TCRLA_Public/010604.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

            Monday, June 4, 2001, Vol. 2, Issue 108



AEROLINEAS ARGENTINAS: Unions Remain Obstinate; No Deal Yet


FIERA: Shuts Down Brazilian Operations
GENERAL MEAT: To Halt Operations Due To Financial Woes


GENER: Companies Submit Bid For Assets




AEROMEXICO: ASSA Still Refuses To Talk About Wage Dispute
BANCRECER: Initiates Sale Process Friday
SAVIA: Stand-Still Agreement With Creditors Remains Flexible
SAVIA: Common Stock Drops 11.6 Percent
XEROX: 2000 Financial Audit Finds Errors, Irregularities
XEROX: Sees Increase Of US$127M In FY 2000 Net Income


ASERCA AIRLINES: Slashes Workforce By 43 Percent This Year

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AEROLINEAS ARGENTINAS: Unions Remain Obstinate; No Deal Yet
The mechanics and the flight attendant unions refused to accept
the terms of a rescue plan aimed at averting bankruptcy at
Argentine airline Aerolineas Argentinas, reported Bloomberg.
These unions stuck to their decision even after meeting with
officials from five other unions Thursday at the cash-strapped

"We don't accept the Spanish government's plan, it's as simple as
that," said Ricardo Cirielli, head of the dissident APTA
mechanics union. "We will defend our workers and hope that with
the other unions we can come up with a better plan."

Spain, Aerolineas' majority shareholder, earlier warned it won't
fund the airline unless all seven unions sign an agreement that
would cut benefits for the 6,500 workers. If all unions agree,
Sepi said it would pump $350 million into the carrier and
guarantee jobs for two years.

Aerolineas has been hurt by three years of recession,
mismanagement and increased costs that added to its $900 million
in debt and $1 billion in losses since the government sold the
bulk of the company a decade ago.

"Spain is ready to put money into the airline, all there needs to
be is agreement," said Economy Minister Domingo Cavallo in a
press conference together with Labor Minister Patricia Bullrich.
Cavallo went on to add that the unions "are putting the future of
the airline in real danger. We don't have the money to take
control of the company and take it forward."


FIERA: Shuts Down Brazilian Operations
Miami-based e-retailer Fiera ( announced in its
Brazilian site ( that it has ended its operations in
Brazil, saying that clients with pending orders will be notified
to resolve the situation, Business News Americas reported
Thursday. The company's CEO, Manuel Montero, didn't explain the
company's move, saying simply that the company will issue a
statement next week.

Fiera dismissed 37 employees or 15 percent of its total workforce
in December. Some company sources blamed three acquisitions last
year that resulted in staff overlaps for the dismissal. Others
also believed that it was one way of speeding up the road to

The three acquisitions undertaken last year were: Brazilian
technology e-commerce site, Mexican electronics
retailer Multiple Zones and office supplies retailer Marken
Office Supplies.

To date, Fiera has received US$30-US$35 million in financing.
Mexico's Technology & Internet Fund (TIF) holds a 13.3 percent
stake in the company. TIF is controlled by Mexican telco Telmex,
which owns 50 percent, while Grupo Carso and the Inbursa hold 25
percent respectively. Latin American Enterprise Fund and the
Advent Group also back Fiera financially.

GENERAL MEAT: To Halt Operations Due To Financial Woes
The financial problems at General Meat Food, as well as the mad
cow disease crisis in Europe, led the Brazilian slaughterhouse to
phase out operations, South American Business Information
reported Thursday. The company will use its inventories,
estimated at R$1 million, to pay the employees' wages and
dismissal costs. General Food, which had its activities suspended
since late February 2001, is controlled by 3C from Rio Pardo (Rio
Gande do Sul). The company began operations in 1998 through
Swift-Armour facilities leased next to Banco do Brasil. By
December 2000, the company made an operating deal with the US
South American Meat for the exports of processed meat to Europe.
The company had a monthly turnover of R$5 million and almost 90
percent of its income depended on exports.


GENER: Companies Submit Bid For Assets
Eight as-yet unnamed companies and consortia submitted bids
Thursday for the port, shipping and maritime assets of power
company AES Gener, according to a report in Business News
Americas. Offers will be studied for a few days and the assets
will be awarded on June 6 with contracts signed on June 14.

Gener, now controlled by US company AES, is selling off all its
non-electric assets including 69.87 percent of Ventanas port,
21.18 percent of Cabo Froward port operator, 26.02 percent of
shipping company CCNI and 26.7 percent of Agunsa, another Chilean
shipping line.

