/raid1/www/Hosts/bankrupt/TCRLA_Public/011011.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, October 11, 2001, Vol. 2, Issue 199

                           Headlines


A R G E N T I N A

TOWER RECORDS: Sells Argentina, Hong Kong and Taiwan Operations
TOWER RECORDS: Successfully Renegotiates Bank Loan Agreement


B R A Z I L

EMBRAER: BES Analysts Downplay Order Delays, Reiterate `Buy'
EMBRATEL PARTICIPACOES: Signs 5-Yr. Satellite Deal With Schahin
FRIGOVERDI: Declared Bankrupt, Fails To Meet Debt Obligations
MOULINEX: Two Takeover Offers Evoke Talks Of Liquidation
PAPEIS SANTO: Auctions Complex To Help Pay Down Debts
VASP: AGU Alleges Bribery, Plans To Overturn TRF Ruling


C H I L E

MICHILLA COPPER: Mine's Future To Be Decided By Month End
TELEFONICA CTC: Strikes $32M Ad Revenue Deal With Publiguias


C O L O M B I A

AVIANCA: Shareholders Approve Stock Sale To Help Slash Debts


M E X I C O

BANCRECER: IPAB Disappointed With Lackluster Loan Portfolio Sale
GRUPO MEXICO: Asarco Announces Imminent Layoffs, Production Cuts
MAXCOM TELECOMUNICACIONES: Announces Ops Report For September 01


     - - - - - - - - - - -


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

TOWER RECORDS: Sells Argentina, Hong Kong and Taiwan Operations
---------------------------------------------------------------
In a company press release, MTS, Incorporated, dba Tower Records,
the world's largest independent entertainment software retailer,
announced Tuesday the completed sale of its operations in
Argentina, Hong Kong and Taiwan, and the execution of Tower
Records franchise agreements in those territories.

Following news Monday that the retailer successfully inked an
amendment to its bank deal, today's statement further attests to
the company's commitment to its business plan, put into effect
earlier this year. Michael Solomon, President & CEO for Tower
Records said, "The divestiture of these foreign operations keeps
us on track with the set of initiatives we have undertaken as
part of our ongoing business program to improve Tower's
performance. The conversion of six of our stores to Tower Records
franchises will enable us to leverage brand equity without
incurring further capital investment or net operating losses."

Local record retailer, Cosmos Records Co. Ltd., a wholly owned
subsidiary of UFO International Co., Ltd., has acquired Tower
Records locations and operations in Taiwan and Hong Kong. The
company has 18 years experience in the music business and intends
to build the existing store portfolio, adding one to two stores
per year over the next four years. Tower Records Franchise
Division confirmed that Cosmos Records is scheduled to open a new
Tower Records store in Taipei later this week, representing the
third in Taiwan.

The four Tower Records stores in Argentina have been sold to
Condor Records, which will continue to operate and expand in that
country under the Tower name, as economic conditions turn around.
Michael Solomon said further, "Tower has established strong brand
recognition in Argentina, as well as a solid customer base.
However the prolonged Argentine recession thwarted our ability to
further expand the company in that country. We believe that, as a
local investor, Condor Records is well positioned to capitalize
on the current changing record retail environment."

Bob Kaufman, Senior Vice President for Tower Records
International Franchises said, "We expect that the sale and
licensing of Tower Records' operations in Taiwan, Hong Kong and
Argentina will enable us to expand our business in these
territories and capitalize on market opportunities. We are proud
to welcome Cosmos Records in Taiwan and Hong Kong and Condor
Records in Argentina to the Tower Records Franchise family."

CONTACT:  Louise Solomon, PR Manager of Tower Records,
          +1-916-373-2574
          

TOWER RECORDS: Successfully Renegotiates Bank Loan Agreement
------------------------------------------------------------
MTS, Incorporated, dba Tower Records, announced Monday the
completion of an amendment to its bank loan agreement with its
consortium of 11 banks led by JP Morgan Chase.

The original loan agreement with it is accelerated pay down
schedule has been significantly amended to provide Tower Records
greater credit availability. Prior to the amendment, credit
available under the facility was $195 million from October 1
through December 31, and $100 million thereafter. Following the
amendment, Tower's credit facility will be $205 million through
December 31 and $195 million through April 2002.

