TCRLA_Public/010924.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

            Monday, September 24, 2001, Vol. 2, Issue 186



AEROLINEAS ARGENTINAS: Aerocontinente Proceeds Despite Crisis
CORREO ARGENTINO: Default On Debt Leads To Bankruptcy Filing


CVRD: Docenave Sells Six Ships
VARIG: To Sack Workers As Part Of Cost Reduction Plan


EDELNOR: AES Extends Sr. Loan Repurchase Offer To 10/4/01
GS INDUSTRIES: To Sell Subsidiary To Chilean Company
TELEX-CHILE: SSB To Conclude Search For Strategic Partner Nov.


AEROMEXICO/MEXICANA: FA's Criticize Planned Job Cuts
AHMSA: Studying Anti-Dumping Complaints Against Europe
BANCRECER: Charges 25% Fixed Interest Rate On Credit Cards
CINTRA: Sale Must Be Put Off, Experts Suggest
GRUPO SIDEK/GRUPO SITUR: Selling Off Subsidiaries' Assets

SANLUIS CORPORACION: S&P Lowers Local, Foreign Currency to 'D'
SANLUIS CORPORACION: Fitch Downgrades Debt Rating To `D'
SANLUIS: Debt-Restructuring Talks With Creditors To Start Soon


ANTELCO: Concedes Legal Action, G$600M Conatel Ruling Stands

     - - - - - - - - - - - -


AEROLINEAS ARGENTINAS: Aerocontinente Proceeds Despite Crisis
Peruvian airline AeroContinente maintained its decision to
purchase Aerolineas Argentinas and Austral, despite the airline
industry crisis stemming from the recent terrorist attacks in the
United States, EFE reported Thursday.

Aerocontinente General Manager Carlos Morales said that Spain's
SEPI, the owner of a majority stake in the Argentine companies,
had been notified about AeroContinente's plans.

"We won't let the attacks in the United States frighten us or
change our plans, because if we did so, we would be yielding to
the terrorists who want to wreck commercial aviation," Morales
said. According to him, his company had presented "the best
labor, financial, economic and operating proposals for the
purchase of Aerolineas Argentinas and Austral."

Morales disclosed that AeroContinente had offered to pay $100
million over 10 years, incorporate eight Boeing 767's within 60
days of the takeover, reschedule the debt of the companies over a
10-year period and negotiate the overhaul of the companies with
the unions.

His conditions were that SEPI pay off fuel debts, plane rentals
and back airline employee wages, plus their earnings for the next
two months as of the takeover date.

CORREO ARGENTINO: Default On Debt Leads To Bankruptcy Filing
Argentina's largest postal carrier Correo Argentina filed for
bankruptcy protection from creditors on Wednesday following a
default on its debt on May 23, according to a report in EFE.

Judge Eduardo Dubois will head the bankruptcy proceedings. Dubois
will determine which debts Correo Argentino must honor, set a
new equity minimum for the firm and analyze the circumstances
that led to the current situation. If a majority of its creditors
reject a restructuring plan, the postal carrier could be forced
into liquidation

Correo Argentino complained that it could not pay its debt
because it was owed $100 million by the government. However the
government countered the complaint claiming it only owes the
postal carrier some $35 million.


CVRD: Docenave Sells Six Ships
In a company press release, Companhia Vale do Rio Doce (NYSE:
RIOpr) (CVRD) announce Thursday that its subsidiary, Navegacao
Vale do Rio Doce S. A. - DOCENAVE (DOCENAVE), sold its six
Brazilian flag ships, with a total capacity of 592,240 DWT, to
Empresa Naviera Elcano, S. A. (ELCANO), the largest Spanish
shipping company.

The value of this transaction is US$53 million. Payment will be
made upon delivery of the ships, slated to occur between
September and December 2001.

The sale of these assets is consistent with CVRD's strategy of
divesting assets that are not related to its core businesses.
Therefore, DOCENAVE intends to divest its remaining dry bulk
cargo carriers. The remaining fleet is comprised of nine ships of
Liberian flag and a total capacity of 905,252 DWT, which are
already being negotiated with other potential buyers.

