TCRLA_Public/010613.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

            Wednesday, June 13, 2001, Vol. 2, Issue 115



AEROLINEAS ARGENTINAS: Govt. Urges Renewal Of Suspended Flights
ARGENTINA FUND: Scudder Latin America To Acquire Fund
EL SITIO: Sells Argentine Connectivity Business To Netizen
FIAT: Suspends Operation At Argentine Auto Plant For A Week


BOLIDEN LTD.: Holds Annual Meeting, Refinancing Seen Iminent


AVIANCA: Colombian Regulators Oppose Merger With Aces


AHMSA: To Renegotiate $1.85B Debt Through A New Revenue Source
BANCRECER: Dresdner-Allianz Takes Control Of Pension Fund
BANCRECER: BSCH Likely To Bid In Upcoming Auction
BUFETE INDUSTRIAL: BOD Finalizing Details Of Bolanos' Takeover
GOODYEAR: President Attributes Closure To Wage-Productivity Gap
GRUPO BITAL: Likely Candidate For A Takeover
GRUPO TELEVISA: Talks With Univision Over Content Continue
SAVIA: A.M. Best Places Seguros And Subsidiary Under Review


ESSALUD: In Financial Difficulties Due To Govt. Interference
NUEVO MUNDO/NBK BANK: Govt. Could Issue Bonds As Financing


BANCO DEL PUEBLO: Loses Money Due To Poor Financial Maneuvering
VENEPAL: Goes Into An Official State Of Arrears

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AEROLINEAS ARGENTINAS: Govt. Urges Renewal Of Suspended Flights
Argentina's government said on Monday it will urge the Spanish-
owned Aerolineas Argentinas to renew flights it had suspended.  
Otherwise, the routes will be auctioned off to another company,
Infrastructure Minister Carlos Bastos said in a Reuters report.  

"We are thinking of awarding concessions through an auction,"
Bastos said.

In early June, Aerolineas suspended flights to Miami, New York,
Auckland, Sydney, Los Angeles, Sao Paulo and Rio de Janeiro
because of financial problems. Argentina's largest carrier, whose
debts stand at an estimated $900 million, is believed to be on
the brink of collapse. Spain's State Industrial Holdings Company
(SEPI), who owns more than 90 percent of the ailing airline,
refuses to inject more cash unless labor unions agree to a plan
involving 1,300 job cuts.

The Argentinean government has also proposed a new round of rapid
negotiations with Spain in a bid to end the crisis surrounding
Aerolineas. Previous negotiations have failed because of SEPI's
determination to implement the plan. Aerolineas workers ended
their 33rd day of strikes on Saturday. Meanwhile workers at ICTS
General Services, a baggage handling company which deals with US
airlines at Madrid's Barajas airport, on Monday started the first
day of their seven day strike which has been called by the union
UGT in protest at the 'precariousness' of their employment

ARGENTINA FUND: Scudder Latin America To Acquire Fund
The Boards of Directors of The Argentina Fund, Inc. (NYSE: AF)
and Scudder Latin America Fund today announced their approval of
an agreement and plan of reorganization whereby Scudder Latin
America Fund, an open-end fund and a series of Scudder
International Fund, Inc., would acquire all of the assets and
liabilities of The Argentina Fund, a closed-end fund.

If the transaction is approved by stockholders and implemented,
each stockholder of The Argentina Fund would become a stockholder
of Scudder Latin America Fund and The Argentina Fund would
thereafter be liquidated. Both funds are managed by Zurich
Scudder Investments, Inc.

The Argentina Fund Board also announced today that the Fund's
Annual Meeting of stockholders will be held on October 16, 2001.
At that meeting, the stockholders will be asked to approve the
Agreement and Plan of Reorganization relating to the proposed
transaction with the Scudder Latin America Fund.

