/raid1/www/Hosts/bankrupt/TCRLA_Public/010920.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, September 20, 2001, Vol. 2, Issue 184
Headlines
A R G E N T I N A
AEROLINEAS ARGENTINAS: Pescarmona Ups Collateral And Bid Resolve
B O L I V I A
COTEL: Expected To Choose New Members For Electoral Committee
B R A Z I L
EMBRATEL PARTICIPACOES: To Face Tighter Competition Next Year
TRANSBRASIL: Continental Shelves Talks Over Possible Partnership
VARIG: To Launch Code-Share Flight Agreement With Alitalia
C O L O M B I A
AVIANCA: Forms Alliances With European Airlines
E C U A D O R
FILANBANCO: Sale Unlikely Due To Recession Speculation In U.S.
M E X I C O
AEROMEXICO: Cutting Jobs In The Wake Of U.S. Disaster
MCMS, INC.: MSL Proposes Acquisition of Key Assets In Mexico
MEXICANA: Restructuring Operations; Anticipates Lower Demand
P A N A M A
PAFCO: Talks With Workers Reach Standstill
V E N E Z U E L A
ORINOCO IRON: BHP To Sell Ownership To CVG
SIDOR: Seeks Debt-Restructuring Amid Weak Steel Prices
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A R G E N T I N A
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AEROLINEAS ARGENTINAS: Pescarmona Ups Collateral And Bid Resolve
----------------------------------------------------------------
The Argentine business magnate Enrique Pescarmona confirmed
Monday his seriousness towards his bid to acquire Argentine
national carrier Aerolineas Argentinas SA from Spanish state
industrial holding company SEPI. According to a report Tuesday in
El Pais, the businessman has put up the assets of his metal group
Impsa, around Pta75.801bn, as collateral for his bid.
Pescarmona's offer is one of the four bids received by the
Spanish government for its ailing Argentine unit. The other
offers are from Grupo Marsans, one of Spain's leading tour
operators; Juan Carlos Pellegrini, a former chairman of
Aerolineas Argentinas; and an unnamed US investment fund. SEPI
said the government might decide on the winning bidder before the
end of the month.
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B O L I V I A
=============
COTEL: Expected To Choose New Members For Electoral Committee
-------------------------------------------------------------
Bolivian fixed line cooperative Cotel was expected to select a
new electoral committee Tuesday after all six members of which
resigned last week, Business News Americas said in a report.
According to Cotel public relations director Paula Lazarte, the
new electoral committee will be in charge of electing a new
executive board for the La Paz-based company between September 26
- 29.
The most recent government-appointed director Jeny Freyes
completed her term of office on August 20 and the government has
issued a decree to designate another person to intervene the
company until the election process is complete.
Over the last six years Cotel has spent more time being
intervened than in the hands of its legitimate controllers,
revealed electoral committee candidate Jose Antonio Saavedra,
adding that the government should indicate to candidates exactly
how much the company has lost in the time that it has been
without proper leadership. However, Lazarte insisted that the
company's operations had not been affected by the failure to
elect a board.
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B R A Z I L
===========
EMBRATEL PARTICIPACOES: To Face Tighter Competition Next Year
-------------------------------------------------------------
Already struggling to compete against Intelig over long distance
phone call price war, Embratel Participacoes SA, Brazil's largest
long-distance telephone company, will be facing two new
competitors next year when current local service providers,
Telefonica and Telemar, enter with the opening of the market,
Valor Economico reported Monday.
The decision to enter the long distance market is an easy one, as
it requires very little investment in infrastructure. Companies
which offer SMP (Servico Movel Pessoal) mobile service will also
be able to enter the long distance market without any further
obligation imposed by Anatel, the telecommunications regulation
agency.
The challenge for Embratel, preparing to enter the local call
market, is huge. The company will have to make investments of
US$500 million in order to provide service to 108 cities in order
to meet the service requirements for licensing. The company will
also lose long distance business as competition increases.
Embratel is also facing a drop in the growth it predicted in its
data transmission services, as well as reduced prices in this
sector.
For more information on the company's financial statements see:
http://www.bankrupt.com/misc/Embratel.doc
Contact: Embratel Participacoes S.A.
