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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, July 5, 2001, Vol. 2, Issue 130

                           Headlines


A N T I G U A   &   B A R B U D A

LIAT LTD.: To Deliver Ambitious Flight Schedule


A R G E N T I N A

AEROLINEAS ARGENTINAS: 11th Hour Rescue "Fairly Unlikely"
AEROLINEAS ARGENTINAS: Eurnekian Considers Possible Investment
AEROLINEAS ARGENTINAS: Injunction Prevents Repo Of Airbus Planes
TOWER RECORDS: Closes Three Shops Due To Decrease In Consumption

B R A Z I L

360AMERICAS: Not In Bankruptcy But May Suspend Operations
BANCO ECONOMICO: Copene Shareholders Discuss Auction Details
CVRD: Two Recent Deals Subject Of EU Investigation
CVRD: Government May Sell 32% Of Ordinary Shares By 4Q01
GLOBO CABO: Fires 20% Of Overall Workforce In Bid To Reduce Costs
LOJAS ARAPUA: Workers Cut, Stores Close To Cut Rental Costs


C H I L E

TELEFONICA CTC: Contradicting Opinions Complicate Tariff Freedom
TELEFONICA CTC: Completely Defines New Organizational Structure
TELEX-CHILE: Creditors Approve Plan For Sale


E C U A D O R

BANCO DEL PACIFICO: Central Bank Takes Control


M E X I C O

AHMSA: Faces Challenges On Lifting Payments Suspension
BANCRECER: Forthcoming Sale Attracts Just One Bidder
BUFETE: Won't Be Re-Listed On BMV Or NYSE
GRUPO DINA: To Delay Submission Of Year 2000 Financial Report
SAVIA: Pays Bank Creditors $300M Ending Restructure Phase One


     - - - - - - - - - - -


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A N T I G U A   &   B A R B U D A
=================================

LIAT LTD.: To Deliver Ambitious Flight Schedule
-----------------------------------------------
With its largest hub in Barbados now fully operational since July
1, the regional airline LIAT (1974) Limited is now running
extensive daily services to several Caribbean islands, The Daily
Nation reported Monday. According to the airline's Director of
Market, David Stuart, using Barbados again as an operational hub,
the cash-strapped carrier would be able to serve Dominica through
the Melville Hall airport. Additionally, it will also increase
daily flights to several destinations.

LIAT closed its flight operations, administration and engineering
divisions in Barbados in 1994, putting an estimated 89 employees
out of work and preserving only its reservations and engineering
divisions in Bridgetown. Against the backdrop of increased
competition from other regional airlines, LIAT officials had
announced plans in March to set up the largest operational hub in
the Caribbean in Barbados.

LIAT, which has a longstanding debt of some EC$20 million
(US$7.4) million to regional government for landing and
navigational fees, has sold two of its aircraft, given the need
to raise some funds and replace the older fleet, Stuart said.

According to Stuart, with the planned increase in flights through
the Barbados hub, LIAT would operate the summer schedule with
nine Dash 8 aircraft.

"It's an ambitious schedule, we know that we can deliver it and
we are doing our summer schedule also in cooperation with our
Carib Sky partners ... so our entire north/south operation with
our nine airplanes and the airplanes of our partners, we think
the summer schedule will be achieved," Stuart said.



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

AEROLINEAS ARGENTINAS: 11th Hour Rescue "Fairly Unlikely"
---------------------------------------------------------------
Pedro Ferreras, chairman of Sociedad Estatal de Participaciones
Industriales (SEPI), describes the last minute rescue of the
state holding company's ailing unit, Aerolineas Argentinas, as
"fairly unlikely," AFX Europe reported Monday . According to
Ferreras, if SEPI is unable to sell the Argentine flag carrier,
which filed for protection from creditors June 22, and workers
fail to approve the restructuring plan, "there will be no other
option but to liquidate the company." He added that besides the
letter of intent from Peru's AeroContinente, until now, SEPI has
not yet received firm offers for Aerolineas.


