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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, June 18, 2001, Vol. 2, Issue 118

                           Headlines



A R G E N T I N A

AEROLINEAS ARGENTINAS: Narrowly Averts Bankruptcy
AEROLINEAS ARGENTINAS: Aerocard Bondholders To Meet June 29
AEROLINEAS ARGENTINAS: LanChile Seen Most Logical Buyer Of Assets
MULTICANAL: May Sell Assets Or Seek Partner To Pay Down Debts


C H I L E

PSINET: Announces Share Purchase Agreement For Chilean Assets


C O L O M B I A

UNIMEC: To Continue Operating EPS Services


M E X I C O

ABC-NACO INC.: Adjusts Production To Offset Labor Dispute
ATLANTICO: Bital Contemplates Dropping Out Of The Bidding
GRUPO TMM: To Purchase Mexican Government's Share Of Grupo TFM
MAXCOM TELECOMUNICACIONES: Must Increase Lines To Reduce Debts


V E N E Z U E L A

SIDOR: Strike Loss Will Not Require Another Debt Restructuring


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A R G E N T I N A
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AEROLINEAS ARGENTINAS: Narrowly Averts Bankruptcy
-------------------------------------------------
For the time being, Argentina's beleaguered flagship airline
Aerolineas Argentinas has averted bankruptcy, according to
Argentine Interior Minister Ramon Mestre in a Bloomberg Thursday
report.

"Infrastructure Minister Carlos Bastos informed us from Spain
that the threat of bankruptcy has been overcome," Mestre said
without disclosing the details of how the dispute between Spain,
the carrier's majority shareholder through its holding company
SEPI, and unions was resolved. Mestre's announcement was
supported by the union representatives of Aerolineas' workers,
who also said that the threat of shutdown was over for now.

The airline, which is losing more than $1 million a day, has
racked up $900 million in debt since the Argentine government
sold control of the carrier to SEPI a decade ago. Argentine
Economy Minister Domingo Cavallo has blamed the losses on
mismanagement by Sepi.


AEROLINEAS ARGENTINAS: Aerocard Bondholders To Meet June 29
-----------------------------------------------------------
First Trust of New York SA, trustee of Aerocard Financial Trust
structured finance fund class B, has set a meeting of bondholders
for June 29. The meeting is being called on account of what the
trustee regards as the insolvency of the bonds' issuer,
Aerolineas Argentinas SA, according to an AFX-Press report
Thursday.  

Although a formal request has not yet been requested by any
Aerocard class B bondholder, Aerolineas Argentinas or a third
party, First Trust cited that on June 7, SEPI chairman Pedro
Ferreras said that Aerolineas Argentinas "is entering into a
situation of effective paralysis, due to a lack of funds, with
the resulting financial incapacity to meet its commitments with
suppliers." Moreover, Ferreras also expressed the need for the
airline's trade unions to accept a restructuring plan as a
condition (for SEPI) to put up the funds needed to remove the
company from insolvency. Insolvency is a clause to cancel terms,
said First Trust.

Repayment of the $50 million Aerocard B fund due Dec 2003 is
guaranteed with credit card coupons of tickets sold on the
Argentine market by the airline. However, revenues depend on
Aerolineas Argentinas continuing its operations and providing its
air transport services. Otherwise bondholders will be on similar
terms with unsecured creditors.

According to the trustee, on June 4, it requested the annual
consolidated income statements and other information from
Aerolineas Argentinas and its business units within five days,
which it has not yet received.


AEROLINEAS ARGENTINAS: LanChile Seen Most Logical Buyer Of Assets
-----------------------------------------------------------------
Analysts believe LanChile, one of the region's star airlines,
would be the most logical candidate to buy any assets that
Aerolineas Argentinas might eventually sell, Reuters reported
Thursday.

"To be able to buy strategic assets at a reasonable price would
be very attractive for LanChile because it fits perfectly with
its strategy," suggested Heinrich Lessau, chief of research at
Santander Investment Chile.

LanChile, whose American depositary receipt is a favorite among
investment analysts in the region, would not say if it was
interested in buying Aerolineas Argentinas' assets. However, in
the past the company has acknowledged an interest in expanding
into the neighboring country.

"It seems like a totally logical step within LanChile's strategy
and an important step for the company in terms of growth,"
Barbara Angerstein, analyst at Celfin brokerage, related.

"In terms of routes, Argentina is very attractive for Lan.
Obviously, this translates into a question of prices, but Lan has
never denied its interest in that market," Angerstein said.


MULTICANAL: May Sell Assets Or Seek Partner To Pay Down Debts
-------------------------------------------------------------
Multicanal SA, Argentina's No. 2 cable company, may resort to
selling a 4-percent stake in DirecTV Latin America LLC, a
satellite television provider, in order to reduce some of its
$850 million in debt, analysts revealed in a report Thursday in
Bloomberg. Multicanal hasn't turned a profit in five years and,
according to company filings, 37 percent of its debt will come
due between this July and March of next year.

