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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

            Monday, October 15, 2001, Vol. 2, Issue 201

                           Headlines


B R A Z I L

BANCO ECONOMICO/MERC. DE PERNAMBUCO: CB Scrambles To Liquidate
PENSAT INC.: Brazil Operations Continue Despite Chapter 11 Filing
SAFIC CVS: Halts Stock, Futures Trading On Increased Losses
VARIG: Suspends New Projects Due To Global Sector Crisis


C H I L E

COMPANIA MINERA: Codelco Considering Exxon Subsidiary Purchase


C O L O M B I A

TERMOCANDELARIA PLANT: AES To Pull Out Of Colombia Due To Losses


E C U A D O R

FILANBANCO: Government To Commence Assets Sale Oct. 18


J A M A I C A

AIR JAMAICA: Angling For Market Share With Full Service Flights
AIR JAMAICA: Voluntary Salary Cuts To Save J$20M Dollars


M E X I C O

AEROMEXICO: Seeks Government Support To Compete With U.S.
AHMSA: Faces Risk After Failing To Meet Deadline, Creditors Warn
BANCRECER: Banorte Denies It Is In Talks With HSBC
GRUPO BITAL: Hires CSFB To Find Investors
SANLUIS CORPORACION: Analysts Blame Default On Cash Flow Problem


     - - - - - - - - - -


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

BANCO ECONOMICO/MERC. DE PERNAMBUCO: CB Scrambles To Liquidate
--------------------------------------------------------------
The Brazilian Central Bank wants to conclude until early near
year the liquidation of the banks Economico and Mercantil de
Pernambuco, South American Business Information reported Tuesday.
Accordingly, the bank awaits legal opinion to complete the
operation, which includes the sale of R$5 billion worth of
government paper indexed by the exchange variation and used as a
warranty among the institutions properties. Due to the exchange
devaluation of almost 30 percent in 2001, the paper would settle
the debts.


PENSAT INC.: Brazil Operations Continue Despite Chapter 11 Filing
----------------------------------------------------------------
DataStream Global Communications (Pink Sheets:CDXX) announced
Thursday that its Pensat, Inc. subsidiary has filed a voluntary
petition for relief under chapter 11 of the Bankruptcy Code as an
initial step in executing a financial restructuring of the
company. The petition was filed on October 9, 2001 in the United
States Bankruptcy Court for the District of Columbia.

The company stated that current conditions facing the national
economy and in particular the telecom and financial markets, have
created an environment in which it has been unsuccessful in
securing the financing necessary to fund the working capital
requirements to continue its USA based operations resulting in
the accumulation of excessive losses in this business unit.
Without the access to funds necessary to meet on-going business
expenses in the USA, the management terminated operations in the
USA and filed its voluntary petition for chapter 11 relief.

The company emphasized that although it has ceased its USA based
operations, its international subsidiaries in Spain, Brazil and
Syria continue to operate as usual and are expected to remain as
on-going businesses. Management stated that it elected to enter
into a chapter 11 reorganization in order to facilitate obtaining
new financing for growth of its international subsidiaries and
expects to be successful in securing such financing.

About DataStream Global Communications

DataStream Global Communications ( www.datastreamglobal.com),
headquartered in Bethesda, MD is an international integrated
communications provider (ICP) with licensed operations in Spain
and Brazil and functions under special agreements in Syria and
provides a wide array of data, telecommunications and network
services, including local operations, long distance, data
transport, high speed Internet access, prepaid calling cards,
carrier wholesale and international private line. DataStream has
offices in Bethesda, MD and international offices and network
operations in Madrid and Barcelona, Spain; Sao Paulo, Brazil; and
Damascus, Aleppo and Lattakia, Syria.

CONTACT:  DataStream Global Communications
          info@datastreamglobal.com


SAFIC CVS: Halts Stock, Futures Trading On Increased Losses
-----------------------------------------------------------
Brazilian brokerage Safic CVC SA halted operations on Brazil's
stock and futures markets amid deepening losses, the company's
president revealed. In a Bloomberg report published Thursday,
James Ferraz Alvim, one of two chief partners in the 70-person
firm, disclosed that Safic would close out or sell its positions
on Sao Paulo's BM&F commodities and futures exchange over the
next 10 days. Furthermore, the company plans to seek an
additional partner or enter new business ventures, such as asset
management.

"We were just losing too much money," Alvim said. "It didn't make
sense to continue."


VARIG: Suspends New Projects Due To Global Sector Crisis
--------------------------------------------------------
Varig decided to postpone projects, which been developed to
attract new shareholders, due to the crisis in the air
transportation sector and the slowdown of the international
economy, O Estado de Sao Paulo reported Wednesday. Despite the
current scenery, Varig is creating a new subsidiary (maintenance
and engineering), which is slated to begin operating by early
2002. Several foreign groups had expressed interest in acquiring
a stake in the group's logistic company VarigLog but the
negotiations were suspended.