Silvia M.R. Pereira
Investor Relations
tel: (55 21) 2519-9662
fax: (55 21) 2519-6388
email: invest@embratel.com.br
or
Wallace Borges Grecco
Press Relations
tel: (55 21) 2519-7282
fax: (55 21) 2519-8010
email: cmsocial@embratel.net.br
TRANSBRASIL: Continental Shelves Talks Over Possible Partnership
----------------------------------------------------------------
In the wake of recent U.S. events, Continental Airlines Holdings
Inc. managing director in Brazil, Ignace Wirtz, said the company
has decided to put possible partnership talks with Transbrasil on
hold, AFX Europe reported Tuesday. According to Wirtz, the
current situation is not conducive to both parties reaching an
agreement. Continental had been looking to get a bigger foot in
the door in Brazil and snapping up a piece of Transbrasil was
perceived as a way to do it.
VARIG: To Launch Code-Share Flight Agreement With Alitalia
----------------------------------------------------------
Brazilian airline Varig and its Italian counterpart, Alitalia, is
scheduled to put into force this week a code-share agreement
signed in December 2000, according to a report Tuesday in O
Globo. The agreement involves 34 code-share flights per week as
well as cooperation in ground and on-board services.
Varig is currently facing financial difficulties. The company
announced last month that its net loss ballooned to 509.1 million
reais ($203.6 million) in the first half of the year, its biggest
six-month loss ever, due to soaring debt costs.
===============
C O L O M B I A
===============
AVIANCA: Forms Alliances With European Airlines
-----------------------------------------------
Colombia's top airline company Avianca is forming alliances (code
share) with European airlines in order to transport passengers
between Lima (Peru) and Europe, according to a report in Gestion
published Friday. Additionally, it is also contemplating forming
alliances in South America, including Peru, although negotiations
have not started yet. Avianca aims to increase its load factor,
which is presently estimated at 65 percent. The company forecasts
a 10 percent sales growth for this year. The airline transports
between 25,000 and 30,000 passengers per year between Peru and
Colombia.
Cash-strapped Avianca, whose first-half losses widened to 187.5
billion pesos in the first half of 2001, up from 117.7 billion
pesos in the same period of last year, is looking to merge with
Aces, a fellow Colombian airline. Avianca and Aces have said the
merger is needed to help them compete with U.S. carriers
encroaching on international routes.
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E C U A D O R
=============
FILANBANCO: Sale Unlikely Due To Recession Speculation In U.S.
-------------------------------------------------------------
Ecuador is now faced with a more challenging task of selling
about $300 million in assets from the failed state-run bank
Filanbanco SA due to mounting concern over a recession after last
week's terrorist attacks in the U.S., Bloomberg said Tuesday.
The sale, which is scheduled to start next Tuesday with the
auction of packages of assets and liabilities in the form of
government bonds and site and term deposits, had become much more
problematic since the terrorist attacks in the U.S., said
business leaders.
"The fact that the world is seeing a possible recession following
last weeks attacks on the U.S. could make the sale more
difficult," said Joaquin Zevallos, head of the Chamber of
Commerce in the coastal port of Guayaquil.
According to analysts, the sale would likely have failed despite
last week's events in the U.S., given the lack of prior notice
and information to potential buyers.
"Even before all this happened it was incredibly difficult to get
information for potential buyers," said Ramiro Crespo from the
Quito based securities firm Analytica Securities. "The sale has
been poorly organized and buyers haven't been given clear
information or enough time to prepare."
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M E X I C O
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AEROMEXICO: Cutting Jobs In The Wake Of U.S. Disaster
-----------------------------------------------------
Aeromexico Chief Executive Alfonso Pasquel revealed Tuesday that
the airline is planning to cut jobs in the next days due to the
impact of the U.S. attacks last week on its finances, Reuters
reported Tuesday.
"The reduction in flights offered will be between 10 and 20
percent and, unfortunately, we are going to have to take action
... to ensure our viability in the future by reducing personnel,"
related Pasquel without revealing the exact number of jobs likely
to be cut. The company has a work force of 7,000.
