TCRLA_Public/010522.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, May 22, 2001, Vol. 2, Issue 100



AEROLINEAS ARGENTINAS: Gov. Makes Final Move To Resolve Dispute
COMACSA: Closes Doors Leaving 290 Employees Out Of Work
LAPA: Files For Protection From Creditors
MOLINOS: Deep Restructuring Yields Positive Results
MUSIMUNDO: Initiates Restructuring To Restore Financial Health
PROTTO HNOS: Declared Bankrupt


CESP: Privatization Could Be Delayed Beyond June
VARIG: Registers Negative Net Equity For The 1Q01


MACHASA: Chilean Judge Orders Arrest Of Chilean Treasurer


EMPRESA METRO: Likely To Face Liquidation
TV ANDINA: Gets Financial Aid From Majority Shareholder


CINTRA: Delayed Sale Plans Jeopardize Mexican Airline Industry
CYDSA: In Talks With Two Firms Over Asset Divestment Plans
HYLSAMEX: Sees Recovery In Market; Improving Results
SAVIA: Announcement Of Divestment Plan Stuns Creditors
GRUPO TELEVISA: To Divest Magazine Business Within Two Months


CEPER: Gets Approval From Creditors To Restructure Debts


SIDOR: Conflict Could Lead To National Strike


AEROLINEAS ARGENTINAS: Gov. Makes Final Move To Resolve Dispute
The government will make a final attempt Friday to reach an
agreement with aviation workers and solve the conflict at
Sociedad Estatal de Participaciones Industriales unit Aerolineas
Argentinas, President Fernando de la Rua said in an AFX Europe
report. The government is proposing an independent arbitrator,
probably Labor Minister Patricia Bullrich, to set a non-
negotiable list of points for discussion.

Bullrich is currently meeting with unions representing
technicians and air stewards at the airline to get them to agree
with the proposal. Both sides have so far rejected the
preliminary agreement reached between Aerolineas and the five
remaining unions. Leaders from the two unions are calling for the
reinstatement of 58 sacked workers as a pre-condition to joining
talks. However, Aerolineas insists that the workers in question
were not fired, but simply did not have their contracts renewed.

Aerolineas has accepted the proposal and has tabled a salary
reduction of between 6 and 20 per cent according to job title,
together with an increase in working hours, in return for a
guarantee that there will be no redundancies during the next two

COMACSA: Closes Doors Leaving 290 Employees Out Of Work
Argentina's only acrylic fiber manufacturer, Compania Acrilica
Sociedad Anonima (COMACSA), pulled the plug on its operations
last week, leaving more than 290 employees out of work, according
to an Ambito Financiero report Friday. The company decided on the
drastic solution upon realizing that it could no longer keep up
with increasing competition in imported products. In particular,
the company sighted imports from Brazil where a weaker real has
made local products cheaper. COMACSA was created from the acrylic
fiber company ISISA when its industrial plant was acquired by the
Radicht group during bankruptcy proceedings. COMACSA had been
excluded from the government's economic recovery plan, which has
so far benefited only the steel, clothing, textile and shoe

LAPA: Files For Protection From Creditors
Lineas Aereas Privadas Argentinas SA, Argentina's second-largest
airline holding company carrying 30 percent of the country's
domestic market, filed for protection from creditors, according
to a report Friday in Dow Jones Newswires. The airline attributed
the defensive action to increasing costs of fuel, excessive taxes
and the current recession plaguing the region. In a statement
released late Thursday, the company explained that the filing was
a measure taken to ensure continued operations and the
preservation of jobs.

"For a relatively small airline, that's a tremendous debt burden
to carry," said Miami-based airline consultant Bob Booth in
reference to the company's debts, which currently stand at $130
million. Booth estimated that the airline was paying about $1
million a month in interest alone. The airline's recent purchase
of an estimated seven new Boeing 737 jets could be a large part
of the debt load, Booth said.

LAPA's creditors include local bank units of Citibank (C), BBVA
Banco Frances (BBV), Banco BanSud (E.BBS) and Banco Rio (STD).
The airline also owes around $52 million to energy company Repsol
YPF SA (REP); Royal Dutch Shell (RD); Exxon Mobile Corp (XOM);
Aeropuertos 2000, the concession that runs most of Argentina's
airports; and the Argentine airforce for airspace fees.

MOLINOS: Deep Restructuring Yields Positive Results
Restructuring at Molinos Rio de la Plata S.A. yielded positive
results, with operating profits of US$2.24 million in the first
three months of 2001 compared to losses of US$1 million posted in
the same period last year, South American Business Information
revealed Friday.

Perez Companc group, which acquired Molinos in a US$400-million
transaction, hired Juan Manuel Forn two years ago to restructure
the company. Molinos, which had losses of US$40 million in 1998,
was able to close 2000 with a net profit of US$19.6 million. The
company's fixed expenses were also reduced from US$334 million in
1998 to US$224 million in 2000. Additionally, Molinos' total
liabilities, which in 1998 amounted to US$378 million, were
reduced to $110 million in 2000.

