TCRLA_Public/011108.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, November 8, 2001, Vol. 2, Issue 219



AEROLINEAS ARGENTINAS: New Owners Willing To Reduce Stake To 51%
BANCO RIO: May Lose $750M Due To "Severe Deterioration"
SIDERAR: Economic Recovery, Import Controls Are Improvement Keys
SOLVAY INDUPA: Shows Improvement But Still Posting Losses


EMBRAER: Seeks To Promote Changes In WTO Finance Rules
VARIG: Canceling Some US Flights Due To Drop In Demand
VESPER: Qualcomm Continues To Restructure Companies


TELEX-CHILE: Negative Earnings Prompt Sale Of Assets


BANRURAL: Rehabilitation To Require Up To 8 Billion Pesos
ENRON: Forms Joint Venture Cogeneration Facility With Tractebel
GRUPO MEXICO: Moody's May Down Foreign Bonds On Weak Metals
GRUPO SIDEK: Asset Sales Report October 1 to 31, 2001
MUNDET: Coca-Cola FEMSA To Bottle, Distribute Trademark Sodas
TRI-NATIONAL: Senior Care Moves Forward With Lawsuit


ANTELCO: Workers Contest Legality Of Privatization Process


VOLCAN: Takes Out US$20M Loan To Cover Current Obligations

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AEROLINEAS ARGENTINAS: New Owners Willing To Reduce Stake To 51%
Spanish airline Air Comet said it is prepared to reduce its stake
in the recently-acquired Argentine national airline Aerolineas
Argentinas to 51 percent, according to a report in Gaceta de los

The Spanish firm is urging Argentine investors to subscribe to at
least 15 percent of a future capital increase of $50 million. The
company is considering allowing some of Aerolineas Argentinas'
creditors, which include banks, Airbus and Repsol, into the
airline's capital in a debt for equity swap.

Under terms of the acquisition, the Spanish company has to hold
the airline's equity for at least two years. Air Comet says it
will allow stable partners into its capital structure, not

Air Comet is looking to reduce Aerolineas Argentinas' costs by
25-30 percent and has planned a 15-20 percent pay cut for its
workforce. In return for the reduction in salaries, airline
employees will be offered shares in the company.

Air Comet expects to reach an agreement by autumn next year
regarding writing off portions of the airline's existing debt.
Under Argentinean law, up to 60 percent of this debt can be
written off.

BANCO RIO: May Lose $750M Due To "Severe Deterioration"
Banco Rio de la Plata SA, Argentina's fourth-largest bank,
projects that a "severe deterioration" in the country, such as a
default or peso devaluation, might cost it $750 million. Such a
deterioration would dramatically increase non-performing loans
and reduce the value of its government bonds, Spanish parent
Banco Santander Central Hispano SA said in a report.

In addition, the Spanish parent said it would have to increase
capital at Banco Rio by as much as $500 million.

Banco Rio recently had its ratings downgraded by Fitch:
--Short-term `C';
--Long-Term downgraded to `CC' Rating Watch Negative; from
  `CCC-`, Rating Outlook Negative;
--Individual Rating `C/D';
--Support `3T'.

SIDERAR: Economic Recovery, Import Controls Are Improvement Keys
The recovery of Argentina's economic activity and the need for an
effective control of imports of sheet steel at dumping prices
will continue to be fundamental factors for improving activity
levels and results, according to steelmaker Siderar SA in an AFX-
Asia report.

In a letter to the bourse stock exchange, Siderar Vice-President
Federico Pena said that the recent decision to increase
protection of the US' steel industry taken by the International
Trade Commission (ITC) adds to an already complicated external

The ITC decision "generates restrictions to global US imports of
steel sheet (and) affects the rest of the international market,
which is reflected in very depressed prices and restricted access
to markets," Pena added.

Siderar posted a net loss of 15.8 million pesos in the first
quarter to Sept. 30, from a profit of 11.6 million pesos a year
earlier. Domestic sales were down 21 percent to 201,000 tonnes,
"one of the lowest levels in the company's history".