AEROLINEAS ARGENTINAS: Eurnekian Considers Possible Investment
--------------------------------------------------------------
Eduardo Eurnekian, an Argentine businessman who controls a third
of the stock of the Aeropuertos 2000 consortium that operates the
airports in Argentina, revealed there was a possibility he might
invest in Aerolineas Argentinas since he was one of the 12 firms
that requested information on the airline, EFE reported Tuesday.
According to Mr. Eurnekian, SEPI, the Spanish state-owned holding
company and primary stockholder of the nation's flagship airline
Aerolineas Argentinas, "is going to make a public offer" and
provide information on the firm.

"According to my attorney, SEPI is demanding a letter of
confidentiality," the businessman added.

Eurnekian, who is also the marjority shareholder of Argentine
airlines LAPA and Southern Winds, considered the rescue of
Aerolineas Argentinas as feasible. On the other hand, he believes
the spectre of the airline being nationalized again, "is an evil
no one wants."

"If there is any possibility (of acquiring the airline), I would
merge it immediately with LAPA. We can't conceive of the market
as some kind of slaughterhouse where we destroy each other and
end up handing (the airline) on a platter to some foreigner,"
Eurnekian explained. The decision concerning the takeover of the
airline's liabilities, however, "is part of negotiations in which
a countless number of factors are involved," he added.


AEROLINEAS ARGENTINAS: Injunction Prevents Repo Of Airbus Planes
----------------------------------------------------------------
Argentina's ailing flagship, Aerolineas Argentinas, has won a
court injunction to block the looming repossession of four leased
Airbus 340-2000 aircraft, according to court sources in a report
Tuesday in AFX-Asia. The court ruled that taking the planes away
would harm the company's ability to operate, thereby threatening
its survival. The move is considered to be contrary to its
current creditor protection status, said the court.

Aerolineas Argentinas, whith some $900 million in outstanding
debt, has been forced to suspend a number of flights for lack of
funding for aircraft maintenance and fuel. On June 22, the
airline filed for protection from creditors and is waiting for
the judge to approve its request to form a creditors' committee.


TOWER RECORDS: Closes Three Shops Due To Decrease In Consumption
----------------------------------------------------------------
The American record chain Tower Records, which kicked-off
operations in Argentina in 1997 aiming to compete with the record
chain Musimundo of The Exxel Group, is closing three of its five
shops in the city of Buenos Aires due to the internal consumption
decrease, South American Business Information reported Tuesday.
The firm now is analyzing a variety of options including: finding
an investment partner, selling the franchise, or closing the
other two branches and leaving the Argentina entirely.

Since its arrival, the company has invested around US$15 million
in its five branches. In 1999, the company had plans to expand to
the provinces to capture 10 percent of the national music market,  
predicting an annual turnover of US$30 million. That year the
company had sales of US$18 million.

Tower has been struggling under the load of its big debts,
expensive store leases, and increased competition from online
sellers like Amazon.com at time when overall sales are soft. The
chain will be under pressure in coming months from lenders to get
a firm commitment by Oct. 1 from financial institutions for the
debt or equity funding needed or face a December reduction in its
credit facility.



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B R A Z I L
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360AMERICAS: Not In Bankruptcy But May Suspend Operations
---------------------------------------------------------
The Brazilian operation of the Canadian fiber optic network
builder 360networks Inc. will not be harmed by its recent filing
for protection from creditors, according to a report in South
American Business Information Tuesday edition. However, the local
operation may be suspended operations in the short-term due to
the high costs for implementing submarine optical cables networks
- 360networks' core business. Telecommunications analyst, Dario
Dal Piaz, vice-president of the Yankee Group in Latin America,
forecasted repercussions for the Brazilian market.

"The operation here could come to an end soon," he said. For Dal
Piaz, the failure of the company, if it occurs, will have been
because of financial imprudence.

In Brazil, the company is controlled by the Latin American
subsidiary of 360Americas, with a different name from the parent
company, according to information provided by executives of the
Brazilian subsidiary.

360networks had been struggling with mounting debt and slower
than expected demand. Last week, the company and several of its
operating subsidiaries filed for protection under the Companies'
Creditors Arrangement Act (CCAA) in the Supreme Court of British
Columbia. The company's principal U.S. subsidiary, 360networks
(USA) Inc. and 22 of its affiliates concurrently filed for
protection under Chapter 11 of the U.S. Bankruptcy Code in the
U.S. Bankruptcy Court for the Southern District of New York.

