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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, June 7, 2001, Vol. 2, Issue 111

                           Headlines



A R G E N T I N A

AEROLINEAS ARGENTINAS: Spanish PM Defends Govt's Role
BANCO FEIGIN: Two Top Executives Summoned To Testify In Court


B R A Z I L

CVRD: Auctions Its Stake in Cenibra


C H I L E

TELEFONICA CTC: Employees Vote To Lodge General Strike June 8
TELEX-CHILE: Assets Divestment Spurs Conflict Among Owners


M E X I C O

AEROMEXICO: ASUR Scrambles To Downplay Impact Of Strike
AEROMEXICO: Counts On Peak Season To Recover Strike Losses
AHMSA: To Lift Temporary Receivership In December This Year
BANCRECER: Bank Executive, IPAB Head To Stage Road Show Next Week
CYDSA: Continues To Divest Assets To Reduce Down Debts
FNM: SCT Confirms Demise Of State-Owned Railroad Firm
MAXCOM TELECOMUNICACIONES: Changes Short-term Investment Policy
MAXCOM TELECOMUNICACIONES: Investor/Analysts Conference On Tap
SAVIA: Seguros Comercial America On S&P CreditWatch Positive
SAVIA: Sale Of SCA May Not Be Enough To Rescue Ailing Company


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A R G E N T I N A
=================

AEROLINEAS ARGENTINAS: Spanish PM Defends Govt's Role
-----------------------------------------------------
Spanish Prime Minister Jose Maria Aznar on Tuesday defended
Spain's role in keeping Aerolineas Argentinas afloat so far,
however, he admitted that there was little more Madrid could do
to help save the struggling airline, according to a Reuters
report. The Argentine airline, which is 90-percent owned by
Spain's State Industrial Holdings Company (SEPI), is teetering on
the edge of bankruptcy as the Spanish holding company refuses to
inject more cash unless labor unions agree to job cuts. This
situation has led to mutual recriminations on either side as the
Spanish owners accuse the unions of intransigence, while
Argentine critics accuse SEPI of mismanaging the airline and
being inflexible at the negotiating table.

Meanwhile, In Barcelona, SEPI Chairman Pedro Ferreras revealed
that the Spanish holding company could not continue to support a
company that has $900 million in debt and could lose about $300
million a year if worker unions refused to give ground.

"They continue asking for more money (to support the airline)
without being willing to adopt minimal measures to avoid losing
money indefinitely," Ferreras said.

"Money is running out, and the workers should be aware that if
there is no remittance of funds (the airline) cannot continue
functioning, and we are the only managers who want this company
to keep functioning," he said.


BANCO FEIGIN: Two Top Executives Summoned To Testify In Court
-------------------------------------------------------------
Two Argentine top executives have been summoned to testify before
a federal judge in a case involving the collapse of local bank
Banco Feigin five years ago, according to a report Friday in
Business News Americas. Former Central Bank chief Pedro Pou and
former economy minister Roque Fernandez allegedly authorized the
transfer of US$37 million from Feigin to repay debts to federal
bank Banco Nacion at the expense of depositors. Former Nacion
directors are also accused of making irregular loans to Feigin
that were never recovered.



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B R A Z I L
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CVRD: Auctions Its Stake in Cenibra
-----------------------------------
Companhia Vale do Rio Doce (NYSE: RIO PR) (CVRD) announced that
it auctioned today its stake in Celulose Nipo-Brasileira S/A
(CENIBRA) through its subsidiary Itabira Rio Doce Company Ltd.
The highest bid was presented by Carthage Investment Corp., a
joint venture formed by Votorantim Papel e Celulose S/A (VCP) and
Aracruz Celulose S/A (ARACRUZ).

The value of the bid was US$670,500,000 for 86,562,480 common
shares, 5,694,900 preferred shares class A and 3,211,189
preferred shares class D, representing 51.48 % of the total
capital of CENIBRA. The bidder presented a letter of credit to
guarantee the fulfillment of its financial obligations.

The closing of this transaction is subject to certain conditions,
among them the exercise or not of the preemptive rights of Japan
Brazil Paper and Pulp Resources Development Co., Ltd. (JBP), a
consortium of Japanese companies, owner of 48.52% of the total
capital of CENIBRA.