SOLVAY INDUPA: Shows Improvement But Still Posting Losses
Recent debt restructuring for Argentine petrochemical producer
Solvay Indupa managed to improve its financial stability, Ambito
Financiero reported.

The company was able to restructure its debts raising an US$84-
million loan in August followed by the placement of US$80 million
worth of bonds in October.

However, the Solvay Indupa still posted losses of 7.1 million in
the third quarter of the financial period.


EMBRAER: Seeks To Promote Changes In WTO Finance Rules
Brazilian aircraft manufacturer Embraer is looking to form an
alliance with China, the newest member of the WTO, Gazeta
Mercantil reported.

Embraer is banking on China's support to promote changes in WTO
finance rules for the exports practiced by the member countries.

The Brazilian company claims it lost some US$4bil in sales of
regional jets due to the illegal subsidies granted by the
Canadian government to Bombardier.

VARIG: Canceling Some US Flights Due To Drop In Demand
Varig, Brazil's largest airline, has seen a 35-percent decline in
ticket sales for flight to the United States. The company decided
to suspend temporarily direct flights between Rio de Janeiro and
Miami, EFE reported Tuesday.

According to Roberto Macedo, marketing vice president,
cancellations would initially apply only to flights in November.
Varig will continue flying to Miami through Sao Paulo.

"We decided a month ago that unless international demand recovers
in November, we would restructure our flight schedules," the
executive said.

Macedo said that, in addition to canceling flights between Rio
and Miami, Varig is considering cutting its international flights
across the board by 15 to 20 percent.

"These are temporary changes. Future reservations indicate that
the market will recover starting Dec. 10," said Macedo.

Varig is also considering whether to trim down its current
international fleet of 30 airplanes to four or six, "depending on
negotiations with aircraft leasing companies," Macedo said.

VESPER: Qualcomm Continues To Restructure Companies
Qualcomm Inc. announced it is "actively working" to restructure
Brazil's Vesper companies and is now finalizing a commitment to
take a controlling interest in the company, AFX-Europe said in a

However, Qualcomm is considering divesting its controlling stake
in Vesper within a year through a sale to a strategic investor or
by spinning off the company to Qualcomm's shareholders.

The mobile communications company plans to consolidate Vesper's
results, but will exclude them from its own proforma figures,
given its planned divestiture of the stake.


TELEX-CHILE: Negative Earnings Prompt Sale Of Assets
After posting a net loss of 3.905 billion pesos at the end of
September, Telex-Chile announced plans to sell assets, AFX-Europe
reported Tuesday.

Accordingly, the company retained Banco Salomon Smith & Barney to
manage the process and locate a suitable strategic partner.

The non-operating loss included a loss of 13.153 billion pesos in
currency translation losses, financial costs of 7.202 billion
pesos and other costs of 1.993 billion pesos.


BANRURAL: Rehabilitation To Require Up To 8 Billion Pesos
The reorganization of Banrural's "weak" situation is likely to
require Mexico's federal government to invest between 6 billion
and 8 billion pesos, according to a report in Mexico City daily
El Universal.

The resources will be supplied this year once the Finance
ministry, National Banking Securities Commission (CNBV),  
Agriculture ministry and the Banco de Mexico decide how the rural
lending organization will be rehabilitated, according to
financial authorities.

Banrural's late-loan portfolio has surpassed 4.5 billion pesos,
and its capital has fallen "drastically" in the past 10 months,
to 200 million pesos.

The bank recently dismissed employees in order to reduce costs,
and according to a source, total cuts in spending could reach 40

ENRON: Forms Joint Venture Cogeneration Facility With Tractebel
Tractebel SA announced it is building a gas-fired cogeneration
facility in Monterrey, Mexico, with troubled energy trading giant
Enron Corp., AFX-Europe said Tuesday in a report.

According to Tractebel, which has an 80-percent stake in the
US$189-million project, the facility will supply 38 different
industrial installations in Mexico under long-term power purchase

Enron has about 20 percent ownership of the project.

Construction of the facility has already begun. The facility is
scheduled to start commercial operation in late 2002.