The Argentina Fund's Board of Directors has determined that it
will recommend to the Fund's stockholders that they vote to
approve the proposed transaction. Since the Fund's inception, the
Board has periodically reviewed the Fund's closed-end structure
and its advantages. As a result of certain recent developments in
the Argentine securities markets and a recent SEC rule change,
the Board no longer believes that the closed-end, single country
structure of the Fund is in the best interests of its

Accordingly, the Board is recommending to Fund stockholders that
they approve the proposed transaction, as it will enable them to
participate in a more diversified fund with a broader Latin
American investment focus, and will also enable them to receive
net asset value for their shares. In reaching this decision, The
Argentina Fund Board considered the fact that recently there has
been a dramatic decrease in market capitalization, liquidity and
new issues in the Argentine market, which is primarily due to
non-Argentine companies acquiring Argentine companies and an
increase in Argentine companies raising money on the NYSE in the
form of ADRs. The Board also considered the impact of a new SEC
rule that will require the Fund to maintain a minimum of 80% of
assets in Argentine securities. The Board considered various
alternatives for the Fund and determined that the proposed
transaction is in the best interests of its stockholders.

During the first year after the completion of the proposed
acquisition, redemptions of shares in cash or in kind by former
Argentina Fund stockholders would be subject to a redemption fee
(currently expected to be equal to 2% of the amount redeemed). In
addition, redemptions of these shares during this period by a
stockholder in excess of a specified amount would be paid in

The transaction is expected to be completed prior to the end of
this year, and is subject to the satisfaction of certain
conditions including regulatory approvals and the approval of The
Argentina Fund's stockholders.

Zurich Scudder Investments, Inc., a leading global investment
management firm, is a member of the Zurich Financial Services
Group. Zurich Scudder Investments is one of the largest and most
experienced investment management organizations in the world,
managing more than US$370 billion in assets for corporate
clients, retirement and pension plans, insurance companies,
mutual fund investors, and individuals worldwide. Headquartered
in New York, Zurich Scudder Investments offers a full range of
investment counsel and asset management capabilities, based on a
combination of proprietary research and disciplined, long-term
investment strategies.

EL SITIO: Sells Argentine Connectivity Business To Netizen
El Sitio, Inc. (Nasdaq: LCTO), a leading Internet media company
targeting Spanish and Portuguese speakers in Latin America and
the United States, today announced that it sold its Argentina
connectivity business to Netizen S.A., a major internet service
provider in the country. El Sitio plans to disclose the terms of
the transaction in the near term.

This transaction is part of a previously announced strategic
decision by El Sitio to divest its non-core connectivity services
in Argentina, Brazil and Colombia as the company has intensified
its focus on the enhancement of its Internet network and the
development of interactive content. El Sitio recently stated that
it has signed a preliminary letter of intent for the sale of its
connectivity services in Colombia. That agreement remains subject
to negotiation of definitive terms.

As a result of this transaction, Netizen, recently acquired by
SkyOnline de Argentina, has taken an important step in the
advancement of its connectivity business and its position as a
leader in the Argentina Internet market. Following the transfer
of El Sitio's 25,000 Argentine subscribers, Netizen will have
over 200,000 subscribers. The transaction also complements
SkyOnline's strategy to provide broadband connectivity and value
added services in Argentina by expanding, through Netizen, its
potential client base.

Leandro Anon, COO of El Sitio, Inc., stated, "Our agreement with
Netizen is a significant step in our planned divestiture of non-
strategic connectivity assets. This transaction permits us to
continue with our strategy to focus on the development of
interactive content."

Gustavo Lucardi, Executive Vice President of Netizen stated, "We
are very proud that El Sitio has selected Netizen to continue
providing high quality connectivity services to its former
clients. We have always pushed ourselves to provide our users
with premium service. In addition, this transaction positions
Netizen to become the leading Internet service provider by year
end 2001."

FIAT: Suspends Operation At Argentine Auto Plant For A Week
Italy-based carmaker Fiat SpA plans to halt operations at its
Argentine automobile plant in Cordoba for a week and fire 70
workers, Bloomberg reported Monday. Daniel Dragun, a spokesman
for the Argentina's autoworkers union known as Smata, attributed
this move to the 53-percent drop in auto sales in May while a
three-year recession drags on. Production at the plant will be
halted starting Tuesday, and the remaining 880 workers will be
given three-fourths of their normal salary to stay at home,
Dragun revealed.

Fiat spokesman Javier Vernengo confirmed the company planned to
halt production, and said the 70 workers had a 60-day contract
that expired.

"We arranged with the company that all the workers will receive
75 percent of their salaries for those days off," said Dragun.


BOLIDEN LTD.: Holds Annual Meeting, Refinancing Seen Iminent
Boliden Limited today held its annual meeting in Toronto and re-
elected the current board of directors, other than Alex Balogh
who did not stand for re-election. At the meeting, Company
President, Thomas Cederborg announced that he intended to resign
as an officer and director of the Corporation following
completion of the equity and debt refinancing initiatives
announced by the Company on May 18, 2001.