"They are going to have to sell the DirecTV stake and invest the
minimum amount," said Christopher Taylor, director of ING Barings
emerging markets telecommunications and media research. Taylor
said that the 4 percent DirecTV stake may be worth as much as
$125 million.

Multicanal saw its net loss widened in the first quarter this
year to 33.9 million pesos ($33.9 million) from 33.1 million
pesos a year ago as the sluggish economy cut its 1.35 million
subscriber base by 32,400. The company lost 146.4 million pesos
in 2000. More alarming for bondholders, the cable provider's cash
and cash equivalents, such as time deposits, plummeted to 27.8
million pesos as of March 31 from 89.1 million the previous year,
according to company documents.

Now, Multicanal needs to ease investor concerns over shrinking
liquidity and a potential default by shoring up its finances as
the economy shows few signs of a recovery.

Standard & Poor's rates Multicanal's foreign currency debt `B',
five notches below investment grade, and said the company has a
"negative outlook." The rating and outlook, identical to that of
the government's, reflect Multicanal's "deteriorated cash flow
protection measures and its dependence on the level of economic
activity in the country," S&P said in a June 5 report.

In a filing last month, the company said it's focused on
"improving long-term profitability of its business by reducing
investments and improving the existing subscribers base."

On the other hand, Grupo Clarin, Multicanal's owner and
Argentina's largest media group, may seek an international
partner with more financing capacity to help pay the company's
debt. Reports last week indicated that the company would announce
within days a merger with Cablevision SA, Argentina's No. 1 cable
company owned in equal parts by U.S.-based Hicks, Muse, Tate &
Furst and UnitedGlobalCom Inc.  



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C H I L E
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PSINET: Announces Share Purchase Agreement For Chilean Assets
-------------------------------------------------------------
PSINet Inc. (OTC BB: PSIXE) today announced that it has signed a
definitive share purchase agreement with an investment group led
by iLatin Holdings and consisting of additional investors,
including Chilean businessman, Jose Cox, pursuant to which the
investment group has agreed to purchase PSINet's operations and
facilities in Chile. The proposed purchase is subject to a number
of conditions, including approval under the U.S. bankruptcy
proceedings.

PSINet expects that its operations in Chile will continue to
operate in the normal course of business, providing reliable
services to its customers. PSINet's operating subsidiaries in
Latin America, including Chile, are not part of the filing under
Chapter 11 of the US Bankruptcy Code.

iLatin Holdings (iLH) is the leading operator and developer of e-
business ventures throughout Latin America, with a rapidly
growing international presence. iLH provides financing, e-
Consulting and e-Building services to over 12 individual
operating companies and continually evaluates and develop new
projects, both internally and on behalf of its clients. Founded
in 1999, its business is grouped into three fundamental Internet
sectors: B2C and B2B businesses, Professional Services and
Enabling Technologies.

This release contains information about management's view of
PSINet's future expectations, plans and prospects that constitute
forward-looking statements for purposes of the safe harbor
provisions under the Private Securities Litigation Reform Act of
1995.

Actual results may differ materially from those indicated by
these forward-looking statements as a result of a variety of
factors including, but not limited to, the doubt as to PSINet's
ability to continue as a going concern, risks associated with
efforts to restructure the obligations of PSINet and Metamor,
risks associated with proceedings commenced by PSINet and its
subsidiaries under the U.S. Bankruptcy Code, competitive
developments, risks associated with PSINet's growth, the
development of the Internet market, regulatory risks, and other
factors that are discussed in the Company's Form 10-K and other
documents filed with the SEC.



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C O L O M B I A
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UNIMEC: To Continue Operating EPS Services
------------------------------------------
Unimec, Colombian health services group, has made it clear that
it will continue to offer EPS (subsidized health) services,
Business News Americas reported June 11. According to Unimec, the
Superintendencia for health in the nation has only stopped the
health services group from operating ARS (contributions-based
health) services through its recent intervention.

Unimec has been taken over by government-based administrators
ahead of a liquidation of its subsidized ARS services for almost
1 million Colombians. The company ran into trouble in 1997 and is
banned from operating ARS services. With no new EPS clients
allowed to be added to the existing 200,000, the business is no
longer viable. Subsequently, Unimec's assets have been impounded.
The company had organized a debt restructuring under Law 550 but
various conditions were deemed unacceptable such as the loss of
over 1,200 jobs.

The authorities have decided to liquidate Unimec's ARS services,
using the firm Banca y Gestion Ltda, due to IT limitations. The
company had over 1 million affiliates in this business segment.



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M E X I C O
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ABC-NACO INC.: Adjusts Production To Offset Labor Dispute
---------------------------------------------------------
ABC-NACO Inc. (ABCR) announced today that labor negotiations
continue with the unionized employees at its Sahagun, Hidalgo,
Mexico Facility. The labor contract expired May 30, 2001, and the
employees have not worked since then.