"This cogeneration facility will be ideally situated in a region
where there is high demand for energy, available infrastructure
and potential for future integration with US natural gas and
electricity markets," said Dirk Beeuwsaert, chief executive
officer of Tractebel Electricity and Gas International.

GRUPO MEXICO: Moody's May Down Foreign Bonds On Weak Metals
Moody's Investors Service informed it would review a total of
$2.1 billion in dollar-denominated debt issued by three of Grupo
Mexico's subsidiaries, Bloomberg reported Tuesday.

According to Moody's, it would review $1 billion of Grupo
Mexico's Arizona-based Asarco Inc.'s debt on "concerns over the
deterioration in the underlying fundamentals of Asarco's
business, which is highly leveraged to the copper market."

Asarco has a $50-million fixed 7 percent bond maturing on Dec. 1.
The bonds under review are rated `B1' and `B3' by Moody's, four
and six notches below investment grade, respectively.

Also under review is $600 million in bonds issued by Grupo
Mexico's subsidiary Grupo Mexico Export Master Trust No. 1, which
have a rating of `Baa2,' the second-lowest investment grade, and
$500 million issued by Grupo Minero Mexico with a rating of
`Ba1,' one notch below investment grade.

Grupo Mexico expects that Moody's may downgrade some of its
foreign bonds on concern that falling metal prices could hurt the
company's ability to pay its debt.

"A downgrade would be fairly justified," said Marco Reyes, an
analyst with Scotiabank Inverlat SA. "The company's situation is
delicate right now as its ability to generate cash has been hurt
by falling copper prices."

GRUPO SIDEK: Asset Sales Report October 1 to 31, 2001
Grupo Sidek, S.A. de C.V. (OTC Bulletin Board: GPSAY GPSBY)
announced Tuesday a report regarding assets sales from October 1,
2001, to October 31, 2001, pursuant to its obligations under the
restructuring agreements entered into with Sidek Creditor Trust:

                         ASSETS SALES REPORT
               FROM OCTOBER 1, 2001 TO OCTOBER 31, 2001
                      (Figures in US$ thousands)

Assets with Reorganization
Value higher than
USD$ 5,000                Sales Value    Reorganization Value
I. Hotels                     14,960                  11,784
II. Real Estate                    0                       0
III. Marinas and Golfs             0                       0
IV. Other                          0                       0
Subtotal                      14,960                  11,784

Assets with Reorganization
Value less than
USD$ 5,000

Subtotal (transactions)          587                    N.A.

Total                         15,547                    N.A.

CONTACT:  Alejandro Giordano Trejo of Grupo Sidek, S.A. de C.V.,
          011-523- 678-5911

MUNDET: Coca-Cola FEMSA To Bottle, Distribute Trademark Sodas
In an official press release, Coca-Cola FEMSA, S.A. de C.V.
("Coca-Cola FEMSA" or the "Company") (BMV:KOFL) (NYSE:KOF)
announced Monday that it has negotiated a franchise bottling
agreement with Fomento Economico Mexicano, S.A. de C.V. ("FEMSA")
under which Coca-Cola FEMSA will become the sole franchisee for
the bottling, distribution and sale of Sidral Mundet, Sidral
Mundet Baja en Calorias, Prisco Mundet and certain other flavored
carbonated beverages (together, the "Mundet brands") in the
Valley of Mexico and in parts of the Southeast territory. The
board of directors of Coca-Cola FEMSA has been informed of
FEMSA's acquisition of the Mundet brands and has approved the
Company's negotiation of the franchise bottling agreement.

The Company expects that the addition of Sidral Mundet, a brand
with a strong heritage and market presence in Mexico, and the
other Mundet brands to the Company's beverage portfolio will
expand the Company's volume base and provide the Company with
more flexibility to execute new market strategies. The terms and
conditions of the franchise bottling agreement are similar to the
current arrangements that Coca-Cola FEMSA has entered into with
The Coca-Cola Company for the bottling and distribution of
similar Coca-Cola trademark soft drink beverages.

