TCRLA_Public/010718.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, July 18, 2001, Vol. 2, Issue 139



AEROLINEAS ARGENTINAS: Former Chief Seen As Most Likely Buyer
COTOR: Pushed To The Brink Of Bankruptcy In Current Climate


CVRD: Analysts Predict Firm 2Q01 Quarter Earnings
TRANSBRASIL: GE Capital Asks Court To Enforce Bankruptcy


BANCRECER: Bid Down To Two Candidates; IPAB's Role In Question
CORPORACION GEO: Expects 2Q01 Revenues To Slump Nearly 26%
DESC: Proceeds With Asset Sales
PROTEL TELECOMMUNICATIONS: Seeks To Venture Into New Business


COBRELSA: To Issue Restructuring Plan Within The Next 60 Days
NEGUSA: Elaborates On Restructuring Plan

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AEROLINEAS ARGENTINAS: Former Chief Seen As Most Likely Buyer
Experts close to the situation say that Juan Carlos Pellegrini, a
former chief executive of Aerolineas Argentinas, may emerge as
the most likely candidate to form a coalition to buy the ailing
carrier, World Airline News reported Sunday. Pellegrini has
already met with unions representing Aerolineas employees, and
there is speculation that he may have the backing of other South
American - and even U.S. - airlines.

Spanish state holding company SEPI, which owns a majority stake
in Aerolineas, has reached the end of its patience, and has set a
July 23 deadline for any potential purchaser.

According to a Latin American airline expert, Bob Booth, who is
also Chairman of Miami-based Aviation Management Services, SEPI
will follow through on its threat to cut off funding.

"I believe SEPI is totally serious," Booth said. "The Spanish
government - having sold [Spanish carrier] Iberia - wants out
very badly and this has given them the way out."

Pellegrini, on the other hand, is also equally serious about
putting together a rescue package for the airline he ran in the
1970s, said Booth.

"I personally believe Pellegrini will put together a viable offer
- he has the prestige and contacts," Booth said.

The support of a large Argentine corporation "with deep pockets"
gives Pellegrini extra clout, and Booth says there is a strong
possibility some other airlines might be tempted to join

COTOR: Pushed To The Brink Of Bankruptcy In Current Climate
Cooperativa de Tamberos de Rosariom (Cotor), which sells milk
products to another Argentine co-operative, Sancor, is on the
verge of bankruptcy, according to a report in Bloomberg Monday
issue. The dairy company owes Scotiabank Quilmes, Banco de la
Nacion SA and Banco SA Bisel some $11 million and has asked its
200 employees to take voluntary retirement.

"We have to restructure our debt. That's the agreement with the
creditors," Cotor's president Bernando Arocena said. "We just
couldn't survive the drop in sales caused by the state of this


CVRD: Analysts Predict Firm 2Q01 Quarter Earnings
Analysts expect firm second-quarter earnings from Cia. Vale do
Rio Doce (CVRD), the world's No.1 iron ore miner, Reuters
revealed Monday. However, Brazil's energy rationing and weak
currency, and several acquisitions make them hard to call. Recent
forecasts vary from 320 million reais to 693 million reais ($124
million-$269 million) for the April to June period, compared with
the first quarter's bumper 660 million reais ($256 million)

Analysts largely agree CVRD's results on Wednesday will benefit
from an average 4 percent increase in the price of iron ore and
pellets in the first six months of the year, but other factors
complicate forecasts.

"The results of Vale have more positives than negatives, but many
things are changing in the company," said Sudameris analyst
Vicente Koki.

Analysts expressed uncertainty on how to measure the impact of
Brazil's emergency energy rationing program, particularly on its
electricity-hungry aluminum production.

Additionally, what still remains unclear is the net impact of
CVRD's acquisitions and sales as it pursues a strategy of
focusing on its core mining business. One of its acquisitions is
ore firm Ferteco, which it bought for $700 million, including
about $130 million of its debt, in late April. It has also made a
$280 million offer for half of No. 4 global iron ore producer
Caemi (CMET4). However, this transaction still awaits regulatory
approval. Japan's Mitsui & Co. Ltd. (8031) owns the other half.

On the sell side, CVRD offloaded Cenibra paper and pulp firm for
$670 million in June, although that may not enter the books until
the third quarter.

Whatever the results, CVRD stock has proved a solid investment in
the first half of this year rising about 17 percent so far,
compared with an 8 percent drop in Brazil's benchmark Bovespa
(BVSP) stock index.

According to BES Securities analyst Cristiane Vianna, who sees  
profits coming it at about 462 million reais ($179 million), the
firm would benefit from the rise in iron ore prices and pellets,
but the many varied factors would mean lower profit than the
first quarter.

TRANSBRASIL: GE Capital Asks Court To Enforce Bankruptcy
Trading in Transbrasil shares were suspended on Sao Paulo's stock
exchange for most of Friday amidst reports that GE Capital Corp.
had asked a court to force the carrier into bankruptcy for
failing to pay $2 million of debts on five aircraft, AP said in a

Transbrasil attorney Gianfrancesco Genoso, in a statement
submitted to the exchange, expressed astonishment by GE's action.
He said all pending issues that might exist between the two
companies are object of legal dispute waged in spheres other than
that of bankruptcy.

"We would like to emphasize that it is only a request for
bankruptcy. Transbrasil has not gone bankrupt and there is no
risk that this will happen," Genoso said. "To this point,
however, the company has not been officially notified about the
request," Genoso added.

According to a local report, Transbrasil signed a renegotiated
leasing contract for five aircraft on May 27. Under the contract,
the carrier owes more than $20 million to five different
companies, including the $2.6 million to GE Capital. The court
was expected to rule on GE's request this week.