Michael Solomon, President and CEO for Tower Records said, "We
are delighted with our new bank deal, which provides our company
with good financial flexibility to maintain operations. We will
continue to implement the solid business plan we put into effect,
in order to meet industry and economic challenges. As a music
retailer with 40 years in the business, we are committed to our
business partners, our customers, and to ensuring that Tower
Records thrives."

Tower, like other music retailers, has recently suffered from a
decline in album sales and competition from discount retailers
and Internet-based vendors. It has 173 stores, down from 187 at
the end of April.

Earlier this year, Moody's Investors Service and Standard &
Poor's downgraded Tower's credit and debt ratings to low "junk"
grades. Both questioned whether Tower could make debt payments
absent new financing, and Moody's warned that bankruptcy was
"likely" if Tower couldn't find new cash or pay off its banks.

Moody's has assigned Tower a `Caa1' senior implied rating and
`Ca' rating for its $110 million of subordinated notes,
respectively its fifth and second lowest grades. S&P's equivalent
ratings are `CCC' and `CC,' its fourth and second lowest grades
other than default.

CONTACT:  Louise Solomon, PR Manager of Tower Records,
          +1-916-373-2574
          


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

EMBRAER: BES Analysts Downplay Order Delays, Reiterate `Buy'
------------------------------------------------------------
Shares of Empresa Brasileira de Aeronautica SA (EMBR4 BS) on
Monday rose 2 percent to 8.57 reais, reported Bloomberg. BES
Securities said in a report considering the company's
fundamentals and the current scenario for the sector, the fourth-
largest aircraft maker's shares are at a low level.

"We do not believe in cancellation in orders but in the
postponing of orders," the report says. BES Securities rates the
shares `buy.' Economists at BES expect the world economy to start
growing in the second half 2002.


EMBRATEL PARTICIPACOES: Signs 5-Yr. Satellite Deal With Schahin
---------------------------------------------------------------
Brazilian long-distance telephone company Embratel Participacoes
SA established a five-year contract with Schahin Administracao e
Informatica for the supply of the service Movsat C, through which
vehicles can be monitored anywhere in Brazil, Jornal do Commercio
reported without revealing the value of the contract. Movsat C is
the communication element of Controlsat from Schahin which
currently has 6,000 terminals. The satellite system used to
provide the service is the Inmarsat operated by Consorcion
Internacional Inmarsat (International Mobile Satellite
Organization) associated to Embratel.

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


FRIGOVERDI: Declared Bankrupt, Fails To Meet Debt Obligations
-------------------------------------------------------------
Meat packing company Frigoverdi failed to pay its debt
obligations leading to the declaration of its bankruptcy in the
state of Mato Grosso, Valor Economico reported October 4.
Frigoverdi had an agreement with creditors since last year in
September, but it failed to pay 40 percent of its R$51.2 million
debt outlined in the agreement. Company owner Celso Perini
revealed that the business only got worse after the agreement,
with meat producers demanding cash up front and banks cutting
credit. The company's European export plans were seriously
affected by consumer concerns over mad cow and foot and mouth
disease which plagued the industry last year.


MOULINEX: Two Takeover Offers Evoke Talks Of Liquidation
--------------------------------------------------------
Didier Segard and Francisque Gay, the two administrators
appointed to oversee troubled French-Italian appliance
manufacturer Moulinex-Brandt, addressed an open letter to the
group's employees on Friday, Les Echos reported Tuesday. In the
letter, they stated their belief that the takeover offers made by
Fidei and SEB are insufficient, and evoking the possibility of
the group's liquidation.

"It would be better if the offers were substantially improved.
Otherwise, it may be feared that the court has to transform
judicial regulation into judicial liquidation," administrators
said in the letter.

The two partial offers are the only bids to have been taken
seriously. Canadian holding company Euroland, which had stated
its readiness to take complete control of Moulinex and its
employees, has not submitted the promised certified cheque.
However, the group confirmed early this week its wish to take
total control of Moulinex-Brandt.

