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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, August 30, 2001, Vol. 2, Issue 170

                           Headlines



A R G E N T I N A

MULTICANAL: S&P Removes Ratings From CreditWatch
PERKINS: To File For Bankruptcy Protection


B R A Z I L

TRANSBRASIL: Sheds One Third Of Staff To Reverse Losses


C H I L E

TELEFONICA CTC: Signs Unbundling Contracts With Telcos, ISPs
TELEX-CHILE: Signs MoU With Creditors Over Debt-Restructuring
TELEX-CHILE: Calls Meeting Aug 31 To Vote On Statutory Changes


M E X I C O

AHMSA: Accused GAN Executives Post Bail
BANCA MIFEL: In Talks With Two Banks Over Equity Investment
GRUMA SA: Named As Defendant Of Antitrust Suit
GRUPO BITAL: To Compete With Dept. Stores With New Payment Card
GRUPO DESC: Hopes To Complete Sale Of Units Within Six Months
HYLSAMEX: Government Probes Guatemalan Steel Product Dumping
PEMEX: In Dire Need Of Private Investment
PEMEX: Yet To Receive Complaints From Customers Over Gas Deals
QUADRUM: Sees BSCH As Most Beneficial Suitor


P A N A M A

PAFCO: Union To Present `Counterproposal' To End Strike


P A R A G U A Y

ANTELCO: Interested Parties Ask To Delay Auction


U R U G U A Y

PLUNA: Government May Cancel Varig's Concession Contract


     - - - - - - - - - - - -


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

MULTICANAL: S&P Removes Ratings From CreditWatch
------------------------------------------------
Standard & Poor's removed Multicanal SA's ratings from
CreditWatch, and affirmed the cable television's B- long-term
corporate credit and senior unsecured debt, and C short-term
corporate credit ratings, AFX-Europe reported Tuesday.

"The removal from CreditWatch follows a significant reduction of
the company's near-term refinancing risk after the closing of a
two-year US$144 million floating-rate note issued at LIBOR plus a
5.5 percent spread and the sale of a put option on 4 percent of
Direct TV Latin America for US$150 million," S&P said.

The ratings' outlook is negative, reflecting the lack of recovery
in economic activity in Argentina, the correlation of the cable
industry to the level of economic activity in the country, and
the long-lasting high interest rate environment that hinders
Multicanal's ability to improve financial measures.

For more information on the company's financial statements:
http://www.bankrupt.com/misc/Multicanal.pdf


PERKINS: To File For Bankruptcy Protection
------------------------------------------
Deisel motor maker Perkins Argentina SA plans to file for
bankruptcy protection from creditors following the termination of
its commercial relationship with Fiat Argentina SA, Perkins' main
activity, Bloomberg reported Tuesday. The board will present the
plan to shareholders at a meeting Sept. 17.

The end of the Fiat contract "has virtually swamped the company
financially," said Perkins board member Alberto Gasquet. "It does
not permit us to meet our scheduled obligations to suppliers with
genuine resources."

A bankruptcy filing and a negotiated settlement with creditors
would allow the company to protect an important source of jobs in
the city of Cordoba, along with Buenos Aires, Argentina's
principal industrial center, the company said. Perkins hopes to
buy time to revive part of the Fiat contract, as well as expand
business with other clients, including PSA Peugeot Citroen,
France's largest automaker.



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B R A Z I L
===========

TRANSBRASIL: Sheds One Third Of Staff To Reverse Losses
-------------------------------------------------------
In an attempt to stem the tide of losses, Brazil's No. 4 airline
Transbrasil announced a plan Tuesday that it would lay off 1,899
employees from 2,888, or about a third of its total workforce,
reported Reuters. The carrier will also sell three of its Boeing
767-200s and then lease them back as part of the cost-cutting
program. The company hopes to get $60 million from the sale.

Beset by rising costs due to the country's sharply depreciating
currency, the airline also plans to move its base of operations
to Sao Paulo's domestic Congonhas airport from the city's
international Cumbica airport, Transbrasil's President Antonio
Celso Cipriani said.

"We want to concentrate around Congonhas because we believe the
passengers are there," Cipriani said, adding the company's main
executive travel market is concentrated in a small radius around
the airport.

The moves should allow the company to post operating profits in
less than two months and cut administration expenses by 35
percent, or 3.0 million reais ($1.17 million) monthly, he said.

The staff cutbacks should be completed in about 90 days at a cost
of about 7.5 million reais ($2.9 million), Cipriani said, adding
the company was currently in talks with unions to carry out the
job cuts. The cutbacks "are not an unmentionable beast ...
(Transbrasil's) survival depends on it," he said.