CONTACT:  Roberto Castello Branco, +55-21-3814-4540, or
, or Andreia Reis,
          +55-21-3814-4643, or, or
          Barbara Geluda, +55-21-3814-4557, or
, or Daniela Tinoco, or
          +55-21-3814-4946, or,
          all of Companhia Vale do Rio Doce

VARIG: To Sack Workers As Part Of Cost Reduction Plan
Saddled with $1.3 billion of debt, Brazil's flagship air carrier,
Varig, on Thursday said it plans to lay off 10 percent of its
17,500-person work force. The company is cutting costs because of
a slump in travel following the terrorist attacks against the
U.S. less than two weeks ago. Varig is taking the reduction
measures as passengers cancel or postpone travel plans on concern
over air traffic safety.

Meanwhile, Varig also plans to suspend 14 percent of its flights
and delay any new investments. A Varig spokesman wouldn't detail
the planned new investments and the company didn't say how long
the flights would be suspended.


EDELNOR: AES Extends Sr. Loan Repurchase Offer To 10/4/01
The AES Corporation (NYSE:AES) has announced that it is extending
the expiration date for its tender offer (the "Offer") for cash
by Luna III, Ltd., a Cayman Islands limited liability exempted
company ("Luna") and wholly owned indirect subsidiary of The AES
Corporation to purchase all of the outstanding (i) 10-1/2% Senior
Loan Participation Certificates due 2005 (the "2005
Certificates") and (ii) 7-3/4% Senior Loan Participation
Certificates due 2006 (the "2006 Certificates" and, together with
the 2005 Certificates, the "Certificates") of Empresa Electrica
del Norte Grande S.A., a Chilean corporation ("Edelnor").

The 2005 Certificates and the 2006 Certificates were issued in an
aggregate principal amount of US$90,000,000 and US$250,000,000,
respectively. The Certificates represent pro rata participation
interests in all payments of principal and interest made in
respect of loans of Edelnor.

The Offer will now expire at 5:00 p.m. New York City time, on
October 4, 2001, unless further extended or earlier terminated.
All other terms remain unchanged.

As of 5:00 p.m., New York City time, on September 17, 2001, Luna
was advised by the exchange agent that approximately US$
10,884,000 of the total amount of the 2006 Certificates were
tendered and none of the 2005 Certificates were tendered.

Information regarding the tender and delivery procedures and
conditions of the Offer is contained in the Offer to Purchase
dated August 6, 2001 and related documents. Copies of these
documents can be obtained by contacting Mellon Investor Services,
at 917/320-6286. Banc of America Securities LLC is the exclusive
dealer manager for the Offer.

Additional information concerning the terms and conditions of the
Offer may be obtained by contacting Banc of America Securities
LLC at 888/292-0070 (toll free) or 704/388-4807 (collect).

CONTACT:  AES Corporation Kenneth R. Woodcock, 703/522-1315

GS INDUSTRIES: To Sell Subsidiary To Chilean Company
Chilean company Compania Electro Metalurgia (ElecMetal) could be
the next owner of ME International foundry in Gary-New Duluth,
Duluth News-Tribune reported Wednesday. ElecMetal offered a bid
of $23.1 million for the Gary-New Duluth plant, as well as
another foundry ME International operates in Tempe, Ariz., and
its corporate offices in Olis.

ME International is currently owned by GS Industries Inc., which
filed for Chapter 11 bankruptcy in February following three
consecutive years of financial losses.

According to Thomas Pitts Jr., an attorney representing ME
International and GS Industries' other subsidiaries, papers to
approve the sale to ElecMetal have been filed with the bankruptcy
judge, but the deal will remain on hold for another month to see
if any higher bidder emerges. If ElecMetal's offer is not topped,
the judge could approve it some time in early November, Pitts

TELEX-CHILE: SSB To Conclude Search For Strategic Partner Nov.
Reports in the local press quoting unnamed sources suggest that
Investment bank Salomon Smith Barney (SSB) should complete its
search for a strategic partner for Chilean telecoms operator
Telex between October 30 and November 15, according to Business
News Americas Thursday.

"The most aggressive offer was submitted by City Main Street, a
North American operator with a presence in 20 countries," one
source revealed.

Other companies, which have submitted bids, include Chilean fixed
line operator Manquehue Net, AT&T, local telecoms holding GTD and
Telex shareholder Southern Cross. SSB will submit the best offer
to Telex shareholders for approval.

Shareholders decided on August 31 to amend the company's charter
in order to sell its principal asset, network and long distance
subsidiary Chilesat. Under the amended charter, Chilesat has been
reclassified as a non-strategic asset, whose sale is still
subject to approval by two-thirds of shareholders.