This transaction is in line with CVRD's strategic focus on mining
and logistics. CVRD is planning to divest its remaining assets in
the pulp and paper industry, Florestas Rio Doce S/A and Celmar
S/A Industria de Celulose e Papel.



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C H I L E
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TELEFONICA CTC: Employees Vote To Lodge General Strike June 8
-------------------------------------------------------------
The restructuring program initiated by Chile's largest telecoms
operator Telefonica CTC on June 1 will result in a general strike
starting June 8, Business News Americas reported Tuesday.
Employees voted Monday, 2000 of them in the affirmative, at a
rally next to CTC's corporate headquarters to lodge a strike to
protest the restructuring program, which calls for widespread job
cuts at the company. The program has already seen the departure
of three vice presidents and 11 senior managers. As many as 1,500
of CTC's 9,200 employees are expected to lose their jobs this
week as the company struggles to cut costs and improve
efficiencies after two years of heavy losses. This is the second
restructuring plan undertaken by CTC since the tariff decree came
into effect. About 2,000 workers were dismissed during 1999 and
2000 as part of the first restructuring.


TELEX-CHILE: Assets Divestment Spurs Conflict Among Owners
---------------------------------------------------------
The company's proposal to divest assets has raised a conflict
among its owners, South American Business Information reported
Tuesday. The financial creditors believe that the sale of the
company's assets is necessary to help recover part of their
debts. However, other stockholders prefer finding a strategic
partner to help solve the difficult economic situation at the
company. Telex-Chile posted losses of $5,964.9mil last March. One
of the prerequisites for the two sides to reach an agreement is
defining a minimum sale price.



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

AEROMEXICO: ASUR Scrambles To Downplay Impact Of Strike
-------------------------------------------------------
Grupo Aeroportuario del Sureste, S.A. de C.V. (NYSE: ASR) (BMV:
ASUR) (ASUR), the Mexican operator of nine airports in the
southeast region of Mexico, today announced details of the impact
on the Company's operations of the strike by the trade union
representing Aeromexico's flight attendants ended on June 2.

Between 12:00 AM on Friday, June 1, 2001, and midnight on
Saturday, June 2, a total of 106 Aeromexico operations to and
from ASUR's airports were cancelled. Of these, 53 were inbound
flights and 53 outbound flights.

In a statement, the Company indicated that nearly all the
outbound passengers scheduled to leave ASUR airports on cancelled
Aeromexico flights were able to find seats on other airlines. The
Company is unable to estimate the exact impact of the strike on
inbound passenger traffic, because figures of Aeromexico's
passengers transported by other airlines into ASUR's airports
cannot accurately be estimated and some other passengers might
have simply postponed traveling.

Aeromexico is one of the main airlines operating at the ASUR
airports. In fiscal 2000 and the first quarter of 2001,
Aeromexico transported 1.41 million and 316,000 passengers,
respectively, representing 12 percent and 10 percent,
respectively, of ASUR's total passenger traffic during those
periods.

Aeromexico has operations at the airports of Cancun, Cozumel,
Merida, Oaxaca, Tapachula, Villahermosa and Veracruz.


AEROMEXICO: Counts On Peak Season To Recover Strike Losses
----------------------------------------------------------
Leading Mexican airline Aeromexico is counting on the highest
traffic season, starting this July. The company hopes the
increased activity will help it recover much of its 98-million-
peso loss in airfares due to a 2-day strike by flight attendants,
Aeromexico CEO informed in a report Tuesday in
Reforma/Infolatina. He admitted that some losses brought about by
the strike, such as potential loss of market share, could not be
immediately quantified. According to the company's chief, the
strike had come at the worst possible moment for Aeromexico,
which posted what he described as "alarming results" during the
first quarter of the year.


AHMSA: To Lift Temporary Receivership In December This Year
-----------------------------------------------------------
Debt-Laden Mexican steel group Altos Hornos de Mexico (Ahmsa),
which recently struck a debt-restructuring agreement with its
creditors, will lift temporary receivership in December of the
current year, according to a South American Business Information
report published Tuesday. As a result, Ahmsa will trade again on
the national stock market, as well as on the NYSE, after being
delisted for two years.

However, Grupo Acerero del Norte (GAN), Ahmsa's present
controller with 50.1 percent stake, needs to restructure its $280
million debt before the receivership can be lifted (including a
legal, financial and bureaucratic cost of $100 million).