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

TELEFONICA CTC: Signs Unbundling Contracts With Telcos, ISPs
------------------------------------------------------------
Telefonica CTC Chile, Chile's largest telecoms provider, has
signed network unbundling contracts with five telcos and ISPs for
the lease of space and lines in its central offices, according to
interconnection manager Manuel Sepulveda in a Business News
Americas report released Tuesday.

"The majority of the contracts are in Santiago and Concepcion.
Most of the requests (for space) are concentrated in only a few
central offices (COs)," Sepulveda said, adding that the company
has gone so far as converting office space at the COs into usable
housing space.

Companies that have unbundling agreements with CTC are: IFX
Networks, Entelphone, Telsur, Infopyme and Emergia. The
agreements cover five contracts for housing, four contracts for
copper pairs (lines that have not been activated), and two
contracts for active lines.

CTC had some 2.7 million fixed lines in service at the end of the
second quarter this year, equivalent to some 82 percent of the
nation's fixed line infrastructure.


TELEX-CHILE: Signs MoU With Creditors Over Debt-Restructuring
-------------------------------------------------------------
Telex-Chile SA announced it has signed with its principal
creditors a memorandum of understanding (MoU) on a program to
restructure the debts of the company and its main subsidiary
Chilesat SA, AFX European Focus reported Monday.

The agreement allows a maturity extension on debt until Dec. 30,
2002, the company informed the Santiago stock exchange. The
extension of the due date on its debt is desigend to give the
company time to find strategic investors and alliances to improve
its business as well as maximize the economic value of the
assets, which the company considers advantageous to sell off.

Moreover, the MoU calls for the sale of assets and the
distribution of proceeds from the sale to write-down debt. If the
net price of the sale of Chilesat is less than or equal to
US$70 million, 90 percent of the proceeds will be distributed to
its creditors, with the remaining 10 percent would be equally
divided between creditors and Chilesat shareholders. If the net
sale price is above US$70 million, the first 70 million will
be distributed as above, with the balance to be divided in equal
parts between creditors and shareholders until all outstanding
debt is paid.


TELEX-CHILE: Calls Meeting Aug 31 To Vote On Statutory Changes
--------------------------------------------------------------
Telex-Chile said it has called an extraordinary shareholders
meeting for Aug 31 to vote on changes to its statutes to allow
the company's debt-restructuring to proceed, AFX European Focus
revealed Monday. If these changes are not approved, the company
may be obliged to declare itself bankrupt under Chilean law.

The company revealed its auditors Ernst & Young have issued a
report saying that under US GAAP, there are substantial doubts
about the company's ability to continue to function as an ongoing
concern. According to the auditors, a successful restructuring of
the company is essential.

Telex-Chile said it would continue to work with its auditors.



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

AHMSA: Accused GAN Executives Post Bail
---------------------------------------
Fernando Gomez Mont, defense lawyer for Grupo Acerero del Norte
(GAN) President Xavier Autrey Maza and CFO Jorge Ancira Elizondo,
revealed that the two executives posted bail of 10 million pesos
each, as part of their appeal against their prison sentences,
Mexico City daily Reforma reported Tuesday. The appeal process
has now passed to a second phase, the steel company said.

"Our objective is to restructure (the company's debt) and the
next step in that will be in September, which will be the
registering of agreement with the creditors in New York," said
Autrey.

Altos Hornos de Mexico (AHMSA), which owns GAN, awaits approval
of the restructuring agreement with its U.S. bank creditors.


BANCA MIFEL: In Talks With Two Banks Over Equity Investment
-----------------------------------------------------------
Hector Reyes Retana, chief executive officer at Mexican Banca
Mifel, revealed that the bank is currently negotiating with two
other banks that are interested in investing in Mifel, Mexican
financial daily El Economista related Tuesday.

"I can't give names, but it would be a minority position. The
current group likes our business and wants to continue talking,
but there are two groups that have looked for us," Reyes said.

The executive's statement comes after he refuted rumors that the
bank is in danger of being intervened in by the financial
regulator, the National Banking and Securities Commission (CNBV).
According to him, there was no reason to doubt the strength of
the bank. He also added that Mifel is one of the `new banks' that
were licensed by the Salinas government after the privatization
of the industry and that survived the 1994-95 economic crisis.
Since its foundation, Mifel has defined its niche market of small
and medium businesses that supply to the nation's larger
industrial chains, Reyes added.