"We are taking these steps to restructure our business and
financial position in a difficult telecommunications
environment," said Greg Maffei, president and chief executive
officer of 360networks. Though the decision to file for
protection was "very disappointing," Maffei said that the company
believes it will provide them the best opportunity to reorganize
and operate their core business.


BANCO ECONOMICO: Copene Shareholders Discuss Auction Details
------------------------------------------------------------
Shareholders of Brazilian petrochemical company Companhia
Petroquimica do Nordeste (Copene), including the Central Bank
(BC), met Monday to discuss Copene's auction details, O Globo
said Tuesday in a report. The auction, which is slated for July
2001, will be the third attempt of the shareholders to sell a 55
percent stake in the company. According to the BC, the sale
rules, including the minimum price of the equity stake fixed at
R$1.366 billion by its last attempt on 12 June this year, will be
released by the end of the week. BC is looking to sell its stake
in Copene to cover part of the costs it incurred in the
liquidation process of the former Banco Economico, which is also
a shareholder in the petrochemical company.


CVRD: Two Recent Deals Subject Of EU Investigation
--------------------------------------------------
Brazil's Companhia Vale do Rio Doce's (CVRDs) recent $700-million
acquisition of iron ore company Ferteco From Germany's Thyssen
Krupp AG (TKAG) and the purchase of a 50 percent stake in Caemi
Mineracao e Metalurgica SA (CMET3) await probe by the European
Commission, Reuters reported Monday. According to the report, the
export market for iron ore is already dominated by CVRD, Rio
Tinto Plc/Ltd (RIO)(RIO) and newly-merged BHP-Billiton (BHP). It
said by some calculations, the three groups' combined share of
global trade may increase to between 75 percent and 80 percent
this year, with BHP-Billiton dominating markets in Asia and CVRD
leading in Europe.

The Commission investigated a bid by BHP for a controlling stake
in Caemi earlier this year, saying that the proposal presented
serious competition problems, and that it would have reduced
competition in the European market for iron ore. The EU said at
the time, had Mitsui not exercised its right to match BHP's
offer, it would have opened an in-depth, four-month probe of the
deal, thus putting an end to the transaction.


CVRD: Government May Sell 32% Of Ordinary Shares By 4Q01
--------------------------------------------------------
The Brazilian government is considering the sale of a 32 percent
stake of ordinary shares in Companhia Vale do Rio Doce (CVRD) in
the last quarter of this year, according to sources close to the
matter, AFX-Europe reported Monday. State-owned development bank,
BNDES, submitted the proposal to the national privatization
counsel (CND) last week. The propsed sale would include buyers on  
both the domestic and foreign markets. However, BNDES still has
to analyze its proposal and then submit a modified version at the
next CND meeting. BNDES will discuss details of the the sale with
the adviser this week. Reports have it that Merrill Lynch will
act as global coordinator, while ABN AMRO Rothschild, will act as
co-coordinator. Banco Bradesco may coordinate the domestic sale.

The equity stake, which is held by the Treasury, has its market
value estimated at US$2 billion. Sale proceeds will be included
in the central bank's US$11-billion fund designed to be set up to
fight speculation against the real.


GLOBO CABO: Fires 20% Of Overall Workforce In Bid To Reduce Costs
-----------------------------------------------------------------
Struggling to reduce costs amidst the backdrop of a 17-percent
slump in the Brazilian currency against the U.S. dollar this
year, Globo Cabo SA, Brazil's No. 1 cable-TV operator and high
speed Internet company, announced plans to dismiss 1,200 workers
and cut contracts with suppliers, Bloomberg reported Tuesday. The
cable operator had about 1.77 billion reais ($757 million) in
debt, most of which is denominated in U.S. dollars.

Globo Cabo, controlled by Brazil's Organizacoes Globo, Microsoft
Corp. and Bradespar SA, also plans to reduce the number of
contracts with suppliers to build its cable network and trim
other expenses in a bid to save $43 million a year, or 10 percent
of its current total costs.

"These decisions aim at preserving the company in this adverse
scenario, maintaining at the same time its service quality as
well as to keep pace in order to regain growth as soon as the
economic scenario changes," Globo Cabo said in a press release.