The agreement of the restructuring plan led banking creditors to
take a 40-percent stake in the company in exchange for a $530
million capitalization.


BANCRECER: Bank Executive, IPAB Head To Stage Road Show Next Week
-----------------------------------------------------------------
Julio Cesar Mendez, head of Mexican bank bailout agency IPAB, and
Carlos Septien, top executive at government-intervened bank
Bancrecer, are scheduled to make a trip to the United States,
Canada and Europe next week, Reforma/Infolatina reported Tuesday.
The purpose of this trip is to attract interest in Bancrecer from
potential buyers aside from those who have already expressed
informal interest. Canadian-owned Grupo Financiero Scotiabank
Inverlat, Mexico's Grupo Financiero Banorte and Spanish banking
concern Sandell reportedly are among the known likely bidders for
Bancrecer. However, none of them has formally expressed interest
in the bank yet.

Bancrecer was put into administration as a result of the Tequila
Crisis in the mid-90s. With an estimated book value of $400
million, the bank will be sold at auction during the third
quarter. Interested parties must have submitted written
applications to take part by July 5, 2001. The financial agent
running the sale is Duetsche Bank Alex. Brown Inc.


CYDSA: Continues To Divest Assets To Reduce Down Debts
------------------------------------------------------
As part of an effort to alleviate debts, Mexican conglomerate
Cydsa last week announced plans to sell its environmental-
management unit to U.S.-based Tyco International Ltd., according
to an El Economista/Infolatina report. However, the terms of the
sale were not disclosed. The unit currently provides water-
treatment services to industrial and local-government clients.
The company's activities are also related to the provision of
integrated systems for potable water, water-treatment plants and
sewerage drainage. The sale of the division is seen as the latest
development in the company's effort to reduce moving costs. The
firm, which has already sold its Monterrey corporate offices,
still has another asset divestiture lined up.


FNM: SCT Confirms Demise Of State-Owned Railroad Firm
-----------------------------------------------------
The collapse of state-owned railroad company FNM was confirmed
through a decree published Monday by Mexico's transport and
communications department (SCT), Business News Americas revealed
Tuesday. FNM will remain only as a legal entity for the purpose
of liquidating its assets. SCT will establish bidding rules for
the sale and appoint a company to carry out all aspects of the
process. FNM, which was instrumental in the growth of the country
in the first half of the 20th century, ran into serious financial
trouble and up to 2000, the government had subsidized it to the
tune of US$435 million.


MAXCOM TELECOMUNICACIONES: Changes Short-term Investment Policy
---------------------------------------------------------------
Maxcom Telecomunicaciones, S.A. de C.V., a facilities-based
telecommunications provider (CLEC) using a "smart build" approach
to focus on small- and medium-sized businesses and residential
customers in Mexico City and Puebla, today announced changes in
its short-term investment policies.

The Company announced the decision to temporarily invest a
portion of its liquidity in Maxcom bonds, given its current cash
position and the substantial negative spread on the Company's
short-term investments. For such purpose, the Company authorized
up to US$10 million to buy bonds at current market value.

"We have always stated that the best use for our funds and the
way to create value for the bondholders is to focus on investing
on our business and use the cash that we have to build our
network and attract additional customers. Our position on this
subject has not changed, especially now that the new management
team is in place. However, given that our cash is expected to
take us into 2002, the current interest rates' levels, and the
discounted price of the bonds as compared to what we consider a
fair market value, we have decided to temporarily invest a
portion of our liquidity in Maxcom bonds," said Fulvio Del Valle,
President and Chief Executive Officer.

Maxcom Telecomunicaciones, S.A. de C.V, headquartered in Mexico
City, Mexico, is a facilities-based telecommunications provider
using a "smart-build" approach to deliver last-mile connectivity
to small- and medium-sized businesses and residential customers
in Mexico City and Puebla. Maxcom launched commercial operations
in May 1999 and is currently offering local, long distance and
data services. In March 2000 the Company issued US $300 million
in 13.75% notes due 2007. Maxcom reported a net loss of Ps$198.8
million in the first quarter of this year as compared to Ps$89.9
million in the same year-ago period.