Coca-Cola FEMSA will bottle the Mundet brands at its existing
production facilities and will sell them through its distribution
network. The Company will continue selling "Lift," a carbonated
apple-flavored Coca-Cola trademark brand.

CONTACT:  Coca-Cola FEMSA, S.A. de C.V.
          Alfredo Fernandez, (52-5) 081-5120 or (52-5) 081-5121

TRI-NATIONAL: Senior Care Moves Forward With Lawsuit
Richard Mata, general counsel to Senior Care Industries, Inc.
[OTC:BB:SENC] announced Tuesday that Senior Care finally
succeeded in serving all of Tri-National's directors including
its Canadian directors in its lawsuit against the directors for
defamation and fraud. This lawsuit, filed back in August alleges,
among other things, that Michael Sunstein and Tri-National
management issued press releases and filed reports with the
Securities & Exchange Commission that falsely and maliciously
claimed that Senior Care failed to pay for land and other
property that it purchased from Tri-National. This property
purchased by Senior Care is located in and around Rosarito Beach
in Baja, California.

"Tri-National's management has been engaged in an ongoing barrage
of false information leveled against Senior Care and its
management," said Bob Coberly, Senior Care's Chief Financial
Officer. He went on to say that Tri-National's attacks started
after Senior Care ceased supporting Tri-National with day-to-day
operating expenses in July. He also noted that Michael Sunstein
has failed to repay any of the monies that he personally borrowed
from Senior Care executives.

Senior Care's tender to Tri-National shareholders turned hostile
immediately after Senior Care stopped financially supporting Tri-
National's office overhead, Coberly explained. He went on to say
that he expects Tri-National's management to continue with these
tactics in order to cover up its own misdeeds.

In addition to the case brought by Senior Care against Tri-
National management, Tri-National filed suit against Senior Care
in the United States District Court in September. Richard Mata
further noted that he doubted that the trustee in the Tri-
National bankruptcy case would pay an attorney to continue that
case. He described Tri-National's complaint as seriously
deficient in several areas of the law and stated that he expected
that Judge Lorenz, who has been assigned to the case, would
dismiss the complaint at the hearing set for December 17, 2001 on
Senior Care's Motion to Dismiss.

Senior Care builds homes for seniors using Senior Care's "smart
home" technology. Presently, the company has projects under
development in Las Vegas, Nevada, San Jacinto, California,
outside of Palm Springs and intends to build an apartment complex
for seniors in Albuquerque, New Mexico. Senior Care is currently
selling condominiums at its Evergreen Manor II project in Los
Angeles, California and will soon start formal development of its
projects in Baja California.


ANTELCO: Workers Contest Legality Of Privatization Process
In a bid to block the privatization process of Paraguay's state-
owned telephone company Antelco, employees filed an appeal that
deemed "unconstitutional" the government decree (14.746/01) that
regulates their participation in the open litigation for the sale
of the company, EFE reported Tuesday.

According to Article 111 of the Paraguayan Constitution,
employees of public entities that are declared to be privatizable
have the right to one "preferential option," whose scope and
shape is regulated by the law.

However, the employees' attorneys claimed that the government has
violated the legislative article by ordering a decree, which
imposes far more stringent attorney and financial regulations on
the workers than the private groups interested in purchasing the

Antelco's privatization is expected to be ready next March.


VOLCAN: Takes Out US$20M Loan To Cover Current Obligations
In an effort to refinance current liabilities, Peruvian mining
company Volcan took out a US$20-million loan from West LB,
Gestion reported Monday.

The mining company plans to pay the loan through the earnings
generated by Chungar's exports.

Volcan posted sales of 102.56 million soles over the third
quarter of the current year, down from 162.03 million soles over
the same period of 2000. The company registered a net loss of
20.28 million soles during the third quarter of this year,
compared to a net profit of 21.82 million soles over the same
period in the previous year.

Volcan also completed the first phase of the expansion for its
Animon concentrates plant. Last October 11 Volcan hired HSBC
Investment Bank to search for a strategic capital partner.

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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