The company began the sale of its assets in March and invited 20-
30 investors to bid. Through the sales, AES Gener expects to
generate US$800 million in resources, which will be used to
reinvest in restructuring the company's finances. Meanwhile,
Gener is also selling oil exploration company Oil Gener, and its
oil interests in Argentina to France's TotalFinaElf.


Guatemalan banking authorities will recommend to the country's
monetary board the liquidation of banks Empresarial,
Metropolitano and Promotor in June, deputy banking regulator
Ergas Barquin revealed in a report Thursday in Business News
Americas. The Banking Superintendence believes that the monetary
board will follow its recommendations. These three banks were
intervened in February and March due to lack of liquidity,
insufficient solvency, poor administration and high degree of
loans to related companies.

According to Barquin, the liquidation processes could "easily"
take up to five years, in reference to Banco Nacional de la
Vivienda and finance company Financiera Fiagro, which have so far
been in liquidation for two years and one year respectively.

Meanwhile, the country's banking authorities also plan to
intervene local finance company Financiera Metropolitana next
week due to lack of liquidity.


AEROMEXICO: ASSA Still Refuses To Talk About Wage Dispute
A strike, which could cost Aeromexico up to US$4 million daily,
has been scheduled to take place Friday if Mexican flight
attendants union ASSA and the leading carrier's management fail
to resolve a wage dispute, Reforma/Infolatina reported Thursday.
However, even with the threatening strike, members of the ASSA
still refuse to discuss the matter insisting that the conflict
over alleged violations of the union's collective contract with
the airline be attended to first. Officials from the federal
Employment and Social Security ministry reportedly are reviewing
ASSA's position with respect to the alleged contract violations.
The dispute centers around the conditions for attendants working
on flights serving destinations in Central America.

Airline management offered ASSA members a 7.5-percent wage
increase on Wednesday, but the union is seeking a 30-percent

BANCRECER: Initiates Sale Process Friday
The sale process for government-intervened bank Bancrecer will be
launched Friday, with a notice to be published in the federal
government's Official Gazette, according to unidentified
officials at Mexican bank bailout agency IPAB in an Infolatina
report Thursday. The top-level decision to proceed with the
process as scheduled was made during a meeting Tuesday. In
addition, the agency advised that bidders must submit their
interest in writing by July 5. Deutsche Bank Alex Brown Inc. will
manage the sale, which is expected to take a few months to be
completed. Meanwhile, IPAB will also sell pension fund subsidiary
Afore Bancrecer-Dresdner in a separate auction.

IPAB was rumored to have been considering a postponement of the
sale of Bancrecer following U.S.-based Citigroup's May 17
announcement that it will acquire Grupo Financiero Banamex
Accival for US$12.5 billion in cash and stock, roughly 2.8-times
book value. IPAB reportedly wanted to design a potentially more-
advantageous sale scheme.

TCR-LA previously reported that IPAB is likely to set special
conditions for the buyer of government-intervened bank Bancrecer
regardless of who emerges as the winner in the bank's upcoming
auction. The agency would seek to reduce its liabilities incurred
in the rescue of Bancrecer if the bank's new owners subsequently
decided to sell. On the other hand, it could also require the
buyer to expand lending at a rate determined by the agency, in
order to generate some form of benefit for Mexican taxpayers, who
funded the bank's rescue.

SAVIA: Stand-Still Agreement With Creditors Remains Flexible
Mexican agro-biotechnology company Savia and its bank creditors
have struck a stand-still agreement, which was due to expire
Thursday, according to a report in Reforma/Infolatina Thursday.
However, unidentified sources close to Savia Chairman Alfonso
Romo revealed on Wednesday that the terms of the agreement are
still flexible. Shareholders were supposed to meet in an assembly
initially scheduled for Friday but the meeting was delayed until
Monday. A company source close to Romo said that the decision now
lies in the hands of the banks' court. Further, he related that
Savia is confident a debt-restructuring plan proposed by the
company will receive creditor approval.

Meanwhile, sources at Banobras stressed that the Mexican state-
run development bank is not preparing to play a role in Savia's
restructuring, contrary to widespread speculation triggered by
Romo's close personal relationship with Mexican President Vicente

SAVIA: Common Stock Drops 11.6 Percent
Mexican agro-biotechnology company Savia's common stock fell 11.6
percent in Wednesday's trading amid expectations that the company
is doomed to fail in its restructuring deal with creditors before
a stand-still agreement expired Thursday, according to a
Reforma/Infolatina report.