MAXCOM TELECOMUNICACIONES: Investor/Analysts Conference On Tap
--------------------------------------------------------------
Maxcom Telecomunicaciones, S.A. de C.V., a facilities-based
telecommunications provider (CLEC) using a "smart build" approach
to focus on small and medium-sized businesses and residential
customers in Mexico City and Puebla, yesterday celebrated Maxcom
Day, an Investor/Analysts conference, to present its new
management team.

During the past months Maxcom Telecomunicaciones has brought on
board a team of highly qualified and recognized professionals
with strong track records in the Mexican telecommunications
market to lead the Company in its new development phase. The new
members of management are: Fulvio del Valle, President and Chief
Executive Officer; Eloisa Martinez, Chief Financial Officer;
Eduardo Patron, Chief Marketing Officer; Rene Sagastuy, Chief
Operating Officer; and, Ricardo Arevalo, Chief Information
Systems Officer.

During the conference, management reviewed the outlook and
strategy for Maxcom to seize existing opportunities to drive
Maxcom to a healthy, sustainable and profitable growth.

Fulvio del Valle, Maxcom's President and Chief Executive Officer,
made the opening remarks and discussed during his presentation
the Company's strategy and outlook for 2001. Mr. Del Valle talked
about the new business model, which is focused on a reliable and
fast execution capacity that offers innovative and quality
products to clients, while it diversifies and grows the current
customer base. Maxcom's sustainable growth will be supported by
the quality of its network and systems.

Mr. Del Valle said: "The Mexican telecom market offers a very
attractive potential of 8 million lines for the 2001-2007 period.
Along with higher revenues, Maxcom will focus on decreasing
present churn levels, increasing service quality and productivity
levels as measured in lines per employee, revenues per employees,
EBITDA per employee and lines per sales employee. To achieve such
goals, operating expenses will grow during the next two quarters
to cover for the rapid increase in installation capacity."

Eduardo Patron, Chief Marketing Officer, presented investors and
analysts attending the event with an analysis of the Mexican
telecommunications market, underlining the Company's
opportunities for growth.

"The Mexican telecommunications market is large and competition
is fierce among Alestra, Avantel, Axtel, Telmex and Maxcom. We
are focusing on offering differentiated products. We will pursue
an aggressive policy of building outside plant in new clusters
within Mexico's Federal District, attracting micro-business and
A, B and C residential customers. We will also be pursuing the
small and medium enterprise market though focused on deployment
of single sites in office buildings.

"We will increase our competitiveness by offering a stronger
portfolio of voice products, while developing quickly our data
products and services. We will continue striving to retain our
customer base and expand it," stated Mr. Patron.

Rene Sagastuy, Chief Operating Officer, explained that the actual
installed capacity in Puebla is of 17, 000 lines, of which 76
percent is already sold.
"Mexico City has an installed capacity of 20,000 lines, of which
83 percent are in service. Growth in the Federal District has
been hampered as a result of the cumbersome permit process. We
hope to expand our network in the second half of 2001 as we
conduct greater lobbying efforts with local authorities and
request more permits per month. We also plan to develop further
single sites as an alternative to grow faster," added Mr.
Sagastuy.

Maxcom's COO also stated that: "our aggressive growth strategy
contemplates capital investments in 2001 of US$52-65 million. One
of the scenarios presented by Mr. Sagastuy contemplates a CAPEX
of US$58 million to be invested primarily in telecommunications
equipment to continue growing aggressively in 2002. Maxcom has
already reached the 30,000-line mark in May, and has already
installed for the third consecutive week, 1,000 lines per week."

Ricardo Arevalo, Chief Information Systems Officer, explained
that Maxcom's has implemented successfully its IT infrastructure
and is currently working to fully utilize all software solutions.

"IT will be leading Maxcom to achieve its business plan
objectives and better service its stakeholders through the
implementation and consolidation of quality and innovative
systems. Maxcom's systems are key to differentiate us from other
Mexican telecom companies," said Mr. Arevalo.

Fernando Galvan, Sales and Commercial Operations Vice President
talked during his presentation about the sales strategy that
Maxcom is implementing to reach its aggressive growth strategy.

"Our success will be driven by our customer-oriented policy and
supported by our strong team effort. To boost sales, we will
continue to exploit the advantages presented by single sites. We
will continue to deploy our cluster strategy and seek alliances
with key residential developers, and PBX manufacturers and
distributors. Aside from bringing more new business, we are
working hard to retain our customer base and further reduce churn
levels," commented Mr. Galvan.