BANCRECER: Bid Down To Two Candidates; IPAB's Role In Question
The forthcoming auction of government-intervened banking
institution Bancrecer now only has two candidates, namely Roberto
Gonzalez Barrera's Banorte and Canadian Scotiabank, which
operates under the direction of Peter Godsoe, Mexico City daily
Reforma reported Monday. The contest is left with only two
bidders after three other institutions namely, Dutch financial
group ING (ING), Spanish bank Banco Sabadell (SAB) and
Corporativo Mexicano Oconhua SA, which initially had also
expressed interest in the sale, in the end did not provide the
paperwork needed to continue in the process.

Now, with only two bidders remaining for Bancrecer's auction, the
role of the Mexican bank bailout agency IPAB has come into
question. The problem, according to the report, is the role of
IPAB in this contest, as both judge of the deal and participant.
The banking watchdog is also an associate of the Canadians in
Inverlat bank. Up to now, the banking authority has not offered
any comment on what some view as a potential conflict of

The final outcome of the sale is expected to be announced by the
beginning of October.

CORPORACION GEO: Expects 2Q01 Revenues To Slump Nearly 26%
Ivan Vela, investor relations director at Mexican builder
Corporacion Geo, said that the company expected its preliminary
second quarter revenues to come in between 950 million pesos and
1.0 billion pesos ($102 million-$107 million), Mexico City daily
Reforma reported Monday. Based on reported income for the second
quarter 2000 adjusted to July 2001 peso values, this represents a
drop of between 22.9 and 26.8 percent.

"The seasonality of income is a key point for the analysis of
this second quarter. The acceleration of production we
experienced during the first quarter last year makes the basis
for comparison with the same period in 2000 difficult," Vela
said. "All the same, we are expecting a contrary effect for the
third and fourth quarters," he said.

Geo is Mexico's top builder of affordable homes. In the first
quarter of the year, its operating profit fell to 662.1 million
pesos from 725.8 million pesos in the first quarter of 2000.

Previous reports revealed that Geo has been posting a string of
poor results in recent quarters and has seen sales growth slip
from 30 percent in 1999 to 3 percent last year ever since it made
an unsuccessful attempt to expand into the US.

In April, Geo was forced to adopt a controversial "poison pill"
financing stance, issuing options convertible into 50 million Geo
shares, to fend off a possible hostile takeover. The so-called
"Poison pill" allows company executives and employees to retain
control of the company even if a bidder acquires all the
company's shares traded in the stock exchange.

Analysts, on the other hand, have urged Geo to reduce its
borrowing levels and make headway on refinancing a $50-million
Eurobond before May, rather than concentrating on sales growth.
Geo's debt burden is currently $240 million.

Gonzalo Fernandez, a construction analyst at Banco Santander in
Mexico City, had warned that a failure to refinance the loans
could mean a further fall in sales for Geo.

Geo informed it would post its second quarter earnings on July 25
after markets closed.

DESC: Proceeds With Asset Sales
Mexico-based Desc Group, which manufactures and assembles
automotive OEM parts, systems, and components, continues to sell
off non-strategic assets and businesses, especially in the real
estate sector, Mexico City daily Reforma reported Monday. The
move is seen part of the company's divestment program aimed at
restructuring their business portfolios and reducing debt.

Just recently, the conglomerate closed their second quarter
reports, which were basically well received by brokerages such as
JP Morgan, Deustche Bank, Goldman Sachs and UBS. Merrill Lynch,
while generally positive, expressed concern about the share
repurchase last October.

Desc is currently holding 152 million shares from its three
classes of common stock, or roughly 10 percent of its capital.
The Desc strategy, in the hands of former Federal Treasurer Luis
Tellez, is to sell a good proportion of these 152 million shares
after making them more attractive to investors, primarily through
sell offs of real estate assets.

Analysts see DESC's divestment program as a direct consequence of
the company's financial pressure, which began after the company
used cash to buy back a major block of its own shares last year.

PROTEL TELECOMMUNICATIONS: Seeks To Venture Into New Business
After liquidating debts with Telmex and restructuring US$27
million in debts with technological partner Vertec, Protel
Telecommunications Company is now looking at possibly venturing
into new businesses, according to a report Monday in Mexico City
daily Reforma. The company, which is run by Benigno Perez and
Pablo Ruiz, is still contemplating a serious investment in
network infrastructure strengthening in conjunction with Cisco


COBRELSA: To Issue Restructuring Plan Within The Next 60 Days
Copper products manufacturer Cobrelsa (Cobres Laminados) will
come up with a restructuring plan within the next 60 days,
Gestion reported July 9, 2001. Cobrelsa, which has about US$15
million in liabilities, 85 percent of which corresponds to debts
with Wiese Sudameris, recently succeeded in the auction aimed at
supplying coins to the Peruvian central bank, a contract worth
some US$2.5 million per year. The figure represents 50 percent of
the company's production and allows it to continue operating
normally for the time being.

NEGUSA: Elaborates On Restructuring Plan
Negusa, with debts of US$30 million, has detailed its
restructuring plan, including a US$5-million bank loan to be used
as working capital, South American Business Information reported
Monday. A provider of raw commodities and finished products from
coffee and cacao, had taken out a US$25-million bank loan to set
up a chocolate production plant. However, the plant, which
started to operate in 1995, failed to return the desired results.

With a working capital increase, the company predicts generating
annual sales of US$40 million over the next years. Negusa,
registered a turnover of US$16 million last year and forecasts
US$20 million for this year.

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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