LOJAS ARAPUA: Workers Cut, Stores Close To Cut Rental Costs
------------------------------------------------------------
The Brazilian retail chain Lojas Arapua, which applied for
bankruptcy protection from creditors in June 1998, laid off 100
managers and closed six stores in June in an effort to slash
rental costs, according to a report in South American Business
Information Tuesday edition. The company has seen a 20-percent
drop in sales in the last two months of the energy crisis and has
had to find a corresponding 20-percent reduction in costs. Lojas
had been hoping to re-establish itself following its default
crisis of 1997 to 1999, but high interest rates and the energy
crisis have dashed its hopes. Meanwhile, the company is changing
its product mix to focus on furniture, which is less vulnerable
to the energy crisis than domestic appliances.



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

TELEFONICA CTC: Contradicting Opinions Complicate Tariff Freedom
----------------------------------------------------------------
Throughout the years, the Regulatory Commission has received
different documents showing a contradiction in companies'
opinions regarding market regulations. The variance has thus
clouded Telefonica CTC Chile's request to liberate its tariffs,
South American Business Information revealed Tuesday.

In 1989, Telefonica CTC stated that cellular telephony would not
replace fixed telephony services since its costs are different
both for users and the concessionary company. Now, the company
says that mobile and fixed telephony are the same voice
telecommunication service considering the host of changes in the
market have taken place since then. Today mobile telephony
surpassing fixed telephony for subscribers and technological
changes continue.

Telefonica also argues that its leadership in the market could be
eliminated because of the change in the market conditions. The
company saye that there are many cases where decrees once imposed
on companies have been changed after the fact according to market
shifts.


TELEFONICA CTC: Completely Defines New Organizational Structure
---------------------------------------------------------------
The new organizational chart of Telefonica CTC Chile is now
completely defined, according to a report in South American
Business Information Monday edition. The company hopes to
emphasize the potential of three key business aspects with the
change.

The new structure eliminates the vice-president position,
converting it to the corporate management area. The center for
shared services was developed, from which all corporate and
business management can request information, support, and advice.
Business organization has greater emphasis, loosening up the
corporate structure, and giving more freedom to its subsidiaries.
The structure's head is its general management, led by Claudio
Munoz.

Areas or the corporate management are divided into Management
Control and Communications, followed by Finances, Inspection, and
Regulation. The service side of the company is divided into
Residential telephony, Long distance, Company's business, Data,
and Mobile telephony.

Additionally, three support units were developed: Network,
Systems, and Human Resources. Each departmental restructure meant
the lay-off of important workers.


TELEX-CHILE: Creditors Approve Plan For Sale
--------------------------------------------
Creditors, both local and international, have finally struck an
agreement regarding the sale of part of Telex-Chile, South
American Business Information reported Monday. The agreement,
which is still being finalized and yet to be delivered to
stockholders, came after several board meetings.

Meanwhile, President Jorge Awad says that a decision regarding
the sale of its broadband subsidiary Chilesat has been reached.
Although shareholders have agreed on selling the entire group, an
agreement concerning the sale of a part or the whole holding
company is yet to be drawn.

US group Southern Cross's proposal for Telex-Chile was initally
regarded as below expectations by the creditors, but it has not
been discarded as SC is concurrently pursuing other alternatives.

SC became part of Telex at the end of last year, when it
purchased the equity ownership held by the Radic family. At
present, through Sociedad Telecommunicaciones de Chile, the US
fund controls equal parts of the company with the Ibanez family:
36.45 percent of Telex-Chile.

Telex's value in the market is between US$170 million and US$200
million. The company's debt is close to US$124 million.



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E C U A D O R
=============

BANCO DEL PACIFICO: Central Bank Takes Control
----------------------------------------------
State-held Banco del Pacifico SA is now under the control of
Ecuador's Central Bank after it injected bonds worth $98.9
million to recapitalize the country's second-largest bank,
Bloomberg reported Tuesday. Recapitalization follows the
Ecuadorean court's ruling that $89 million in bonds issued by the
Finance Ministry and injected into the bank by the government
deposit guarantee agency was illegal. Pacifico was subsequently
instructed to return the bonds to the Finance Ministry.

Now, the Central Bank is using bonds held in reserve to
strengthen the Pacifico's capital. Consequently, the deposit
guarantee agency transferred on Monday its ownership of Pacifico
to the Central Bank.