Molinos is involved in the operation of flour mills and the
production of vegetable oil and other food products such as
pastas, rice, margarines, sauces, seasonings and prepared meats.
The company exports it products to all South American countries
and Russia.

MUSIMUNDO: Initiates Restructuring To Restore Financial Health
Struggling to stay afloat amid a two-year long financial crisis
Musimundo, Argentina's largest record chain, will initiate a
restructuring plan, South American Business Information reported
Friday. The plan will see Musimundo focusing on its core
businesses of CD and book sales, as well as the closure of 15
shops in the next month, thus slashing its personnel.

Musimundo has debts totaling almost US$120 million. According to
Jorge Demaria, Executive Vice President of The Exxel Group, the
country's economic crisis and the sale of copies and illegal
records, which generates annual sales of $130 million, had a
great impact on the company. Exxel has reportedly invested US$240
million since it acquired Musimundo.

Musimundo plans to open a mega-store in the Recoleta area in the
city of Buenos Aires. The company also plans to reduce its
personnel in the Internet-related business and sell a branch in

PROTTO HNOS: Declared Bankrupt
The Argentinean wheel and tire manufacturer Protto Hnos revealed
it has been declared bankrupt, Buenos Aires Economicos reported
earlier this month. The declaration came after the company failed
to present financial proposals to allow it to continue by the
official deadline. Although it was able to reduce its losses and
achieved an 8 percent increase in sales, the company's ability to
acquire raw materials was deeply affected by its current
financial condition. Protto's assets totaled 17.2 million pesos
at the end of 2000 however, its liabilities amounted to 29
million pesos.


CESP: Privatization Could Be Delayed Beyond June
The privatization of key Brazilian utility firm Cesp could be
pushed back beyond June as a result of the country's chronic
energy shortage, according to a Sao Paulo state official Friday
in a Reuters report.

State Energy Secretary Mauro Arce said potential bidders in the
much-awaited auction could require more time to study the
consequences of a country-wide energy-saving plan, which the
government released on Friday. The Sao Paulo state recently
suspended the sale of Cesp, slated for May 16, citing the need to
wait for the release of energy-saving and rationing measures
designed to combat a crippling energy crisis resulting from
severe drought.

"We maintain our decision to sell Cesp," Arce said, adding "June
is possible, although I would say we need time to digest these

VARIG: Registers Negative Net Equity For The 1Q01
Brazilian national carrier Varig ended the first quarter of 2001
with negative net equity of R$344.96 million, according to a
report in Brazil Financial Wire Friday. The company's first
quarter net losses totaled R$196.31 million, a 1,113-percent
increase compared to last year's same reporting period. Net
revenues increased 22.60 percent, to R$ 1.45 billion. Operating
expenses rose 53.27 percent, to R$ 639.52 million. Operating
losses amounted to R$ 190.66 million, up from R$ 35.02 million in
the first three months of the previous year.

Varig is considering the sale of a 30-percent stake in its
VarigLog logistics unit in order reduce debt by US$500 million.
According to reports, the company's debts stand at US$1.3
billion, including US$200 million coming due this year. The
company blamed the rising dollar for its worsening debt situation
since 85 percent of the company's debt is dollar-denominated.


MACHASA: Chilean Judge Orders Arrest Of Chilean Treasurer
Chilean Treasurer Gianni Lambertini was ordered to be arrested by
a Chilean judge in connection with the pending lawsuit filed by
the workers of Machasa textile company in 1982 when it was
declared bankrupt, the Chilean Treasury confirmed Wednesday in an
EFE report.

The Treasury was one of Machasa's creditors, and therefore
received money after the bankruptcy. However, workers objected to
the distribution made by the union and took the matter to the
courts, which, at that time, ordered a payment of 350 million
pesos in restitution ($ 583,333 in present day funds).

After several trials, the Treasury was forced to return the
declared settlement amount, which it did between 1995 and 1996,
before the publication of a Finance Ministry decree authorizing
the payment of some 3 billion pesos ($ 5 million).

Regardless, the Chilean Supreme Court ruled that the Treasury
must pay interest on the interest, which is why the figure rose
from 350 million to 5 billion pesos ($ 8.33 million). For this
reason, Judge Wilson Rodriguez ordered the Treasury to pay
another 1.7 billion pesos ($ 2.83 million) to round out the sum
determined by the Supreme Court.