Vaughn W. Makary, President and CEO of ABC-NACO said, "Both sides
in this labor dispute are working hard to resolve the outstanding
issues. A settlement will need to reflect the economics of the
currently depressed rail market situation. The severity of the
current downturn in orders, particularly for new freight cars,
has placed extreme cost pressure on all rail products suppliers."

The company will begin increasing production at its other
facilities in order to fill customer orders and to minimize the
impact of the work stoppage. The effects of the work stoppage and
the relocation of production to the other facilities will have a
negative impact on the Company's operating results.

ABC-NACO is one of the world's leading suppliers of
technologically advanced products to the rail industry. With four
technology centers around the world, ABC-NACO holds pre-eminent
market positions in the design, engineering and manufacture of
high-performance freight car, locomotive and passenger suspension
and coupling systems, wheels and mounted wheel sets. The Company
also supplies railroad and transit infrastructure products and
services and technology-driven specialty track products. It has
23 offices and facilities in the United States, Canada, Mexico,
Scotland, Portugal and China.


ATLANTICO: Bital Contemplates Dropping Out Of The Bidding
----------------------------------------------------------
Grupo Financiero Bital Chairman Eduardo Berrondo said that the
group is still willing to wait a little longer to complete its
acquisition of government-intervened bank Atlantico, according to
an Infolatina report. However, he admitted that Bital, having
waited for more than three years to complete the acquisition, is
getting impatient at financial authorities' failure to strike an
agreement with them. Now, the company is also looking at the
possibility of withdrawing its bid to acquire Atlantico from bank
bailout agency IPAB.

"After three and a half years you can't rule out any of the
options," he said.


GRUPO TMM: To Purchase Mexican Government's Share Of Grupo TFM
--------------------------------------------------------------
Transportacion Maritima Mexicana, S.A. de C.V. (NYSE: TMM and
TMM/A), and Kansas City Southern Industries (NYSE: KSU), both
owners in Mexico's busiest railway, Transportacion Ferroviaria
Mexicana, S.A. de C.V. (TFM), announced that TFM will acquire the
Mexican government's 24.6% ownership of Grupo TFM. The
acquisition of the government's ownership is planned to occur
during the third quarter of 2001.

The Mexican government's 24.6% share of Grupo TFM is valued at
approximately $249 million. Subtracted from that total purchase
price will be approximately $81 million, which constitutes the
proceeds from TFM's sale of the Hercules-Mariscala Line, a
redundant 18-mile rail line that has been sold to the government.
The remaining portion of the purchase price will be paid at the
TFM level from a combination of cash and debt financing. The
purchase will eliminate the government's ownership in Grupo TFM.


MAXCOM TELECOMUNICACIONES: Must Increase Lines To Reduce Debts
--------------------------------------------------------------
Mexican fixed-line operator Maxcom Telecomunicaciones SA is
optimistic it can nearly quadruple its customers over the next 16
months, saying it needs that rate of growth to pay debts next
year, according to a Bloomberg report Thursday issue. Chief
executive Fulvio Del Valle informed that the company must
increase its line total to 110,000 from 30,000 to make a $21
million bond payment due next October. At the current
installation rate of 1,300 lines a week, it will reach that goal
by the end of August 2002.

"It's achievable, possible and doable," Del Valle said. "The
potential market growth for the coming six years is for 8 million
lines."

Maxcom has lost money since it began selling lines in May 1999.
The company is rushing to add more lines to generate profit in
time to make payments on its $275 million debt and to persuade
investors to put up more money for further expansion. Concern
over Maxcom's ability to pay is reflected in the price of its
bonds, now trading at 37 cents on the dollar.

"Maxcom may run out of cash sometime in 2002 and the question is
will someone else put more money in?" said Bruce Stanforth, a
fixed-income analyst at BNP Paribas in New York who rates the
bonds a `hold.' "They have to show extremely aggressive growth,
and that's going to be a high hurdle."

At March 30th, the company had $107 million in cash after selling
$300 million of 13.75 percent bonds due 2007 a year earlier. The
bonds tumbled last year after the company reported a larger-than-
expected second-quarter operating loss of $11.3 million. Losses
increased 27 percent over the same 1999 period as low-revenue
generating Internet users filled capacity and blocked out higher-
revenue phone users like businesses.



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V E N E Z U E L A
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SIDOR: Strike Loss Will Not Require Another Debt Restructuring
--------------------------------------------------------------
Even with its strained finances following a loss of as much as
$25 million last month due to a strike, Venezuelan steelmaker
Siderurgica del Orinoco (Sidor) doesn't need to restructure its
debts, according to board President Maritza Izaguirre in a report
Thursday in Bloomberg. Izaguirre said the loss from May's three-
week strike would range from between $20 million and $25 million.

Last year, the company signed a $449 million debt restructuring
after defaulting on a $40 million payment. Bankers were concerned
the company would request another debt restructuring after the
strike. Sidor, owned by a group of Latin steelmakers, hasn't
broken even since the government sold it in 1997. Around 4,200 of
Sidor's 6,000 workers went on strike May 1.




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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