In announcing his planned resignation, Mr. Cederborg stated: "I
believe that our lenders and the counterparties to our foreign
currency hedge contracts will this week approve the refinancing
and restructuring proposal that we presented to them on May 21,
2001. As soon as they do, we intend to proceed with our rights
and common share offerings which are fully secured by standby and
guarantee commitments. When these initiatives are completed, I
will have finished the job that I began in July 2000 when we
started our capital management program and the Company will have
a new board of directors. That is an appropriate time for me to
step down and will give the board adequate time to find a new
chief executive officer to lead the new Boliden. In the meantime,
I will work to successfully complete the equity and debt
refinancing initiatives and to ensure a smooth transition."


AVIANCA: Colombian Regulators Oppose Merger With Aces
Colombian regulators shunned a bid by Aerovias Nacionales de
Colombia SA (Avianca) and Aerolineas Centrales de Colombia (Aces)
to merge on the grounds that it would stifle competition,
Bloomberg said Monday.

"The (regulator), in trying to ensure Colombia maintains free
competition and protect the consumers, concludes that the
integration would result in less competition," the commerce and
industry regulator said in a press statement.

Analysts said the rejection of the merger would make it harder
for Avianca, Latin America's oldest carrier, to reduce losses. In
the past years, it has been struggling to cut its high debt ratio
and revamp sluggish sales.

"This rejection is going to be a problem for Avianca. They were
really hoping to improve their services and efficiency with this
merger," said Carolina Forero, an analyst with Bogota-based
Corporacion Financiero Del Valle.

Avianca and Aces filed a merger plan in March and at the time
said that they expected to obtain approval this month. Forero
estimated that a merger by the two companies would have commanded
70 percent of the local market.


AHMSA: To Renegotiate $1.85B Debt Through A New Revenue Source
Mexico's largest steelmaker, Altos Hornos de Mexico SA (Ahmsa),
succeeded in convincing creditors to renegotiate a $1.85 billion
defaulted debt by turning to a different revenue source -- coal,
Bloomberg reported Monday.

"Coal has become a very important alternative fuel in this
country and in the U.S.," said Juan Carlos Pilgram, deputy
director of loan recovery for Grupo Financiero Banamex-Accival.
Pilgram was one of the bankers who worked on Ahmsa's debt-
restructuring agreement, which was signed two weeks ago. "It's
going to be a big driver" for Ahmsa.

Steel prices have slumped more than 20 percent this year, while
the price of coal -- used to fire its steel-making furnaces --
has more than doubled. Ahmsa will probably generate more profit
this year from selling coal to other companies than from
producing steel. That profit will kick in more than half of the
$230 million of operating cash flow the company and bankers
forecast for the year -- enough to keep up with debt obligations
after a court-ordered suspension of payments is lifted.

Some analysts, on the other hand, predict that Ahmsa and its
creditors are being too optimistic about the company's chances of
making a turnaround. Ahmsa is still a steelmaker at a time when
steel prices have fallen about 25 percent from last year, said
Daniel Altman, an equity analyst with Bear, Stearns & Co. in the

"Coal can only do so well," said Altman, who estimates Ahmsa will
generate $200 million in operating cash flow this year.

BANCRECER: Dresdner-Allianz Takes Control Of Pension Fund
After battling with the Mexican government for four months,
Dresdner-Allianz managed to boost its 49-percent share in
Bancrecer pension fund, Afore Bancrecer, by 3.5 percent bringing
its total stake to 52.5 percent, South American Business
Information reported Monday. The remaining 47.5 percent, which
belongs to the Mexican banking institute IPAB, will be auctioned
off. Proceeds from the sale will go to the bank Bancrecer.
However, it is still unclear if it will be included in the
records of its capital when the time comes to sell the bank to
Citigroup. Dresdner-Allianz of Germany can also participate in
the forthcoming auction or outbid the winner to take up 100
percent of the fund.

BANCRECER: BSCH Likely To Bid In Upcoming Auction
Despite strong denial coming from the senior executives of Grupo
Financiero Santander Mexicano - a subsidiary of Spain's Banco
Santander Central Hispano (BSCH)- about reports that it plans to
bid for Bancrecer, its participation is still widely expected,
Reforma/Infolatina reported Monday. Conventional wisdom in
Spanish banking circles is that BSCH will be among the bidders
for the bank.

