Alcatel,
Philips, HP, IBM, Lexmark, Nortel and Cisco.


CESP: Only Four Firms Submitted Qualifying Documents For Auction
----------------------------------------------------------------
Electricite de France SA, AES Corp. of the U.S., Electricidade de
Portugal SA and Duke Energy Corp. were the four utilities that
delivered documents on May 3 in order to qualify to bid in the
May 16 sale for control of Cia. Energetica de Sao Paulo (Cesp),
Bloomberg reported Thursday. Contrary to plans revealed earlier,
VBC Energia SA, a Brazilian holding company for power utilities,
will not participate in the bid for Cesp's control.

The number of companies actually planning to qualify for the sale
is expected to be smaller than the state's initial forecast of as
many as nine. Sao Paulo state plans to sell a 38.7 percent stake
in the utility for at a minimum price of 1.74 billion reais ($781
million). According to analysts, interest for Cesp has diminished
because a weakening real will increase financial expenses at the
heavily-indebted Cesp, which has about 85 percent of its 5.6
billion reais in debt denominated in dollars.

"We are living a moment of uncertainty that could lead to a
falling real," said Mario Palhares, a power utility analyst at
Rio de Janeiro-based BES Securities. "Suppose the real falls to
2.4 reais, it may hurt the returns on your investment."

Cesp has a power generation capacity of 7,730 megawatts,
accounting for more than a half of Sao Paulo state's total
electricity production. Cesp provides over a third of the energy
consumed in Sao Paulo state.


CESP: Government To Pay $500M Worth Of Debts On May 10
------------------------------------------------------
Earlier Thursday, Guilherme Toledo, president of power generator
Cia. Energ‚tica de Sao Paulo (Cesp), announced that the Sao Paulo
state government is expected to settle the company's debts of
$500 million on May 10, just days before the company will hit the
auction block, reported Brazil Financial Wire. Cesp is scheduled
to hit the auction block on May 16. However, one obstacle to its
privatization is the announcement by Cemig that it intends to
take part in the auction. Cemig is the Minas Gerais state-run
power company. Toledo said that a 1996 state law forbids
government-run companies to bid in privatization auctions.
However, Itamar Franco, Minas Gerais governor, claims the 1996
law is unconstitutional. He also added that foreign groups are
welcome at such auctions.


VESPER: Ends 2000 With R$415.15M In Losses
------------------------------------------
Brazilian WLL fixed telephone services company Vesper ended 2000
with a loss of R$415.148 million, South American Business
Information reported Thursday. The company registered a net
income of R$66.715 million, however the costs of the services
provided overcame its turnover amounting to R$260.220 million.
Vesper, the telecoms carrier controlled by Bell Canada
International (BCI - 34.4 percent), VeleCom (49.4 percent) and
Qualcomm (16.2 percent), reported a negative gross result of
R$193.505 million. Meanwhile, operating expenses amounted to
R$221.643 million. Vesper's net worth fell to R$78.789 million
from R$117.695 million in 1999.

BCI was planning to divest its participation in the telecom
carrier, as it intends to focus on cellular mobile communications
through Telecom Americas. However, the negotiations with Velecom
and Qualcomm regarding BCI's US$875 million stake were put off.



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

TELEFONICA CTC: Reports $24M Losses In 1Q01
-------------------------------------------
Telefonica CTC Chile posted a loss equivalent to $24 million
dollars in the first quarter of this year, as compared to the $17
million profit it posted in the period a year ago, EFE said
Wednesday. The results were mainly due to the decree regulating
industry rates, the company said, adding that it could be partly
due to stiff competition in the cellular telephone market and to
the negative impact of the rate regulating decree, enforced since
1999.

Telefonica CTC revealed that the greatest losses were in cellular
telephone services ($18 million) and conventional telephones
($17.8 million). Operating results were off by 49.6 percent in
the first quarter of the year as compared to the same period of
2000. The company has been posting poor results in the last two
years.



