/raid1/www/Hosts/bankrupt/TCRLA_Public/010628.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

            Thursday, June 28, 2001, Vol. 2, Issue 126

                           Headlines



A R G E N T I N A

AEROLINEAS ARGENTINAS: Suspends All Flights For Safety Reasons
GUBY NETWORK: In Talks With Large Firms Regarding Sale Of Company
TOWER RECORDS: 3Q01 Net Loss Up, Selling Five Argentine Stores


B A R B A D O S

LIAT LTD.: Financial Results Slowly Regaining Altitude


B R A Z I L

GLOBO CABO: Share Price Jumps On Sale Rumors
iG: Reaches Break-even Point For The First Time Since Creation
VARIG: To Issue $100M Bonds To Rollover Debt Part of $300M Debt


C H I L E

GENER: Abandons Sale Of 51% Stake In Water Utilities


M E X I C O

GRUPO AZUCARERO: Cane Growers Urge Payment Of Debts
GRUPO TELEVISA: May Divest Video-Rental Business To Reduce Debts
GRUPO TMM: Betting On Railroad's Future Pays Off
PROTEL: Restructures Debts With Telmex, Vertec


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

AEROLINEAS ARGENTINAS: Suspends All Flights For Safety Reasons
--------------------------------------------------------------
Aerolineas Argentinas suspended all flights amid mounting
tensions affecting the airline, which is controlled by the
Spanish state holding company SEPI, El Mundo reported Tuesday.
The decision is not linked to the airline suspending payments
last week, SEPI said, but rather it is part of the precautionary
measures to guarantee passenger safety, especially in the light
of the conflict which surrounds the airline.

Aerolineas Argentinas' management has called on its safety
committee and the Argentinean authorities to assess the situation
and decide when flights can be resumed. It recommends that
flights remain suspended until it is established that aircraft
and crew are in a perfect state. The suspension of flights
complicates the grave situation of the airline, which may go
bankrupt.


GUBY NETWORK: In Talks With Large Firms Regarding Sale Of Company
-----------------------------------------------------------------
Miami-based Latin American search engine Guby Network is now in
talks with US-based Microsoft and Spanish multimedia group Prisa
(www.prisa.es), among others, to sell the company, according to
Guby's Argentina manager Jorge Grippo in a Business News Americas
report released Tuesday.

"We are in talks with large groups in Europe and others such as
Microsoft and (Mexico's dominant telecoms operator) Telmex, which
have no presence in the southern part of the Americas," Grippo
said.

Guby, in August 1999, closed a US$4-million financing round with
investment fund Explorador.net. However, in September 2000, the
capital ran dry and the network was forced to lay off its almost
200 employees and maintain the sites through its founders.

"When the first round was carried out we had money leftover. We
were told that the money was not important and if we needed it we
would have it, but when we needed it the market had changed too
much," Grippo explained.

He blamed the poor results of the past to bad management on the
part of the board, which believed money was no barrier.
Currently, Guby is restructuring its business plan, which was
based on online advertising revenues and free access to its
sites. Now the network is licensing its search engine technology
and forging e-commerce deals.


TOWER RECORDS: 3Q01 Net Loss Up, Selling Five Argentine Stores
--------------------------------------------------------------
Tower Records, the US record store chain based in West
Sacramento, revealed its net loss in the 3rd-quarter grew to
$34.3 million from $4.2 million year ago as revenue inched up to
$255.09 million from $255.04 million, according to a report in
Consumer Electronics published Monday. Tower Records took $23.8
million charge partly linked to shutdown of its bookstore
business. A large part of pretax charge, which amounted to $17.8
million, was as a result of the restructuring and assessment
impairment.

Tower has closed all but one of its 9 bookstores as well as 3
record and outlet stores. The company also sold 2 frame/gallery
outlets. Under restructuring plan implemented in Feb., Tower is
selling or closing operations in Canada (2) and Argentina (5),
entering into joint venture for chain in Hong Kong (2) and
Singapore (3) and "monitoring" another 9 U.S. outlets for
possible closure, SEC filing said. Tower currently operates 185
stores.

Restructuring cut Tower's gross profit in quarter to $70.9
million from $85.4 million and gross margin declined as
percentage of revenue to 27.8% from 33.5 percent. Tower's U.S.
revenue increased to $148.7 million from $148.5 million but
international slipped to $106.4 million from $106.5 million.

Tower also will be under pressure in coming months from lenders
to get firm commitment by Oct. 1 from financial institutions to
get debt or equity funding needed to meet Dec. reduction in
credit facility. Tower reached agreement with Chase Manhattan and
J.P. Morgan in April to extended $225 million credit facility for
a year, but the amount available gradually decreases to $210,
$195 and $100 million in July, Oct. and Dec., respectively.

