TCRLA_Public/011109.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             

         Friday, November 9, 2001, Vol. 2, Issue 220



ALTO PALERMO: Troubled Subsidiary Considers $100M Bond Float
BANCO DE GALICIA: 15% Revenue Cut Likely Under Gov't Debt Plan
GRUPO GALICIA: Suffers 12% Drop in Third Quarter Earnings
SIDERAR SA: Domestic, International Downturns Slash Sales By 28%


COPEL: Common Stock Slides As Investors, Analysts Doubt Sale
COPEL: Investors Shun Auction, Sale Suspended Indefinitely


ENERSIS: $64M Profit In 1st Nine Months Offsets Brazilian Woes
TELEFONICA CTC: Unit Posts 7.8% Profit, Expects Triple In '02


GRUPO MEXICO: Moody's Reviews Subsidiaries' Bonds For Downgrade
GRUPO MEXICO: Admits It Can't Pay $450 Million JP Morgan Loan
GRUPO TELEVISA: Study Sees 10-15% Presales Drop Next Year


ANTELCO: Workers Say Privatization Process "Unconstitutional"
PETROPAR: Recovery Of G$26B In Deposits Proves Problematic   


CANTV: AES Withdraws $1.4 Billion Bid for Venezuela's CANTV
CANTV: Shares Dive As Investors Speculate On AES Deal Outcome
CANTV: Records $13 Million Net Income In Third Quarter Results
CANTV: CEO Roosen Comments On Hostile Takeover, Pending Plans

     -  -  -  -  -  -  -  -


ALTO PALERMO: Troubled Subsidiary Considers $100M Bond Float

Alto Palermo shopping center unit Inversiones y Representaciones
SA is planning to issue up to $100 million in convertible bonds,
or a share issue of up to ARP100 million ($100.7 million),
reports AFX News.

Accordingly, the subsidiary is also considering a $100 million
non-convertible bond program to be issued at the board's
discretion, or the ratification, modification or elimination of
Alto Palermo's 1998 global debt issuance program.

The purpose for the planned bond issuance was not stated by the
report. The Company is calling a shareholders meeting on December
4 for this purpose.

The plan comes at the heels of a recent action by Standard &
Poor's, placing IRSA ratings on CreditWatch with negative

The S&P's action was based on the deterioration in the company's
credit quality and S&P's concerns about the company's ability to
continue to refinance its significant short-term debt maturities.

Similarly, the senior unsecured debt and corporate credit ratings
of Alto Palermo S.A. was downgraded last week to 'CCC+' from 'B'.

The downgrade follows the recent collapse in shopping mall retail
sales, reflecting poor prospects for the industry in the medium

BANCO DE GALICIA: 15% Revenue Cut Likely Under Gov't Debt Plan

Argentina's third largest bank, Banco de Galicia y Buenos Aires
SA, could lose more than 15 percent of annual revenues should the
government decide to restructure its $155 billion debt.

The bank, which has a third of its assets in government debt,
could also encounter mass withdrawals in the event the plan
pushes through, says Bloomberg, citing analysts.

"These guys are walking dead. There's going to be a banking
crisis in Argentina," says Ernesto Ramos, who is a portfolio
manager at Nicholas-Applegate Capital Management in San Diego.

Since late June, some $10.1 billion in deposits, representing 12
percent of the total, have been pulled out by Argentines.  About
$1.2 billion of that was withdrawn in the last two weeks.

Meanwhile, several of Galicia's biggest clients, including the
Correo Argentino postal service, are already bankrupt, and
analysts say more companies probably will stop paying loans.

Argentine banks own about a fifth of the government's $155
billion of provincial and federal public debt.  

Galicia's $4.9 billion in provincial and federal government debt
is the most held by any bank except state-owned Banco de la
Nacion.  J.P. Morgan estimates the amount equals more than three
times Galicia's equity.

Recently, international credit rating agency Fitch downgraded
Galicia's short-term foreign rating to "C" and placed its long-
term foreign debt under Watch Negative with a "CC" rating.

Galicia's local currency ratings was similarly downgraded with
the following ratings:

     (i) Short-term "C";
    (ii) Long-term downgraded to "CC" Rating Watch Negative,    
         from `CCC-', Rating Outlook Negative.