Chilesat defaulted on a US$8.9 million credit facility in April.
The Telex board subsequently recommended Chilesat's sale after
creditors refused to grant a 12-month grace period.


AEROMEXICO/MEXICANA: FA's Criticize Planned Job Cuts
The recent tragedy in the U.S. should not be used as an excuse to
lay-off employees, according to the flight attendants at Mexicana
de Aviacion and Aeromexico, Mexican financial daily El Economista
reported Thursday. They are urging executives at both companies
to look for other alternatives to resolve the financial problems
that they are experiencing now as a result of the U.S. crisis.

Union Association of Flight Attendants (ASSA) head Alejandra
Barrales said a decision of this nature will have to be taken
after a financial study is carried out between the company and
employees, in order to determine whether it is necessary to
adjust the labor force. Barrales recognized that the airline
industry is currently suffering, but said that the layoff of
workers would not be allowed by the unions.

AEROMEXICO/MEXICANA: Rating Agencies Predict Financial Trouble
Besides laying off employees due to the impact of the recent
terrorist attacks against the U.S. on its finances, Aeromexico
and Mexicana will also fight a price war because of downward
pressure on prices, according to Moody's Mexico CEO Benito Solis
in an Mexican financial daily El Economista Thursday edition.

Just recently, another bond rating agency, Fitch, said its
outlook on Aeromexio and Mexicana is negative, as a result of
last week's crisis in the United States. Aeromexico is currently
rated "BB" and Mexicana is currently rated "BB." Fitch estimated
that each company lost between $5 million and $15 million because
of cancelled flights last week.

Moody's predicted that Cintra's revenues would decline, and that
"something should be done" about the company's debt. Mexicana and
Aeromexico are owned by holding company Cintra, in which the
government has a majority stake.

AHMSA: Studying Anti-Dumping Complaints Against Europe
The debt-laden Mexican iron and steel giant Altos Hornos de
Mexico is now analyzing the launch of anti-dumping complaints
against Eastern European countries and the European Union,
reported Mexico City daily Reforma. The company's spokesperson,
Francisco Orduna, disclosed that the steel producer will present
a complaint against Eastern European countries and will begin a
process of vigilance against imports arriving from the European

Ahmsa's executive council recently ratified an agreement with
creditors to restructure its US$1.85 billion debt. The council
also approved a timetable of activities put forward by the US
Securities & Exchange Commission, which would help the company
re-list on the New York Stock Exchange, from which it was de-
listed late last year. Furthermore, the agreement covers a debt
restructuring program for Ahmsa's parent company, Mexican steel
and industrial conglomerate GAN (Grupo Acereros del Norte), which
itself owes some US$300 million.

BANCRECER: Charges 25% Fixed Interest Rate On Credit Cards
Mexico's Bancrecer will charge credit card clients a fixed
interest rate of 25 percent per year, Mexico City daily Reforma
reported Thursday. However, this will only be applicable to
clients who will transfer their balances to the Deferred Payment
Plan, are current on their payments and have good credit
histories, according to Vice President Raul Triay.

"The program of deferred payments is part of the line of credit
cards, and through a telephone call, the client can transfer
their balance to this plan and pay in three, six or 12 months
with a fixed rate," said Triay. The bank will likely end the year
with close to 70 thousand credit card clients, he predicted. The
bank's other credit cards charge an interest rate of 36 percent,
Triay said.

CINTRA: Sale Must Be Put Off, Experts Suggest
Analysts and airline industry experts, as well as the Mexican
Pilots' Union Association, are calling for the postponement of
the government's sale of airline holding company Cintra, Mexico
City daily Reforma reported Thursday.

According to Vector analyst Carlos Hermosillo, United Airlines
and American Airlines, which were thought to be interested in
acquiring a piece of the Mexican airline industry, are now
concentrating on their own problems brought about by the recent
terrorist attacks in the United States.

"They should proceed very carefully with any decision. Our
position is that Cintra should not be sold, not even if (the
government) completes its aviation policy," said ASPA
spokesperson Francisco Esquivelzeta.

GRUPO SIDEK/GRUPO SITUR: Selling Off Subsidiaries' Assets
Mexican groups Sidek and Situr have initiated the process of
selling off directly or indirectly certain assets owned by the
groups' subsidiaries, Mexican financial daily El Economista
reported Wednesday. The sell-off stand-outs include ten tourist
developments, two plots of undeveloped land, offices, wine-
cellars, residential properties and more. The divestiture will
also include a letter of credit issued by Kapital Haus.