Moulinex-Brandt, which has interests in 11 countries from China
to Brazil, and debt at the end of last year of 766 million euros,
filed for bankruptcy on September 7, putting 21,000 jobs -- more
than half of which are in France -- at risk.


PAPEIS SANTO: Auctions Complex To Help Pay Down Debts
-----------------------------------------------------
The industrial complex of the Brazilian paper company Papeis
Santo Amaro was scheduled to go on the auction block Wednesday, O
Globo said in a report. The minimum price was set at R$39
million. The complex is made up of two industrial plants and an
18,000-hectare forest area in the state of Bahia. Proceeds of the
sale will be used to help the company pay off debts of more than
R$133 million. Papeis Santo Amaro went bankrupt in May last year.


VARIG: May Have To Disburse $50M This Month
-------------------------------------------
Leading Brazilian airline will have to shell out some US$50
million this month if investors that previously acquired its
bonus in the international market advance their right of
withdrawal, Valor Economico reported Monday. The company failed
to pay part of a recent maturity estimated at US$100 million,
causing concern about the notes. Varig's debt now totals US$1.3
billion. It has outlined a plan to reduce costs, and predicts
raising US$156 million through the issuance of new debt over the
next five years.


VASP: AGU Alleges Bribery, Plans To Overturn TRF Ruling
-------------------------------------------------------
The Brazilian AGU (Advocacia Geral da Uniao) accused Vasp of
bribery following the Brazilian airline's recent $1 billion
victorious lawsuit against it over ticket price controls during
the late 1980s, Valor Economico reported Monday. AGU announced
plans to make an appeal to the decision of the TRF (Tribunal
Regional Federal) that assured the airline of indemnification for
the supposed losses reported between 1986-1992 when the air
tariffs were frozen. The TRF had voted 4-3 in favor of the
airline, agreeing that it was unfairly harmed when the government
barred airlines from raising ticket prices from 1987.



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

MICHILLA COPPER: Mine's Future To Be Decided By Month End
---------------------------------------------------------
Chile's Antofagasta Minerals expects to decide the future of its
Michilla copper mine within two weeks, announced legal affairs
director Ramon Jara in a report Tuesday in Business News
Americas. The official's announcement came in response to local
press reports that the mine will start closing in December.

"Closing is one of the alternatives we're looking at, but no
decision has been made," Jara said. "We expect to clear the
situation up within two weeks and present a proposal to the
board."

Michilla union leaders, headed by Ramon Contreras, held a press
conference Monday (Oct.8) to announce the "imminent" closure of
the mine, which they said would result in 1,500 job losses.
According to Antofagasta, Michilla has 463 direct employees, but
1,000 indirect jobs would also go, the union leaders said.

The planned closure of the Michilla copper mine is reportedly due
to the losses brought about by a slide in the prices for the
metal.


TELEFONICA CTC: Strikes $32M Ad Revenue Deal With Publiguias
------------------------------------------------------------
Telefonica CTC announced it has signed a new US$32-million
contract with Publiguias, a company involved in (Yellow Pages and
White Pages) Directories, Estrategia reported October 1. The deal
will see Telefonica receiving a percentage of the revenues from
advertisement in the Yellow Pages and White Pages. In addition,
Publiguias will pay Telefonica CTC a fee per client for the
permanent updating done by Telefonica CTC to its database.

The contract terms run from the third quarter of the current year
up to June 2006, anticipating the termination of the current
contract due in December 2002. Telefonica CTC has a 9 percent
participation in Publiguias.



===============
C O L O M B I A
===============

AVIANCA: Shareholders Approve Stock Sale To Help Slash Debts
------------------------------------------------------------
Avianca shareholders agreed to a plan to sell $68.5 million in
equity at a meeting held on Friday to help pay off the cash-
strapped Colombian airline's debt, Reuters revealed in a report.  

"This operation seeks to help the company overcome its problems
for awhile, at least until the government rules on the merger,"
according to a source, who asked not be named.

Avianca had forecast loses for 2001 to reach about $171 million,
owing in part to fallout after the Sept. 11 attacks in the United
States -- which have hurt business and dramatically increased
insurance costs, the source related.