One of the country's oldest music chains, Tower has been
struggling under the load of big debts, expensive store leases,
and increased competition from online sellers like Amazon.com at
time when overall sales are soft.



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B A R B A D O S
===============

LIAT LTD.: Financial Results Slowly Regaining Altitude
------------------------------------------------------
Garry Cullen, chief executive of regional carrier LIAT (1974)
Limited, gave his assurance that even though the airline is still
in a `fragile financial state,' it is now regaining altitude, a
report in The Daily Nation revealed Monday. Reporting a 13 per
cent increase in sales over last year's figures, Cullen said the
airline was also recording advance bookings for the upcoming
summer holidays.

"For the period April to May last year, LIAT carried 124,000
passengers, and 145,000 for the same period this year," he said,
adding that airline carried 700,000 passengers per year in the
region, an average of 60,000 per month.

"We also have a huge summer time table scheduled from the July
1, and already it is working from the point of view that people
are already making bookings," he added. The coordination of
connecting flights would take effect from July 2.

However, while improving its outlook, Cullen said one of the main
challenges LIAT faces is strengthening the public's perception of
the airline following negative publicity in 1999 and early last
year.

"We need to get the message out that LIAT is going to be around
and is going to be strong," he said.



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B R A Z I L
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GLOBO CABO: Share Price Jumps On Sale Rumors
--------------------------------------------
Brazilian cable television and Internet firm Globo Cabo saw its
shares prices soar in the afternoon trading on Tuesday amid
speculations that it is going to sell its cable network
infrastructure to a telephone operator, Reuters said in a report.
The company's shares were up over 11 percent to 1.1 reais at 2
p.m. local time (1700 GMT) in high turnover trade, while Brazil's
benchmark Bovespa index was off 0.25 percent.

"There is a rumor flying around that it is selling its network of
cables to some telephone companies," said a local telecoms
analyst who declined to be named.

According to Suzana Salaru, an analyst at Brascan bank, the sale
of the network would make sense for Globo Cabo since the
infrastructure was costly to maintain and unprofitable. A company
spokesperson said the internet firm did not plan to release a
statement addressing the rumors running through the market.

Traders on Tuesday frequently cited the name of fixed-line giant
Telemar as a potential buyer of the network but Roberto Terziani,
Telemar's investor relations officer, denied that such a deal was
in the works. However, he admitted that the company was indeed
looking at a number of networks with a view to buy.


iG: Reaches Break-even Point For The First Time Since Creation
--------------------------------------------------------------
Leading Brazilian free Web access provider iG moved into the
black in May for the first time since its creation in January
2000, reaching a break-even point, high-level company officials
revealed in a Reuters report published Tuesday. The officials,
who asked to remain anonymous, said iG had opted not to release
details of its bottom line until the company had completed four
or five consecutive months of break-even results and until its
accounts had been audited.

IG, launched in January 2000 and one of the pioneers of the free
access model, has remained afloat even as other free providers
closed as capital flows slowed following a steep slide in
worldwide technology shares in the first half of last year. Since
its launch, the group has swallowed up $170 million in capital
investments. Revenues from advertising and electronic commerce
last year reached $30 million, although iG has not given out any
financial information this year.

iG began a restructuring in February this year, laying off 29
employees, leaving it currently with 290 people on its books. In
March, it sold its access infrastructure and data center to
fixed-line phone operator Telemar for 50 million reais ($22
million).


VARIG: To Issue $100M Bonds To Rollover Debt Part of $300M Debt
---------------------------------------------------------------
Viacao Aerea Rio-Grandense SA (Varig), Brazil's No. 1 airline,
plans to raise $100 million by selling bonds backed by ticket
sales in Brazil in order to pay one third of the $300 million in
debt coming due this year, Bloomberg reported Tuesday. According
to Manuel Guedes, the company's senior vice president for
investor relations who made the announcement, the bonds would
probably have a term of five years. Guedes refused to disclose
the names of the investment banks handling the transaction.

Varig will use other credit lines and cash to refinance the
remaining $200 million in debt coming due this year, Guedes said.
Varig has debts of $1.3 billion, 85 percent of which is
denominated in foreign currency.

Meanwhile, Varig agreed Tuesday to follow corporate governance
rules the Sao Paulo Stock Exchange has adopted to attract
investors.



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C H I L E
=========

GENER: Abandons Sale Of 51% Stake In Water Utilities
----------------------------------------------------
Chilean power company Gener abandoned the sale of its 51 percent
stake in sanitation works Explotaciones Sanitarias and Ecogener,
according to a report in Business News Americas Monday. Sources
revealed that the three bids received, which were believed to be
Chile's Emos, UK's Biwater and France's Vivendi, were deemed
`unsatisfactory.' Explotaciones and Ecogener were up for sale in
their entirety because Gener, which U.S.-based AES recently
acquired, had an agreement with the owners under which they would
sell their 49% stakes in the two companies at the "right" price.