The airline suspended its 118 daily flights between Mexico and
the United States after U.S. airspace was closed following the
attacks by hijacked planes on the World Trade Center in New York
and the Pentagon near Washington. Aeromexico resumed flights to
the United States on Saturday amid tightened security after the
U.S. reopened its airspace gradually.
"We were losing $1 million a day, from Tuesday to Friday,"
Pasquel disclosed.
After the attacks, demand for flights dropped, forcing the
airline to lower its number of daily flights, he noted. The
number of passengers was down by around 10 percent to 20 percent,
he said.
Cutbacks would affect ground staff, cleaning staff and companies
providing in-flight food, according to Pasquel.
CONTACT: Mayte Sera Weitzman of AeroMexico, +1-713-744-8446, or
mweitzman@aeromexico.com
MCMS, INC.: MSL Proposes Acquisition of Key Assets In Mexico
------------------------------------------------------------
In a joint press release, Manufacturers' Services Ltd. (MSL)
(NYSE: MSV) announced entering into an agreement to acquire from
MCMS, Inc. operations in Mexico, Asia and the U.S. for $43.5
million. The transaction is subject to approval by the Bankruptcy
Court supervising the Chapter 11 case for MCMS, which was filed
September 18, 2001.
MSL believes the operations that is acquiring are an ideal fit
with its strategic plan to expand operations in low cost regions,
as the acquisition will add operations in Monterrey, Mexico,
Penang, Malaysia and Xiamen, China.
"This combination is a great fit for MSL and our combined
customers. The additional facilities and capabilities will
further round out our global offering and enhance our ability to
serve customers throughout the entire product lifecycle," stated
Bob Donahue, President and COO of MSL. "Both MSL and MCMS use
BaaN as the primary ERP platform and this compatibility will
ensure a smooth and rapid transition as the companies' assets are
combined. The MCMS business principals of providing the highest
levels of customer care will blend perfectly with the MSL
culture."
"We are confident that MSL offers our customers the best
opportunity for world-class manufacturing support. Combined, we
will continue to support the MCMS business philosophy of globally
providing consistent quality systems, manufacturing processes,
procedures and information systems in order to bring strategic
advantages to our customers," said Rick Rowe, MCMS CEO. "Both
companies' cultures are focused on the delivery of first-class
customer care and will help enable a smooth transition through
this process."
About MSL:
Manufacturers' Services Ltd. (MSL) (NYSE:MSV) is a leading global
provider of advanced electronics manufacturing services (EMS) to
original equipment manufacturers (OEMs). The company operates a
global network of manufacturing facilities in the world's major
electronics markets - North America, Europe and Asia. MSL has
developed relationships with leading OEMs in rapidly growing
industries such as wired and wireless communications, networking
and storage equipment, computer systems and peripherals, consumer
electronics, industrial equipment and commercial avionics. MSL
provides integrated supply chain solutions that address all
stages of the product life cycle, including engineering and
design, new product introduction, materials procurement and
management, testing, printed circuit board assembly, product
assembly, systems integration and assembly, order fulfillment,
distribution and after-market support.
About MCMS, Inc.:
MCMS, Inc. is a global leading provider of advanced electronics
manufacturing services to original equipment manufacturers who
primarily serve the data communications, telecommunications, and
computer/memory module industries. We target customers that are
technology leaders in rapidly growing markets, such as Internet
infrastructure, wireless communications and optical networking,
that have complex manufacturing service requirements and that
seek to form long-term relationships with their electronics
manufacturing service providers. We offer a broad range of
electronics manufacturing services, including pre-production
engineering and product design support, prototyping, supply chain
management, manufacturing and testing of printed circuit board
assemblies, full system assembly, end-order fulfillment and
after-sales product support. We deliver this broad range of
services through operations in Nampa, Idaho; Durham, North
Carolina; Penang, Malaysia; Colfontaine, Belgium; Monterrey,
Mexico; Xiamen, China; and San Jose, California. MCMS information
is available by visiting the company's Web site at www.mcms.com.
CONTACT: MSL
Stephen Schultz
(978) 371-5412
stephen.schultz@msl.com
MCMS, Inc.