Jose Antonio Solbes, Director of Investor Relations and Treasurer
emphasized that the business model focuses on diversifying the
client base, having lower but attractive and stable ARPUs, and a
high and reliable execution capacity to allow the company to
reach a breakeven level by the second half of the year. The
trends of the Company show that the number of customers is
expected to grow beyond 35,000 from current levels of 13,000.
Recurring ARPUs will also decrease from historical records of
above US$100 to a stable and attractive US$60.

The Company showed three different scenarios of having 65,000,
75,000 or even 85,000 lines by the end of 2001, each scenario
contemplated a different point to reach EBITDA breakeven level
during the second half of the year. Under the scenarios
presented, revenues for the year would range from US$37.2 to
US$42.8 million.

Mr. Solbes also mentioned that the Company has been developing
the necessary infrastructure to be able to install 10,000 lines
per month by December 2001. At such installation levels, Maxcom
should be able to reach an interest coverage ratio of 1:1 in
early 2002.

During the closing remarks Maxcom's President and CEO, Fulvio del
Valle, emphasized that the new business model will allow Maxcom
to have a healthy, sustainable and profitable growth, while
reaching breakeven level in the second half of 2001. "We are
committed to our stakeholders and in making Maxcom a profitable
company."

Additionally, Mr. Del Valle mentioned that the Company has
approached the Mexican telecommunications authorities to explore
the possibility of amending its concession to allow national
coverage.


SAVIA: Seguros Comercial America On S&P CreditWatch Positive
------------------------------------------------------------
Standard & Poor's today placed its triple-'B' financial strength
and counterparty credit global scale ratings on Seguros Comercial
America, S.A. de C.V. (SCA) on CreditWatch with positive
implications. At the same time, Standard & Poor's placed its
double-'mxA'-plus national scale ratings on SCA on CreditWatch
with positive implications.

The rating action follows the announcement made by the holding
company, Savia, S.A. de C.V. (Savia), of its decision to sell its
remaining controlling stake on the Mexican insurer to ING Group
NV (ING).

In February 2000, Savia announced an agreement with ING in which
it sold 41.4% of SCA's controlling interest, and subscribed a
call option for the remaining controlling interest on SCA, which
was negotiated and fully exercised on June 5, 2001, giving ING an
86.7% controlling stake of the insurer. The remaining 13.3%
remains publicly traded.

Standard & Poor's considers SCA's position on the Mexican market,
its cost structure, and its relationships with top insurance and
reinsurance brokers as competitive advantages, which will be
enhanced with ING's experience in the global markets. The ratings
will remain on CreditWatch with positive implications until SCA's
role within the ING organization is defined and the regulators
authorize the operation, Standard & Poor's said.


SAVIA: Sale Of SCA May Not Be Enough To Rescue Ailing Company
-------------------------------------------------------------
Alfonso Romo's sale of his remaining stake in Seguros Comercial
America (SCA), Mexico's largest insurance company, to Dutch group
ING may not be enough to salvage what is left of the
entrepreneur's debt-ridden dynasty, analysts warned in a
Financial Times report Tuesday edition. On Monday, ING agreed to
pay Savia, Mr. Romo's holding company, $791 million for an
outstanding 45 percent stake in SCA, bringing its share in the
insurer to 86.7 percent following last year's purchase of a 41.5
percent stake for $808 million. Some analysts calculate, however,
that ING overpaid by $250 million - $500 million.

In recent years, Mr. Romo has invested $1 billion to become a
player in the high-stakes world of biotechnology. In less than a
decade his company, Seminis, has become the world's largest
vegetable seed producer, with 29 percent of the market. However
aggressive expansion, combined with weak North American seed
sales and currency fluctuations, has been a financial drain on
Savia.

Last year the holding company registered $445 million in losses
on sales of $3.2 billion. To ease this, Savia sold last month
three units of its packaging subsidiary, Empaques Ponderosa, for
$285 million. Adding this to the sale of SCA, Savia will be able
to wipe some $1 billion in debt from its balance sheet.

A long list of creditors including JP Morgan Chase and ING, which
extended Savia a $500 million zero-coupon bond, have been
pressing Mr. Romo to sell off assets following a series of
defaults.




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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