Analysts and traders remain apprehensive about the company's
ability to come up with a feasible restructuring plan. Up to now,
Savia Chairman Alfonso Romo has not yet reached a deal with
Netherlands-based ING to sell his remaining 43.15-percent stake
in leading Mexican insurance company Seguros Comercial Mexicana.
The sale is seen as Romo's sole option in order to help pay down
Savia's estimated debts of US$1.3 billion. ING already owns a
41.5-percent stake in the insurance company, which it bought into
last year for US$808 million. Romo's remaining stake in Seguros
Comercial America is valued at between US$700 million and US$1.2

XEROX: 2000 Financial Audit Finds Errors, Irregularities
Xerox Corporation (NYSE:XRX) today announced that its auditors,
KPMG LLP, have certified Xerox's financial statements for the
three years ended Dec. 31, 2000.

The financials include restatements reflecting results of the
previously announced fuller review by KPMG and the concurrent
investigation conducted by the Audit Committee of the Xerox board
of directors.

Xerox has now determined that certain accounting practices
including some that involve complex accounting issues, which it
had previously believed to comply with generally accepted
accounting principles (GAAP), in fact, misapplied GAAP. In
addition, the company has made period adjustments to certain
previously recorded charges for errors and irregularities
resulting from the accounting issues in Mexico. The impact is a
cumulative reduction of Common Shareholders' Equity and
Consolidated Tangible Net Worth of $137 million and $76 million,
respectively, as of Dec. 31, 2000. Adjustments to revenue in each
of the three years, 1998-2000, were insignificant. Net income for
2000 increased by $127 million. First quarter 2001 net income
improves by approximately $50 million, but this level of
adjustment will not continue in subsequent 2001 quarters.

"After rigorous reviews of Xerox's accounting, no fictitious
transactions were found and the company's liquidity is not
impacted," said Paul A. Allaire, Xerox chairman and chief
executive officer. "Xerox can now continue to focus on
effectively executing its turnaround strategy, which remains on

Allaire added that Xerox continues to make progress in improving
its already substantial cash position. The company's current
worldwide cash balance is approximately $2 billion, following the
repayment of most of its second quarter maturing debt.

Xerox today is filing an 8-K with the Securities and Exchange
Commission that includes its audited financial statements.
Details of the components of the adjustments as well as
additional financial disclosures are included in the 8-K. The
complete Annual Report on Form 10-K for 2000 will be filed very

XEROX: Sees Increase Of US$127M In FY 2000 Net Income
Xerox Corp saw an increase of approximately US$127 million in its
full year net income following an adjustment in its accounting
methods over the last three years, AFX-Europe reported Thursday.
Additionally, the company announced its first quarter net income
also rose by US$50 million, adding this level of adjustment will
not continue in subsequent 2001 quarters. The company said it has
determined that certain accounting practices, including some that
involve complex accounting issues, failed to comply with
Generally Accepted Accounting Principles (GAAP).


ASERCA AIRLINES: Slashes Workforce By 43 Percent This Year
Aserca Airlines, Venezuela's second-largest carrier, fired 800
workers this year, or 43 percent of its total workforce of 1,850
employees, in a bid to save between US$1 million and US$1.5
million per month, Bloomberg reported Thursday.  

"We're in a price war, which obliges a restructuring," said
Simeon Garcia, Aserca's owner and president. "We're prepared to
maintain these prices for 12 months if we have to."

Aserca, which earlier restructured its US$11 million debt with a
group of Venezuelan banks led by Banesco Banco Universal, is
struggling to cut costs in a price war with the country's leading
carrier, Aeropostal Alas de Venezuela. Fares on some routes have
fallen by more than 50 percent as analysts say the Venezuelan
airline market heads for consolidation. Garcia also added that
the company is cutting its investment this year to US$560,000
from US$4 million last year. Last year's investments were swollen
by the installation of a new electronic ticketing system. This
year, Aserca anticipates a 5 percent growth in sales to US$84

Aserca, which controls 39 percent of the market, owned a 70
percent-stake in Air Aruba, which was forced into bankruptcy last
year. The Aruban government lost a US$2.5 million lawsuit against
Aserca related to the bankruptcy. Now, Aserca is contemplating a
US$35 million counter suit against the Aruban government, Garcia

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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