GRUMA SA: Named As Defendant Of Antitrust Suit
----------------------------------------------
El Aguila Food Products Inc., along with other companies, filed a
suit in a U.S. Court against Grupo Bimbo SA and Grupo Industrial
Maseca SA (Gruma), Bloomberg reported Tuesday. The plaintiffs,
which include tortilla producers such as El Aguila, La Espiga de
Oro and La Reyna, allege that Bimbo and Gruma are buying space on
supermarket shelves and preventing competing products from being
displayed, said Irwin Steinberg, executive director of the
Tortilla Industry Association in Dallas. Both the defendants and
the plaintiffs are members of the association.

"They are alleging that the payment of slotting allowances is a
violation of antitrust rules, in other words the payment of money
to buy shelf space," Steinberg said.

He added that though it is common for supermarkets to charge
companies for shelf space to display products, the U.S. companies
allege that "a supermarket has a limited amount of shelf space
for a particular product category and if someone pays enough
money, then other companies are excluded from being in the
market."

Steinberg said that the U.S. Federal Trade Commission is
currently investigating the practice in a separate investigation
that is looking at the whole industry.

TCR-LA earlier reported that Grupo Industrial Maseca SA might
sell its bread business if the division doesn't turn a profit by
year's-end. The company's bread business is now under "total and
complete review" due to losses since it began operations in late
1998 with a $50-million plant near Monterrey.


GRUPO BITAL: To Compete With Dept. Stores With New Payment Card
---------------------------------------------------------------
Grupo Financiero Bital officials revealed that the Mexican bank
will offer new Fixed Payment Card (TPF), with payment periods of
six to 30 months on purchases of electronics, durable goods and
vacations, reported Mexico City daily Reforma Tuesday. The move
is reportedly aimed at competing with department stores.

"The TPF brings together the best characteristics of credit cards
and plans that stores offer," according to Bital Marketing
Manager Gonzalo Vargas Diaz. The card will have fixed interest
rates and payments, and limits based on the client's ability to
pay, Vargas related.

"The default for every purchase will be 18 months, but you can
change the period by calling (the Bital hotline)," he said. There
will be no penalty for early payment, he said.


GRUPO DESC: Hopes To Complete Sale Of Units Within Six Months
-------------------------------------------------------------
With an aim to restore profitability, lessen production costs and
increase quality, Grupo Desc is now in the process of selling its
truck and electric automobile parts units, reported Mexican
financial daily El Economista Tuesday. The sale of these units,
which the company considered to be strategically weak, is
expected to be completed within the next six months, allowing
Desc to focus on auto parts, chemicals, real estate and food
through its subsidiary Cor Fuerte. Desc's truck unit currently
generates annual sales of $6 million, but further development of
the company's truck area would be very expensive.

Desc, which is headed by Fernando Senderos Mestre, saw its
revenue fall 9.1 percent in the second quarter of 2001 to US$554
million. Operating profits fell by 32.3 percent to total US$48
million due to a 13.6-percent drop in car-part demand. The
company has opted to divest of its transmission subsidiary TSP
but will keep up plans for investment of US$100 million, mainly
in its car division, responsible for 46.5 percent of group sales.
Desc is still working at 75 percent capacity at its nigh on 30
plants for car-parts production across Mexico.


HYLSAMEX: Government Probes Guatemalan Steel Product Dumping
------------------------------------------------------------
Mexico's Economy ministry is now investigating the dumping of
Guatemalan standard piping following a request made by steel
company Hylsamex, according to a report Tuesday in Mexico City
daily Reforma. Hyslamex executive Rafael Rubio Perez revealed
there is dumping in excess of 55 percent, and demanded to see a
tariff of an equal percentage. According to the company, the
offending product is standard black and galvanized tubing, used
to conduct water, air, non-corrosive liquids and wires.

Hylsamex subsidiary Grupo Siderurgico de Alfa requested the
investigation, with the support of Tuberia Nacional and Tuberias
Procarsa, on May 22. The companies hope for a preliminary
resolution within four to six months.


PEMEX: In Dire Need Of Private Investment
-----------------------------------------
State-owned oil monopoly Petroleos Mexicanos (Pemex), the world's
third-largest producer, warned Monday that it could face
`collapse' unless it gets more private money, AP said in a
report. In a press statement, the company revealed that the big
challenge for Petroleos Mexicanos in the next few years is to
increase investment in development, something which requires
private investment capital.

According to Pemex general director Raul Munoz Leos, the company
requires investments of $33 billion in production and exploration
for oil and gas in the next five years. He said Pemex's priority
is to increase reserves, particularly of light crude and non-
associated natural gas.