CONTACT:  VARIG Brazilian Airlines, Miami
          Jeff Kriendler, 305/866-2115



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

COMPANIA MINERA: Codelco Considering Exxon Subsidiary Purchase
--------------------------------------------------------------
Codelco President Juan Villarzu revealed that the Chilean state-
owned mining company has expressed an interest in acquiring a
subsidiary of Exxon Mobil Corporation, EFE reported Thursday.
According to the report, Codelco has signed a confidentiality
agreement with Exxon to assess the viability of acquiring
Compania Minera Disputada de las Condes Ltda.

Codelco is primarily interested in the Exxon subsidiary's Los
Bronces deposits and has reportedly offered between $800 million
and $850 million for the deposits.

"Codelco is interested in this possible acquisition because we
are convinced that, from both the mid- and long-term
perspectives, the demand for copper will continue to grow in
response to global economic expansion," Villarzu said.

Exxon had previously announced its intention to liquidate assets
in Chile.



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

TERMOCANDELARIA PLANT: AES To Pull Out Of Colombia Due To Losses
----------------------------------------------------------------
U.S. energy firm AES announced on October 8 its intention to
close down its 300 MW Termocandelaria gas-fired power plant in
Colombia, Reuters said in a report. The company blamed its
decision on losses caused by the new government regulations and
the country's armed conflict.

"Short- and medium-term perspectives, given current regulation
and market conditions, leave us no other option," said AES.

AES informed that the $150-million Termocandelaria plant, which
it has operated in the port city of Cartagena since acquiring it
from KMR Power Corporation in November 2000, would withdraw from
Colombia's energy grid on Dec. 3.

According to the president of the Colombian Power Generators
Association, Francisco Ochoa, it is likely that AES will
dismantle Termocandelaria for reassembly elsewhere, perhaps in
Brazil or California.

AES's situation in Colombia has deteriorated since March, when
the government decided it would no longer compensate companies
for losses incurred due to attacks by leftist guerrillas on the
country's high-voltage power pylons.



=============
E C U A D O R
=============

FILANBANCO: Government To Commence Assets Sale Oct. 18
-------------------------------------------------
Ecuador's presidency announced Wednesday that the sale of assets
belonging to Ecuadorian intervened bank Filanbanco will start
October 18 and run until November 4 at the latest, according to a
report in Business News Americas.

The government expects to recover US$200 million from the sale of
the defunct bank's fixed assets, US$600 million from its loan
portfolio and some US$211 million from government bonds used to
capitalize the bank. Financial institutions and individual
investors can bid for different components of the loan portfolio.

The government will use US$450 million from the auction to
reimburse Filanbanco depositors who still have claims on the
bank. Depositors that had deposits above US$10,000 when
Filanbanco was intervened have not yet been reimbursed.
Depositors are allowed to participate in the auction and exchange
their claims for Filanbanco assets.

Another US$25 million will be doled out in the form of severance
payments for employees that will be dismissed after the auction,
whose success will determine how many Filanbanco employees will
be retained to prepare the bank for liquidation. Filanbanco had
some 5,300 employees in May.



=============
J A M A I C A
=============

AIR JAMAICA: Angling For Market Share With Full Service Flights
---------------------------------------------------------------
Gordon "Butch" Stewart, chairman of Air Jamaica, ensured that the
airline would not be cutting back on its services even with its
aggressive bid to manage costs, The Jamaica Observer said
Wednesday in a report.

"You are in a fight to get a bigger piece of what has become a
smaller pie," said Stewart. "Cutting back on services would
worsen things, for service is what will help to make a difference
in this environment."

It was in the search for this business that enhanced service,
such as Air Jamaica's offer of champagne and quality food on its
flights, would help make a difference, Stewart argued.

"Cutting out champagne and food are, of course, well-meaning
suggestions," he said. "It would save some money, but it would
impact on the market. We could possibly explain the move to our
Jamaican travelers and they would understand, however, in the
wider marketplace, we have built a reputation as the airline of
excellent service and we would hurt that."

Air Jamaica, like other airlines around the world, has been hurt
by the September 11 terrorist attacks in the United States when
hijacked passenger planes were used as missiles to bring down the
towers of the World Trade Center in New York and to damage the
Pentagon in Washington.


AIR JAMAICA: Voluntary Salary Cuts To Save J$20M Dollars
--------------------------------------------------------
Air Jamaica expects to save over $20 million (Jamaican) in the
next three months as members of staff voluntarily gave up a
percentage of their salary to save operational costs, RJR Radio
Jamaica said Thursday. According to the report, the majority of
staff members have volunteered to take salary cuts of three to
ten percent until December. The airlines' president and vice
presidents are also taking a ten-percent cut, directors and
general managers will take a six-percent cut and pilots will give
back eight-point-five percent over two months.