The Treasury has refused to pay until the Santiago Court of
Appeals and the Supreme Court have heard the case. In addition,
the Treasury said that this sum does not fit into its budget, and
that the treasurer does not have the authority to make the


EMPRESA METRO: Likely To Face Liquidation
Empresa Metro de Medellin, the company, which administers the
Medellin underground transport system in Colombia, is widely
believed to be close to liquidation, South American Business
Information reported Friday. According to national authorities,
the company's likely fate is a consequence of the severe
financial problems it is currently battling. Currently owing the
state some US$2.2 billion, Metro has posted losses of over 1.5
billion pesos. Adding fuel to the ongoing speculation is the
US$600-million lawsuit recently filed by a Spanish-German

TV ANDINA: Gets Financial Aid From Majority Shareholder
Colombian regional television channel TV Andina is to receive a
cash injection of 700 million pesos to help make payroll and pay  
suppliers. The company's short-term obligations have piled up
over the last few months, South American Business Information
reported Friday. Telecom, the company's majority shareholder,
which has already injected a total of 28 billion pesos into the
group over the years since its creation, will pay 70 percent of
the total in proportion with its stake in the TV group. The
remaining balance will be paid by the 14 departments, in which TV
Andina broadcasts. Additionally, TV Andina will also receive 280
million pesos from the Colombian national television commission,
as well as the anticipated 35 million pesos monthly according to
its new business model aimed at self-sustaining activity in the
medium-term. At the end of this year, the Colombian government
will assess its progress to see whether the channel remains

Previously, TCR-LA reported that TV Andina was likely to face
liquidation if Telecom refused to extend financial support as the
company is widely believed to be in need of a 1.2 billion peso
capital injection. Telecom said it would not finance the firm but
would only cover debts as long as the short-term self-sufficient
future of the channel can be assured.


CINTRA: Delayed Sale Plans Jeopardize Mexican Airline Industry
Postponement of the plans to sell the assets of government-owned
holding company Cintra is putting the Mexican airline industry in
a critical situation and could prompt Cintra-controlled leading
carrier Mexicana de Aviacion to begin putting-off flights.  
Reforma/Infolatina reported Friday that Mexicana CEO Fernando
Flores disclosed the situation to members of the Communications
Committee in the Lower House of the Mexican Congress. Supporting
evidence for the dire need for action was evident when Mexican
airline companies posted a combined loss of 1 billion pesos in
the first-quarter of the current year, Flores cited. Moreover, he
said that leading carriers Mexicana and Aeromexico, both owned by
Cintra, had been forced to fire 700 employees during the year
through April. According to Flores, losses and job cuts at
airlines were largely results of a widespread slowdown in
economic activity. He also revealed that Mexicana's cash
reserves, which stood at 1 billion pesos at the end of last year,
had dwindled to just 200 million pesos.

According to a previous TCR-LA report, plans to sell Cintra's
assets have been stalled due to pressures currently being imposed
by the opposition-controlled Mexican congress. Mexican bank
bailout agency IPAB, which owns a 51-percent stake in Cintra,
decided to delay the sale for six months, or until clear
parameters had been established for federal airline industry
policy. This postponement is seen costing substantial sums of
money for IPAB, which this year had hoped to garner a total of 20
billion pesos from asset sales.

CYDSA: In Talks With Two Firms Over Asset Divestment Plans
Mexican textiles and industrial-packaging firm Cydsa is currently
in talks with two unnamed firms. Cydsa contemplating divestiture
of two company assets or establishment of two strategic alliance
projects in order to stave off hungry creditors, South American
Business Information said Friday. The company is still dealing
with a mountain of debts, totaling US$451 million at the end of
the first quarter of 2001, even after paying down some US$110
million. Funds for the reduction of debt were generated from the
sale of Tubopak, Celofan, Cordonsed and its corporate offices In
Monterrey. In 2000, Cydsa shut down Ultracril and Filamento de
Rayon operations.

HYLSAMEX: Sees Recovery In Market; Improving Results
Hylsamex, a struggling subsidiary of the Mexican industrial
conglomerate Grupo Alfa, has seen a recovery of its market and
hopes to increased prices on certain products this May/June,
according to a South American Business Information report Friday.
The combination of greater volume and higher prices could bring
about an improvement in operating cash-flow, an area which has
already reached US$33 million, surpassing the mark of US$10
million at which Alfa would have implemented a credit line for
the firm.

Previously, Grupo Alfa announced a decision to sell separately
the flat-steel division of Hylsamex, or some other individual
unit of the troubled steelmaker, after several failed attempts to
divest Hylsamex as a whole. Accordingly, a worldwide slump in
steel prices has dampened interest among the potential buyers of
Hylsamex, which currently faces liabilities totaling $1.3

SAVIA: Announcement Of Divestment Plan Stuns Creditors
The announcement by Savia, a Mexican agro-biotechnology
subsidiary of Monterrey-based Grupo Pulsar, to divest a 20-
percent stake in the company as part of a plan to restructure its
estimated $900 million in debt astonished some of its creditors,
Reforma/Infolatina revealed Friday. The confusion among market
players, analysts and Savia's creditors adds fuel to speculation
that it may have either adopted misinformation tactics or given
up attempts to follow a well-defined investor relations strategy.