Explotaciones Sanitarias produces drinking water as well as
collecting and treating sewage under an indefinite concession to
serve the industrial sector of Santiago's Quilicura municipality.
Ecogener, on the other hand, provides services for the treatment
of industrial liquid waste, the operation of water treatment
plants, and the construction and maintenance of drinking water
and sewerage systems.



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

GRUPO AZUCARERO: Cane Growers Urge Payment Of Debts
---------------------------------------------------
Thousands of cane growers in the western Mexican state of Jalisco
have threatened to stop supplying Grupo Azucarero Mexico, one of
Mexico's leading sugar companies, Reforma/Infolatina reported
Tuesday. The said they plan to take over the company's Tala sugar
mill if GAM refuses to pay the debts owed to them before July 1.
According to the local cane growers' leader, Serafin Hernandez
Campos, GAM owes growers more than 200 million pesos.

"This is a critical situation for all cane growers because we
need to supply cane on time for it to be processed, but the mill
owners have not paid us what they owe us," Hernandez said.

GAM has liabilities totaling an estimated $40 million. In July
2000, the sugar company had a preliminary agreement with Bancomex
for the liquidation of the debt but it fell through.


GRUPO TELEVISA: May Divest Video-Rental Business To Reduce Debts
----------------------------------------------------------------
Expectation is widespread among local investors and market
players that Mexican media giant Grupo Televisa might divest
Televicentro, its video-rental business, according to a report
Tuesday in Reforma/Infolatina. The move is viewed as a means for
Televisa to liquidate debts owed by the group to Alejandro
Burillo. Proceeds from the Televicentro sale would reduce these
debts. Burillo is the chairman of Grupo Pegaso and cousin of
Televisa's Emilio Azcarraga Jean. The divestment is expected to
be conducted in the context of capital investment needs flowing
from Televisa's plans to expand its presence in the growing U.S.
Hispanic market.


GRUPO TMM: Betting On Railroad's Future Pays Off
------------------------------------------------
Two years ago, Mexico's Transportacion Maritima Mexicana SA was
forced to choose between the money-losing maritime cargo business
on which the company was founded and its newly acquired railroad,
Bloomberg said in a report Tuesday. TMM choose the railroad,
which had deteriorated under decades of government neglect, on
the promise that tracks linking Mexico's capital and three major
ports to the U.S. would capture most of the booming trade between
the two countries. The bet paid off. The railroad, which
overhauled aging track and replaced dilapidated rolling stock,
quadrupled its operating cash flow since TMM and partner Kansas
City Southern Industries Inc. purchased control from the
government for $1.4 billion in June 1997.

"The railroad is a cash machine," said William Erhman, who
manages a 15 percent stake in TMM for New York-based investment
firm EGS Partners. TMM shares have gained 160 percent since
January 2000 when it sold the shipping line, which had accounted
for 70 percent of sales, and reduced debt by $220 million in the
last two years. Future profits from the railroad should help pay
down more debt and may push the shares higher, said investors.  

Debt covenants, which have been lifted last year, prevented the
railroad from paying cash dividends that would allow TMM to tap
into its profits. Without money from the railroad, TMM barely
generates enough cash to meet interest payments, analysts said.
According to the company's president, Javier Segovia, the
railroad might start paying dividends to owners this year.
Legally, the railroad can pay a dividend equal to half accrued
net income, which now is about $60 million.

However, the railroad must first make payments on $830 million in
debt and spend on improvements, said Federico Mora, an analyst
with Standard & Poor's in Mexico City.

"They have to balance how much they can take out of the railroad
without affecting its ability to pay debt and make investments to
grow," said Mora.


PROTEL: Restructures Debts With Telmex, Vertec
----------------------------------------------
Mexican telephone company Protel, the country's No. 4 long-
distance carrier, on Friday announced it had completed debt
restructuring deals with main creditors such as Telefonos de
Mexico (Telmex), South American Business Information said in a
report Tuesday. Protel has paid off current account debts to
Telmex. The deal includes adherence to one-off investment concept
payments and the new tariff structure as well as a commitment to
combating by-passing. The agreement, which has put an end to
legal and regulatory disputes between the two companies, is
reportedly similar in nature to those struck by Telmex and partly
U.S.-owned carriers Alestra and Avantel early this year.

Also on Friday, Protel said that it had reached an agreement with
U.S.-based Vertec, which owns a large minority stake in the
company, to restructure $27 million in debt.




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
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