SANLUIS CORPORACION: S&P Lowers Local, Foreign Currency to 'D'
Standard & Poor's lowered Thursday its local and foreign currency
corporate credit ratings on SANLUIS Corporaci˘n S.A. de C.V. to
'D' from double-'B'-minus. Standard & Poor's does not rate any
debt issued by SANLUIS.

The ratings were lowered to 'D' to reflect SANLUIS' voluntary
decision not to honor about $8.9 million in interest payments on
its $200 million notes due 2008, despite having available funds
to meet this obligation.

The outlook on the corporate credit rating had been changed to
negative on May 9, 2001.

Analyst: Jose Coballasi, Mexico City (52) 5-279-2014

SANLUIS CORPORACION: Fitch Downgrades Debt Rating To `D'
Fitch-NY-September 20, 2001: Fitch has lowered the foreign and
local currency ratings of SANLUIS Corporacion, S.A. de C.V.
(SANLUIS) from `BB' to `D'. The rating action is a result of the
company's decision to begin to restructuring its debt
obligations. The company announced today that it will not make
payments on its short-term Euro commercial paper and Euro bonds.
The Euro bonds consist of US$200 million with a coupon of 8.875%
due 2008. An interest payment of US$8.9 million was due Sept. 18,

Despite the apparent availablity of balance sheet cash, the
company has been experiencing difficulties refinancing its short
term indebtedness. The company is taking these actions as a
result of lower liquidity in the international financial markets
and the expectation for a more severe downturn in the U.S.
economy following last week's tragic events. The combination of a
longer term slowdown in U.S. automotive sales and production, and
SANLUIS' recent debt financed capital expenditure investments
that increased brake production capacity has pressured cash flow
available to service debt. In addition, continued low gold and
silver prices for the company's mining operation and the
continued strength of the Mexican Peso versus the dollar has hurt
the profitability of this Mexican exporter.

SANLUIS's ratings had been constrained by high financial leverage
levels, resulting from a sharp increase in debt levels during
1997 and 1998 as the company significantly expanded production
capacity. Consolidated debt as of 6/30/01 totaled US$549.9
million, of which approximately half were direct obligations of
SANLUIS Corp. and the balance obligations of operating

SANLUIS is the leading producer of leaf springs for the NAFTA
market, with estimated market shares of 62% for the United States
and Canada combined and 90% in Mexico. Leaf springs are used in
the suspensions of most pick-up and medium-duty trucks, certain
sport-utility vehicles and some minivans. SANLUIS's auto parts
division also manufactures brake components. SANLUIS's mining
division accounts for 10% of revenues and is a producer of gold
and silver.

Contact: Guido Chamorro 1-312-368-5473, Chicago
         Giovanna Caccialanza 1-212-908-0898, New York.

SANLUIS: Debt-Restructuring Talks With Creditors To Start Soon
Mexico's Sanluis expects to start negotiating with creditors in a
couple of weeks after missing an $8.9 million interest payment on
a $200 million bond that matures in 2008, and failing to rollover
the commercial paper, Bloomberg reported Thursday.

In a statement, the company revealed it "has decided to
temporarily halt the amortization of non-renewable commercial
Europaper and the interest payments on Eurobonds it sold."

About 85 percent of the company's cash flow came from the brakes
and suspensions it sell to automakers such as Ford Motor Co. and
General Motors Corp. The remaining 15 percent was from its gold
mines. Cash flow for the first half of the year sank 39 percent
to $41 million compared with the same period in 2000.

Sanluis said its brakes, suspensions and mining units would
continue to meet customers' orders and would operate financially
independent of the holding company. Those units will be able to
reschedule their debt payments and take out new credit lines even
as the parent company negotiates a restructuring with creditors,
Sanluis said.


ANTELCO: Concedes Legal Action, G$600M Conatel Ruling Stands
Paraguayan telecoms company Antelco will have to pay back to its
clients some G$600 million after it gave up its legal action
against the national telecoms agency Conatel, South American
Business Information reported Tuesday. Conatel had obliged the
company to give back the amount claiming Antelco had overcharged
its clients. More than 1,000 clients complained to Conatel about
the company's higher fees. Antelco is scheduled for privatization
on December 12 of the current year. Spain's Banco Santander
Central Hispano serves the company's financial and investment
adviser in the privatization process.

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
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