TCR-LA earlier reported that the company, according to Mateo
Mazal, senior marketing executive, is continuing to take steps
leading up to a definitive debt-restructuring agreement with its
bank creditors including Chase, Bank of America, Banamex and
BBVA-Bancomer. Savia fully expects a deal to be struck before the
end of the month.

GRUPO TELEVISA: To Divest Magazine Business Within Two Months
Unnamed Grupo Televisa sources revealed that the Mexican media
giant could sell its magazine publishing division, Editorial
Televisa, within the next two months. Sources quoted in an
Infolatinareport Friday said that a quick sale of the division is
not possible since no due diligence proceedings have been
conducted yet. However, the underlying implication remained that
the company currently is in talks with one or more potential

Editorial Televisa, which the group bought from Laura Diez
Barroso, cousin of Televisa Chairman Emilio Azcarraga Jean, in
August 2000, reported a 46.3 percent drop in its first-quarter
2001 operating profit, to 23.9 million pesos. In addition, its
net sales were down and operating costs were up.

Company sources said a slump in advertising sales in the context
of slowing domestic economic growth was the main reason why
Televisa is looking to divest the division.


CEPER: Gets Approval From Creditors To Restructure Debts
Creditors of Conductores Electricos Peruanos S.A. (CEPER)
approved early this month the company's restructuring allowing it
to pay its US$31-million debt over a 10-year period, reported
South American Business Information. The restructuring includes
US$6 million credits to finance working capital, exports and
other operations. The company is expected to generate sales of
US$22 million this year, a 10 percent increase over last year.
CEPER is also predicted to generate a turnover of US$31 million
in 10 years time. Ceper remains open to negotiations with
strategic partners. A couple of years ago the company had a
partnership with BICC, but later withdrew from the Peruvian

CEPER is involved in the production and distribution of
electrical cables, metal sheets, plates, coils and wires. The
company exports its products to various countries in Central and
South America. At present the company exports only 15 percent of
its overall sales, but predicts to increase that to nearly 40
percent within the next 4 months.


Empresa Metro de Caracas, a company believed to be in dire
financial straits, will get a US$45-million loan from Corporacion
Andina de Fomento (CAF), the regional development authority,
according to a South American Business Information Friday report.
The loan proceeds will be partly dedicated used to financing
construction of the Venezuelan capital's underground transport
system known as Line 4 (Capuchinos - Plaza Venezuela). As a
result of CAF's deal, Empresa Metro now stands to benefit with
Bandes de Brasil for US$107 million in foreign trade (civil works
and machinery and equipment purchasing).

SIDOR: Conflict Could Lead To National Strike
Apparently last week's government-sponsored mediation talks
between management and union at the Venezuelan integrated
steelmaker Sidor did very little to help resolve its crisis,
Business News Americas reported Friday.

"We have advanced in the conversations... We have achieved some
preliminary agreements, but we are no closer to each other on
others," the company's HR director Maria Elena Posadas said.

As a result, the 17-day all-out stoppage at the steelmaker
threatens to become a national strike. National union body CTV
has reportedly asked unions countrywide to start the legal steps
necessary to call their members out in support of Sidor's 6,000
workers. A national strike could take place within 20 days and
could include the country's main industry, the oil sector,
according to CTV. Sympathy stoppages have already started.
Workers at the state's four aluminum companies (Alcasa, Bauxilum,
Carbonorca and Venalum) downed tools for four hours yesterday.
Their union has begun procedures that would lead to a longer

Nationally, unions see the Sidor issue as an attack on the
collective bargaining system. CTV leader Jesus Urbieta said
traditional labor negotiations have broken down in Venezuela
because the government had done away with the mechanism.

Alfredo Ramos, leader of the Nuevo Sindicalismo (New Unionism)
movement said: "Today it's Sidor's collective contract, tomorrow
another company's." CTV presidential candidate Carlos Ortega
likened the national strike call to a declaration of war.

Recent reports also suggested that Sidor's union grouping,
Sutiss, has appealed to a judge's ruling in favor of 552 workers
who had turned to the courts to uphold their constitutional right
to work.

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.

This material is copyrighted and any commercial use, resale or
publication in any form (including e-mail forwarding, electronic
re-mailing and photocopying) is strictly prohibited without prior
written permission of the publishers.

Information contained herein is obtained from sources believed to
be reliable, but is not guaranteed.

The TCR Latin America subscription rate is $575 per half-year,
delivered via e-mail.  Additional e-mail subscriptions for
members of the same firm for the term of the initial subscription
or balance thereof are $25 each.  For subscription information,
contact Christopher Beard at 301/951-6400.

* * * End of Transmission * * *