Avianca is currently seeking a merger deal with Colombia's No. 2
airline, Aces. The merger was initially rejected by the
government's anti-trust body over fears it would create a
monopoly power in the domestic market. Avianca and Aces have
appealed the ruling.



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

BANCRECER: IPAB Disappointed With Lackluster Loan Portfolio Sale
----------------------------------------------------------------
The outcome of last week's attempted sale of six past-due loan
portfolios belonging to intervened bank Bancrecer was a
disappointment to Mexico's Bank Savings Protection Agency (IPAB),
Business News Americas reported Tuesday. IPAB placed six
portfolios on the block last week, but it was able to sell only
one, when a buyer calling itself Lend Lease International
Distressed Debt III offered US$20.8 million for a package
consisting of 262 commercial and industrial loans.

The buying price represented 16 percent of the loan package's
total book value and was "a bargain," according to an IPAB
source. The agency declared the other five sales null and void
after failing to receive an acceptable bid. The total book value
of the portfolios came to US$872 million. IPAB will try to sell
the loan portfolios again at a later date when market conditions
improve.

Proceeds from the sale of the loan portfolios will be used to
reduce the cost of the government's bailout of the banking
industry following the 1994-1995 crisis.


GRUPO MEXICO: Asarco Announces Imminent Layoffs, Production Cuts
----------------------------------------------------------------
Due to a sharp downturn in global zinc prices this year, Grupo
Mexico U.S. subsidiary Asarco issued warnings to its 363 workers
about imminent layoffs and cuts in production in three Tennessee
zinc mines, Reuters reported Monday.

Asarco spokesman Jerry Cooper disclosed that on October 1 the
company issued Worker Adjustment Retraining Notification (WARN)
Act notices to employees at the Coy and Immel mines and the Young
mine and mill near Knoxville. Asarco is required by law to give
workers a 60-day advance warning of potential layoffs, and the
notification was done partly as a formality, although production
cuts may come before then, Cooper said.

Asarco is now currently weighing three options at the zinc mines,
ranging from complete suspension of output to partial curtailment
to no action at all, Cooper said.


MAXCOM TELECOMUNICACIONES: Announces Ops Report For September 01
----------------------------------------------------------------
In a company press release, Maxcom Telecomunicaciones reported
improving operational results.

    * Turnaround materialized: 56,800 lines in service
    * Line count doubled in 6 months
    * Net additions in September 2001 equal to full year 2000
    * Churn rate drops below 1%
    * Customer base up 150% in 6 months

Maxcom Telecomunicaciones, S.A. de C.V., a facilities-based
telecommunications provider (CLEC) using a "smart build" approach
to focus on small- and medium-sized businesses and residential
customers in Mexico City and Puebla, today announced its
September 2001 operational metrics.

During the month of September 2001, the company achieved a record
number of net additions with 9,900 lines; churn level of 0.9%;
and, as of September 30, 2001, 32,600 customers were connected to
its network.

Since taking operational control of the company, the new
management team has been continuously demonstrating its
turnaround capabilities, month after month and quarter over
quarter.

"We are dealing here with a local economy slowdown combined with
global uncertainty, both in the macroeconomic and the political
arenas; we are being very careful as to assess our investment
commitments, but our own results and cash on hand encourage us to
continue into our next target: EBITDA breakeven by the end of
this year or early next year, something unforeseeable for Maxcom
shareholders, even 6 months ago," said Fulvio Del Valle,
President and Chief Executive Officer, who added: "It is exciting
to see the number of challenges being met at Maxcom and to have
the team committed for its execution."

Full third quarter 2001 earnings report will be released by the
end of October, 2001.

                        Y2000    1Q01     2Q01     3Q01   Sep-01
Installations          27,983   6,024   10,982   27,459   10,336
Disconnections         18,506   4,582    6,129    3,878      430
Net additions           9,477   1,442    4,853   23,581    9,906
Lines EOP              26,910  28,352   33,205   56,786   56,786
Customers EOP          11,264  13,208   18,653   32,621   32,621




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 240/629-3300.


* * * End of Transmission * * *