"We were given two options," said Jose Luis Ycaza, the head of
the Central Bank board. "Either the Central Bank increased the
capital or the bank would automatically enter a process of
liquidation."

Courts last week ruled that the $89 million int state bonds
issued by the Finance Ministry last year to recapitalize Pacifico
and restore the bank's capital to the legal minimum was illegal
because Pacifico had shareholders other than the state. Moreover,
the court said that the money was not used to help repay
depositors.

The government seized Banco del Pacifico in October 1999 to
prevent it from collapsing and is now trying to sell it off.



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

AHMSA: Faces Challenges On Lifting Payments Suspension
------------------------------------------------------
Altos Hornos de Mexico, the country's second-largest steelmaker,
suffers a setback in its aim of lifting a two-year-long
suspension of payments. Opposition coming from the Mexican state-
run development bank Banobras has thwarted its current plans,
according to a report Monday in Mexico City daily Reforma. AHMSA
subsidiary Micare, a mining company that exclusively supplies
Mexican state-owned power utility CFE (the Federal Electricity
Commission), owed $79 million to Banobras. While AHMSA's
committee of bank creditors has been working to restructure the
liabilities of Micare and AHMSA holding company GAN, Banobras'
opposition to a $193 million deal on Micare is believed to be
delaying efforts to have AHMSA lift its suspension of payments.


BANCRECER: Forthcoming Sale Attracts Just One Bidder
---------------------------------------------------
The sale of government-intervened Mexican bank Bancrecer, which
bank bailout agency IPAB has slated for October this year, may
see Canadian-owned Grupo Financiero Scotiabank Inverlat as its
only bidder, according to a report Tuesday in Mexico City daily
Reforma. Widespread reports indicate that the Mexican subsidiary
of Spain's Banco Santander Central Hispano (BSCH), which recently
availed access to Bancrecer's data-room, is no longer interested
in making a play for the bank, which book value is estimated at
$400 million.

Grupo Financiero Banorte's recent public statements to the effect
that Banorte is planning to bid for Bancrecer are little more
than attempts to bolster the group's image, suggested
unidentified analysts.

Previous reports revealed that Banorte had formally approached
Deutsche Bank, which is handling Bancrecer's sale for IPAB, to
request information regarding the assets offered in the
forthcoming sale of the government-intervened bank.


BUFETE: Won't Be Re-Listed On BMV Or NYSE
-----------------------------------------
Mexican construction company Bufete Industrial, which was
recently acquired by Sergio Bolanos, will not be listed again on
the Mexican Stock Exchange (BMV) or the New York Stock Exchange
(NYSE), Mexican financial daily El Economista reported Monday.
Bolanos, who paid a token price of 1,000 pesos for Bufete and
assumed responsibility for its liabilities totaling an estimated
$450 million dollars, said that the company would remain
privately held.


GRUPO DINA: To Delay Submission Of Year 2000 Financial Report
-------------------------------------------------------------
Mexican heavy-vehicle maker Grupo Dina announced Friday it would
delay the submission of its year 2000 annual financial report to
the Mexican Stock Exchange (BMV), revealed Mexico City daily
Reforma. According to Dina, its report is yet to be completed
because the company had not been able to obtain mandatory
information from MCII Holdings, which owns a 24.3-percent stake
in the heavy-vehicle maker.

Meanwhile, Dina is reportedly poised to announce that it has
reached an agreement with creditors to restructure $164 million
in bonds maturing 2004. Bondholders have agreed in principle to
the new arrangement.


SAVIA: Pays Bank Creditors $300M Ending Restructure Phase One
-------------------------------------------------------------
Monterrey-based Mexican holding company Savia ends the first
phase of its debt-restructuring efforts after paying $300 million
to bank creditors, Reforma said Friday. The timing of the
payment, immediately prior to the end of the second quarter, was
crucial to the financial reporting requirements of all
institutions involved.

Meanwhile, Savia's decision to divest U.S.-based agro-
biotechnology company Seminis hinges largely on the latter's
future earnings. Seminis recently refinanced $367 million in
debt, most of it with Harris Trust, a subsidiary of Bank of
Montreal.




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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Information contained herein is obtained from sources believed to
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