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


GRUPO DINA: To Meet With Bondholders To Review Financial Audit
--------------------------------------------------------------
Cash-starved Mexican heavy-vehicle maker Dina is scheduled to
meet with bondholders at the end of June to review a financial
audit of the company, Reforma/Infolatina reported Thursday. The
due diligence audit, which is currently being conducted by a New
York-based firm, was ordered by bondholders following Dina's
default on a $6.5 million interest payment. At the meeting, the
financial statements previously presented to bondholders by Dina
management will be compared with the results of the audit. Dina
is reportedly looking to buy back the bonds at a discount.


SAVIA: Strikes Preliminary Agreement With Creditors Over Plan
--------------------------------------------------------------
Mexican agro-biotechnology company Savia, a subsidiary of
Monterrey-based conglomerate Grupo Pulsar, said it had reached
agreement in principle with its creditors on a debt-restructuring
plan, Reforma/Infolatina reported Thursday. According to the
company, details of the plan will not be released immediately but
it expects to wrap everything up in a definitive agreement during
May. On April 24, Savia revealed it was in talks with creditors
due to a "temporary" liquidity problem, which was caused by an
over-investment in subsidiary Seminis, a variety of adverse
market conditions, and climatological factors.

Savia reported a first-quarter net loss of 148.8 million pesos,
6.8 percent less than its net loss of 158.9 million pesos in the
year-ago period.

First-quarter operating profit, however, was 750.4 million pesos,
up 399.5 percent from the year ago period. Sales for the quarter
totaled 8.0 billion pesos, down 1.6 percent from the year-ago
period.

Integrated financial costs during the first quarter were 199.4
million pesos, as against negative costs of 54.1 million pesos in
the year-ago period.



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

EDC: Reports First Quarter Earnings
-----------------------------------
CA Electricidad de Caracas (EDC) posted earnings of 17.5 billion
bolivars ($24.6 million) in the first quarter, or 5.60 bolivars a
share, more than doubling the gain of 7.8 billion bolivars, or
2.51 bolivars a share during the first quarter of 2000, Bloomberg
related. EDC attributed the results to lower costs. The company
said it cut operational costs to 100 billion bolivars from 115
billion bolivars. Administrative costs fell 22 percent as the
company offered severance payments to workers, almost half of
whom accepted early retirement or quit last year.

EDC was taken over by AES Corp., the U.S.' largest power plant
developer, in June in a $1.6 billion hostile takeover.


SIVENSA: Registers US$25.9M Net Loss For Second Fiscal Quarter
--------------------------------------------------------------
Caracas-based iron and steel group Sivensa announced an 11-
percent increase in its net loss to US$25.9 million, for the
second fiscal quarter ending March, versus the same-period last
year, Business News Americas reported Thursday. However, its
operating loss fell 77.5-percent reduction to US$1.8 million,
compared to the same-quarter in 2000. The company attributed this
reduction to the US$7 million profit by steel division Sidetur
and the US$3 million gain by wire division Vicson. Those gains
were offset by a US$5.7 million operating loss from pre-reduced
iron division IBH and a loss from auto division Danaven.

Danaven's sales fell 3 percent to US$45 million, due to reduced
exports as a result of the slump in the US economy. Domestic
sales, in commercial vehicles produced and auto parts sold,
increased 23.4 percent and 26 percent respectively.

Investigations into accounting inconsistencies discovered in
December continue, with a report expected "shortly." Talks to
restructure the group's debt are underway. Proposals include
selling some Danaven subsidiaries in Colombia.


SIVENSA: Banks Demand Accelerated Payment From Orinoco Iron Plant
-----------------------------------------------------------------
Caracas-based iron and steel group Sivensa, which co-owns
Venezuela's troubled Orinoco Iron hot-briquette iron plant,
announced that banks have called for an acceleration of repayment
on the US$623 million owed by the plant, Business News Americas
reported Thursday. According to Sivensa, the lenders are making a
demand on Orinoco's guarantors, however, they are willing to
negotiate a possible loan restructuring and are allowing it to
receive funds for continued operations.

"Discussions with the lenders and other interested parties are
continuing, but no assurance can be given as to whether and, if
so when, an agreement on the restructuring of the Orinoco Iron
loans will be reached, or as to the terms or impact of any such
agreement," a Sivensa statement said.

One possibility put forward in Venezuela is support from state
heavy-industry holding company CVG, which supplies Orinoco iron
ore through its CVG-Ferrominera division and power via its hydro-
electric company Edelca.




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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