Johnna Freeman, 208/898-2600
jfreeman@mcms.com
MEXICANA: Restructuring Operations; Anticipates Lower Demand
------------------------------------------------------------
Mexicana spokesman Fernando Martinez on Tuesday revealed that
Mexicana was assessing restructuring its operations to reflect
the anticipated lower demand in the U.S. market, Reuters said in
a report.
"The possibility that traffic to the United States ... collapses,
or if it doesn't collapse, sees a substantial fall, would also
force the company to readjust its operations," Martinez said.
Union officials anticipate Mexicana to announce job cuts shortly
after losing some $2.5 million a day last week, approximately 40
percent of its weekly income.
Martinez did not mention the possible cutbacks but said Mexicana
was watching "very closely the behavior of the market so as to
take the necessary measures."
CONTACT: Jenny Jenks, Marketing Director, International
Division of Mexicana Airlines, +1-210-491-9764, or
ennyjenks@mexicana.com
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P A N A M A
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PAFCO: Talks With Workers Reach Standstill
------------------------------------------
Talks between Panama's Puerto Armuelles Fruit Company (PAFCO) and
its workers for a new collective agreement is now at an impasse,
EFE reported Tuesday. PAFCO union head Jose Morris Quintero
revealed that the company has only presented offers that worsen
the workers' salary conditions. According to Quintero, workers
cannot negotiate because they are currently attempting to prevent
a cooperative from entering a farm called Ceiba, one of three
farms of the Mega 4, which were abandoned by the company in June
because it considered them unproductive.
On August 20, around 3,200 PAFCO workers lodged a strike after
failing to reach an agreement with the company regarding its new
collective and the reincorporation of 540-day laborers to their
posts at the Mega 4 farms. After striking for 10 days, the
workers decided on August 30 to end their work stoppage and
resume negotiations with the company without further threats of
once again walking off the job.
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V E N E Z U E L A
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ORINOCO IRON: BHP To Sell Ownership To CVG
------------------------------------------
Mining company BHP Billiton Group plans to sell its 50 percent
stake in the Venezuelan hot briquetted iron plant Orinoco Iron,
Bloomberg said Wednesday. Accordingly, the Melbourne-based group
will sell the stake to Venezuela's state-owned Corporacion
Venezolana de Guyana for a nominal fee of $1. CVG, which already
owns 13.2 percent of BHP's partner at Orinoco, International
Briquettes Holding Inc. (IBH), will make the $1 offer by the end
of this month. Orinoco Iron, which produces briquettes used to
boost the iron-ore content of the scrap metal that's the primary
material of steel mini-mills, has been teetering on the brink of
collapse.
SIDOR: Seeks Debt-Restructuring Amid Weak Steel Prices
------------------------------------------------------
Venezuelan steelmaker Siderurgica del Orinoco is looking to
restructure its debts due to weak steel prices, according to a
report Tuesday in Bloomberg.
"We have suggested a debt restructuring to the authorities,
partners and banks," Sidor President Martin Berardi said without
revealing how much debt may be restructured. "That is one of two
or three possible scenarios."
In February last year, Sidor reached a debt restructuring
agreement with 23 banks led by Banco Santander Centro Hispano,
Citigroup's Citibank NA, and Venezuela's Banco Provincial SA and
Banco Industrial de Venezuela. The company's ability to service
its debt has been hammered by weak steel prices.
The company expects 2001 revenue to fall even though output will
rise 7 percent to 3 million tons from 2.8 million tons in 2000.
The steelmaker also forecast its fourth consecutive loss since
being sold by the government in 1997.
"If there is going to be a recovery, we will probably see it by
the end of the first quarter," Berardi said. Most of Sidor's
production of steel slabs is exported.
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.
This material is copyrighted and any commercial use, resale or
publication in any form (including e-mail forwarding, electronic
re-mailing and photocopying) is strictly prohibited without prior
written permission of the publishers.
Information contained herein is obtained from sources believed to
be reliable, but is not guaranteed.
The TCR Latin America subscription rate is $575 per half-year,
delivered via e-mail. Additional e-mail subscriptions for
members of the same firm for the term of the initial subscription
or balance thereof are $25 each. For subscription information,
contact Christopher Beard at 301/951-6400.
* * * End of Transmission * * *