In addition, Pemex needs about $20 billion to upgrade its
refining system, and $1 billion to boost its petrochemical
output, which has fallen to just over one-half of what it was
five years ago.

Munoz Leos warned that under a worst-case scenario in which
investment levels of recent years aren't increased, Pemex could
see a one-third decline in its crude and gas production in five
or six years.

Pemex is the world's third-largest producer with current crude
output of 3.1 million barrels a day. The company is also the
seventh-largest company in terms of reserves, with 26.9 billion
barrels of crude, and ninth largest in terms of assets.

Failure to meet Pemex's investment needs could take Mexico from
its current $11 billion annual surplus in oil and petroleum
products to a $500 million deficit in the medium term. And with
Pemex exporting more and more heavy crude at the expense of light
grades, crude export revenue could drop as much as two-thirds,
Munoz Leos added.


PEMEX: Yet To Receive Complaints From Customers Over Gas Deals
--------------------------------------------------------------
Marcos Ramirez Silva, director at Pemex Gas y Petroquimica
Basica, said the company hasn't received any direct complaints
from customers with the terms of contracts that guarantee the
supply of natural gas at a fixed price of 4 dollars per million
BTUs for the next three years, Mexico City daily Reforma reported
Tuesday. However, he admitted that they are aware that some
companies have gone to the Energy Regulatory Commission to
express their problems.

Companies signed contracts with Pemex for 4 dollars when the
international price of natural gas was at a high. Pemex signed
contracts for 4 dollars with 500 companies, which make up 80
percent of total sales.


QUADRUM: Sees BSCH As Most Beneficial Suitor
---------------------------------------------
Banco Santander Central Hispano (BSCH) is seen as one of the most
probable bidders for Banca Quadrum. Quadrum's owners have been
involved with the Spanish bank for years now, Quadrum sources
revealed Tuesday in a Mexican financial daily El Economista
report. According to sources, the owners of Quadrum have had
dealings with Banca Serfin, which BSCH acquired last year, and
have business alliances making it logical for Quadrum to look to
BSCH for fresh resources. However, Serfin sources denied the
existence of any alliance, as well as any formal negotiations,
between it and Quadrum.

While authorities have not announced the exact amount of funding
that Quadrum needs, estimates by analysts indicate that the
figure cannot be more than $100 million.



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P A N A M A
===========

PAFCO: Union To Present `Counterproposal' To End Strike
-------------------------------------------------------
The Panamanian union representing workers at the Puerto Armuelles
Fruit Co. (PAFCO) was supposed to release Tuesday the terms of
their proposal to Puerto Armuelles Fruit Co. (PAFCO), revealed
the union's legal representative, Antonio Osorio, in an EFE
report.

The workers have already studied a proposal presented by the
company on Monday, which, according to Osorio, called for a 50-
percent pay cut. The PAFCO offer led the union to present a
"counterproposal," he added.

On Aug. 23, PAFCO challenged the strike in a suit filed with the
labor tribunal of the province of Chiriqui, where the company
operates. The union's attorney labeled the suit a legal maneuver
designed to avoid paying the salaries of the 3,200 workers who
support the strike.

PAFCO attorney Pedro Cedeno said that the illegality of the
strike can be proven because workers based their action on the
reopening of Mega 4, a point not included in a collective
bargaining agreement.

"The company's argument is that the union went on strike based on
a reason that is not contained in the list of conditions,
something which, in our opinion, is illegal in accordance with
Article 280 of (Panama's) Labor Code," Cedeno said, adding that
the strike has cost PAFCO $2 million so far.


===============
P A R A G U A Y
===============

ANTELCO: Interested Parties Ask To Delay Auction
------------------------------------------------
Interested parties for the privatization auction of the
Paraguayan telecoms operator Antelco have requested Banco
Santander Central Hispano (BSCH) to postpone the operation,
Diario ABC reported Aug. 23. However, the auction is still
confirmed for December 12 of the current year. Foreign operators
have informed BSCH that there will not be enough time to prepare
a bid until next December.



=============
U R U G U A Y
=============

PLUNA: Government May Cancel Varig's Concession Contract
--------------------------------------------------------
The Uruguayan airline company Pluna expects to post a deficit of
between US$10-12 million this year, El Pais reported Saturday.
The Minister of Transport and Public Works, Lucio Caceres, said
they are now considering terminating the contract of the
concession of the Brazilian airline Varig due to its bad
management. Varig is the manager of Pluna and a partner as well.




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 and Edem
Psamathe P. Alfeche, 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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or balance thereof are $25 each.  For subscription information,
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