Mexican bank savings protection agency IPAB officially kicked off
the sale of Bancrecer on June 1 with a call to bid in Mexico's
federal register. The agency is looking to complete the Bancrecer
sale process by October this year. The sale could net IPAB US$700
million to US$800 million, according to Noe Romero, a senior
banking analyst with Mexico City firm Bursametrica Management.

Bancrecer is the last major intervened bank to be sold by Mexican
authorities, who have pumped US$11.2 billion into the bank to
clean up its bad loans portfolio since taking it over in November

IPAB, along with the Finance Ministry, the National Banking and
Investment Commission (CNBV) and the Bank of Mexico, will review
potential buyers and authorize a short list to access Bancrecer's
financial records. Financial groups slated to make bids for
Bancrecer include Mexico's Banorte, Canada's Scotiabank and UK-
based HSBC.

BUFETE INDUSTRIAL: BOD Finalizing Details Of Bolanos' Takeover
The Mexican construction, engineering and procurement firm Bufete
Industrial's board of directors was slated to meet Monday. On the
agenda was the analyis of the final details of Sergio Bolanos'
forthcoming takeover of the company and setting a date for a
shareholder assembly, according to a report in Reforma/Infolatina
Monday. The shareholder assembly, likely to be scheduled for June
26 or June 27, will see the formal approval of the transaction.
Bufete Chairman Jose Mendoza reportedly already has turned over
the reins of the company to Grupo Serbo's Bolanos. Subsequently,
Bolanos has met for the past several days with Bufete employees
and creditors. Bufete has estimated total liabilities of over
$400 million. According to the report, Bolanos is to pay a token
of 1,000 pesos (around $108) for the company.

GOODYEAR: President Attributes Closure To Wage-Productivity Gap
One of the reasons why the Mexican subsidiary of Goodyear Tire &
Rubber recently shut down a tire plant in Tultitlan, on the
outskirts of Mexico City, is the growing gap between wage growth
and productivity gains in Mexico. The disparity was revealed by
Emilio Bellorin Font, president and CEO of the company's Mexican
subsidiary in an Infolatina report released Monday.

Earlier this year, Goodyear Oxo dismissed 1,350 workers, ceased
production of 18,000 tires to 25,000 tires per day, and cancelled
projected investment of $20 million per year. Bellorin related
that the Mexican rubber industry workers over the past three
years had received cumulative wage increases totaling 45 percent,
with inflation during the period at 31 percent.

GRUPO BITAL: Likely Candidate For A Takeover
Grupo Financiero Bital is seen a very likely candidate for a
takeover by the Mexican Finance ministry and the National Banking
and Securities Commission (CNBV), according to a report Monday in
Reforma/Infolatina. The takover prediction is based on a belief
that Bital controlling shareholders, led by new Chairman Luis
Berrondo, are not prepared to shoulder the financial burden of
Atlantico's recapitalization. Bital's drawn-out acquisition of
government-intervened bank Atlantico has suffered numerous set
backs. Disagreements between the group and financial authorities,
coupled with differences among financial authorities themselves,
have complicated the extent to which Atlantico's recapitalization
should be funded by public offers.

GRUPO TELEVISA: Talks With Univision Over Content Continue
U.S. Hispanic television network Univision has rejected a deal
proposed by Mexico's Grupo Televisa but talks between the two
firms are continuing, with a June deadline now pushed back until
September, Reforma/Infolatina revealed Monday. The deadline has
been reportedly set for September because Univision advertisers
will need to be informed of the network's 2002 programming lineup
at that time. According to the report, the deal will see Televisa
boosting its stake in the company from 6 percent to at least 15
percent, and raise the percentage of royalties Univision pays on
Televisa-produced content from 9 percent to around 15 percent.

Univision competitor Telemundo - jointly owned by Sony Corp.,
Bastion Capital and Liberty Media Group, which is wholly owned by
AT&T - is expected to present a content-acquisition proposal to
Televisa soon.