The voluntary cuts are part of the airline's efforts to save jobs
in light of the fall out in air travel as a result of last
month's terrorist attacks in the United States. Air Jamaica has
also deferred the start up of all new routes with the exception
of Curacao that will open as scheduled in November.

President and Chief Executive Officer, Christopher Zacca informed
that the airline would continue to review its operations and make
changes where necessary to increase and protect market share.



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

AEROMEXICO: Seeks Government Support To Compete With U.S.
----------------------------------------------------------
Aerovias de Mexico SA (Aeromexico), the country's largest carrier
and Mexicana's sister company, presented a complaint to the
Communications and Transport ministry (SCT) claiming it is a
victim of unfair competition from U.S. airlines, according to CEO
Alfonso Pasquel. In a Mexico City daily Reforma report released
Thursday, the airline claimed that U.S. airlines were able to
drastically reduce fare prices because of subsidies provided by
the U.S. federal government.

"It appears to be grave. We are asking for support form our
authorities because, evidently, they are offering (prices) at
below their costs," said Pasquel. The routes with the widest gaps
in pricing are Mexico-New York, Mexico-Los Angeles, Mexico-Miami
and Mexico-Houston.

Aeromexico, which is owned by holding company Cintra, depends on
flights to and from the U.S. for about 30 percent of its revenue.

CONTACT:  AEROMEXICO
          Mayte Sera Weitzman of AeroMexico, +1-713-744-8446, or
          mweitzman@aeromexico.com



AHMSA: Faces Risk After Failing To Meet Deadline, Creditors Warn
----------------------------------------------------------------
Creditors of the Mexican steelmaker Altos Hornos de Mexico warned
that the firm is in jeopardy after failing to meet the timetable
for a restructuring agreement, Ft.com reported Wednesday.

Ahmsa and its creditors, including Bank of America and Mexico's
BBVA Bancomer, reached an agreement in May to restructure $1.85
billion in debt. However, the steelmaker refused to recognize its
debt and failed to file a request with the US Securities &
Exchange Commission for a bond swap by the agreed September 28
deadline, said BofA's Orlando Loera, president of the creditors'
steering committee. The executive noted that both measures are
considered prerequisites for lifting Ahmsa's payment suspension,
which creditors had hoped to do by the end of the year.

"We doubt the sincerity in the stated desire to lift the payment
suspension," he said. "We doubt they will act in good faith. The
win-win situation is over."

Meanwhile, Ahmsa spokesperson Francisco Orduna explained that the
company had announced earlier this month that the resumption of
payments would be postponed as a result of the terrorist attacks
against the United States. According to him, the delay will only
be for two weeks.

"We're working on the financial information, and we expect to
present a filing soon to the SEC (Securities Exchange
Commission)," said Orduna.


BANCRECER: Banorte Denies It Is In Talks With HSBC
--------------------------------------------------
Mexican financial group Banorte, which recently acquired
Bancrecer, denied rumors that it is in talks with Hong Kong
Shanghai Bank Corporation (HSBC) or any other bank over a
possible sale, Mexican financial daily El Economista reported
Thursday. Despite Banorte's denial, its stock price continued to
rise.

"The truth is that Banorte, now with Bancrecer, is becoming more
attractive, and it wouldn't be at all strange for a foreigner to
buy it. It sounds reasonable. So even though Banorte denies it,
nobody believes them much," said Vector Casa de Bolsa analyst
Abel Hibert.


GRUPO BITAL: Hires CSFB To Find Investors
-----------------------------------------
Grupo Financiero Bital has hired the services of Credit Suisse
First Boston (CSFB) to find domestic or foreign investors that
can provide the group the nearly $300 million required to
complete its process of reorganization, Mexico City daily El
Universal reported Thursday. That amount of funding does not
include the acquisition of Banco del Atlantico, according to a
source, "And if we add the operations of Atlantico, the
requirements reach $500 million."

For the moment, "We are chatting with various groups to determine
which is the best option for the bank," said Bital executives.
Still, just because the bank is looking for financing, "doesn't
mean we'll sell the majority of shares," they said. In recent
months, ING and GE Capital have expressed interest in buying a
stake in the bank.


SANLUIS CORPORACION: Analysts Blame Default On Cash Flow Problem
----------------------------------------------------------------
At risk of stating the obvious, Santander analyst Luis Miranda
told the Mexico City daily Reforma Thursday the reason why
Sanluis Corporacion missed payment on a 200-million dollar
Eurobond due in 2008 is that it doesn't have sufficient resources
to service its debt. Miranda's statement, with which Banamex
analyst Claudio Medina concurred, came amid denials from Sanluis
that it is struggling financially. The company blamed the default
on last month's terrorist attacks in the US. The company is also
expected to default on $93-million in europaper.




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
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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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