SAVIA: A.M. Best Places Seguros And Subsidiary Under Review
A.M. Best Co. has placed the A (Excellent) financial strength
ratings of Seguros Comercial America S.A. (SCA) and its wholly
owned surety subsidiary, Fianzas Comercial America, under review
with developing implications.
This action follows the announcement that the ING Group will
exercise its option to acquire the controlling interest of the

Savia, SCA's majority shareholder, has agreed to terms with the
Amsterdam-based ING Group, one of the largest financial services
organizations in the world, that it will acquire majority
ownership in the SCA Group, the largest Mexican insurer in terms
of gross premiums written. ING will acquire the additional stake
of 45% in SCA from Savia -- increasing its investment to 87% --
for approximately $791 million USD. The remaining 13% shares are
publicly traded, and it is expected ING will make a tender offer
for them. The acquisition, which is subject to regulatory and
shareholder approvals, is expected to have closure by the second
quarter of 2001. This transaction reflects ING's ongoing strategy
to solidify its presence in the rapidly growing and
underexploited financial services markets in Latin America. ING
recently bought 49% of Seguros Bital, another Mexican insurer.
The transaction will be financed internally by ING.

ING intends to make the necessary investments to maintain SCA's
leadership position. SCA is a well-positioned local insurance
company with an experienced management team.

Considering that there are no redundancies with ING's existing
operations in Mexico, no immediate changes are expected. SCA will
benefit from the international experience and presence of the ING
Group and should strengthen its strategic position vis-a-vis the
globalization of the financial services sector in Mexico. This
transaction, along with recent similar investments by other
multinational companies, is a reflection of the tremendous growth
prospect of the Mexican insurance industry.

A.M. Best will monitor ING's and SCA's action plans and the
resulting impact on the companies' operating and financial
strength. The ratings will remain under review pending A.M.
Best's further examination of the details of the transaction and
the companies' revised business strategies.


ESSALUD: In Financial Difficulties Due To Govt. Interference
Essalud is experiencing financial difficulties because of the
government's interference, according to a report Monday in South
American Business Information. The company's debts with the drugs
& pharmaceuticals industry, according to market sources, now
amount to almost US$60 million. The government obliged Essalud to
count on sufficient capital reserves to be used if an emergency
occurs. Therefore, the company had to delay its expected payment
to the drug industry.

NUEVO MUNDO/NBK BANK: Govt. Could Issue Bonds As Financing
The Peruvian government could issue bonds to finance a capital
injection of banks Nuevo Mundo and NBK Bank, which were
intervened late last year after political and economic turmoil in
the country sparked a run on deposits, Business News Americas
reported Friday. According to a source close to the process, the
reason for the infusion is to attract more potential buyers and
avoid liquidation. However, the transaction still depends on the
results of an ongoing audit of the two banks. The two auditing
firms contracted for the final evaluation of the two banks' books
have 90 days from June 1. But the auditing firms are expected to
finish ahead of time, allowing banking officials to fix the final
price within 45-60 days, the source predicted.

On May 31, two banks agreed in principal to acquire Nuevo and
NBK. The acquiring institutions are Ecuador's Banco
Interamericano de Finanzas for NBK Bank and Peru's Banco
Internacional Financiero (BIF) for Nuevo Mundo. However,
officials are yet to set a final price-tag, pending the external


BANCO DEL PUEBLO: Loses Money Due To Poor Financial Maneuvering
Reports regarding the activities of Venezuela's Banco del Pueblo
- a state banking entity -- showed that it lost Bs$14.17 million
in 40 days. The poor results stemmed from poor financial
maneuvering - placing money in lower interest accounts than were
available to it - during 2000, South American Business
Information reported Monday. The report, which Finance Minister
Jose Rojas received in August and December 2000, also revealed
that Del Pueblo executives have abused travel allowances and
other expenses. Bank president Roberto Rodriguez even billed the
bank for cigarettes. In addition, some loans were conceded
without proof (ID cards or business registration documents) being
provided by clients.

VENEPAL: Goes Into An Official State Of Arrears
Struggling paper maker Venepal obtained approval of its
application for a concession of a state of arrears from the
majority of its creditors, South American Business Information
reported Friday. Creditors of the Venezuela paper group believe
that the move of the company to go into an official state of
arrears will protect assets over a year as it continues to
operate, employ a full workforce and search for a financial
partner to resolve its two-year-old financial struggle.

Jefferson Smurfit Stone is one of the leading shareholders in
Venepal but ducked out of a full purchase, as did Copamex of
Mexico of late. Banks own bonds in the company worth US$37
million while Venepal owes roughly US$70 million.

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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