GRUPO GALICIA: Suffers 12% Drop in Third Quarter Earnings

The net income of Grupo Financiero Galicia SA, the holding
company of troubled Banco de Galicia y Buenos Aires, fell to
ARP34.8 million ($35 million) in the third quarter, reports

This compared to the ARP39.7 million ($39.9 million) netted last
year.  The Company says the drop is due to the recession,
increasing bankruptcies and skyrocketing interest rates.

The Company also says its higher provision against problem loans
to companies also caused for the 12 percent drop in earnings.

According to the bank, problem loans jumped 37% to ARP450 million
($453 million) in the latest quarter as several of its large
clients like Correo Argentino and Musimundo SA filed for

Increased provisions were the "result of a deterioration in the
quality of the bank's commercial loan portfolio brought about by
Argentina's prolonged recession," a statement read.

Grupo Financiero Galicia owns 93 percent of Banco de Galicia y
Buenos Aires SA, which allocated ARP133 million ($133.9 million)
in third-quarter provisions, a huge jump from ARP52 million
($52.3 million) last year.

SIDERAR SA: Domestic, International Downturns Slash Sales By 28%

Troubled steel maker Siderar SA says persistent recession in the
local market and the crisis in the international steel industry
dragged down its first quarter to September 30 results by 28

According to AFX News, the Company recorded ARP168.6 million
($169.7 million) sales for the period, with domestic sales down
21 percent to 201,000 tons.

Siderar says the latest domestic sales figure is "one of the
lowest levels in the company's history."  The Company also
disclosed that deliveries for the period fell 18 percent to
401,000 tons.

Meanwhile, exports dropped 15 percent to 200,000 tons, "in a
context of a deceleration of economic activity in the principal
steel-consuming markets, aggravated by surplus supply originated
fundamentally in some countries with structural excess that
affect volumes and prices," Siderar said.

Output of hot-rolled plate fell 29 percent to 419,000 tons, while
cold-rolled plate was down 25 percent to 272,000 tons, and coated
products dropped 10 percent to 140,000 tons.

The market situation and the restrictive situation of the
Argentine financial market led Siderar to intensify its cost
reduction program and adjust its staffing structure. Severance
charges rose to $10 million pesos, up from $2 million a year ago.

Gross profit was down 51 percent to $28.8 million as smaller
volumes and prices were "partly compensated by an important
reduction in production costs and overheads," the report said.

However, a reduction in working capital allowed net debt to be
cut by 11 percent to ARP454 million, the report said.

Siderar's foreign currency rating was recently downgraded from
"B+" to "CCC+" with a negative outlook by Fitch rating agency.


COPEL: Common Stock Slides As Investors, Analysts Doubt Sale

Stock market investors continue to dump Copel shares due to
pessimism that the Company's sale may not push through come
November 12, reports Bloomberg.

According to the news agency, common stock has now lost 22
percent of its value since October 30, closing Monday at BRL14.8
($5.78), the lowest level since April 20.

Analysts believe the BRL5.07 billion ($1.98 billion) asking price
for the 89 percent voting shares in Copel is just too high.

Last Wednesday, CVRD and Tractebel withdrew their bid for this
reason.  Brazilian private equity fund GP Investimentos, the
third qualified bidder, is expected to follow suit.

"The sale won't happen again. The price is too high," believes
Sergio Tamashiro, a power utility analyst at Uniao de Bancos
Brasileiros SA in Sao Paulo.

COPEL: Investors Shun Auction, Sale Suspended Indefinitely

The privatization of Copel is not going to push through next

According to Business News Americas, Brazil's Parana State was
forced to suspend Wednesday the privatization plan after no
investor deposited the financial guarantee due November 6.

"In the next few days the regional government will analyze the
situation," a statement released by the Parana government read.

A local press says the auction is indefinitely suspended.

Last week, two possible investors withdrew their bid, saying the
$1.98 billion price tag for the Company is way too high.

The state government, however, says the minimum price was "the
result of careful analysis in which the public interest was

"The privatization of Copel has important social objectives, as
the resources obtained will be invested in improving levels of
education, health and public safety for the population of Parana
state," says the statement.

"The reasons for privatizing Copel remain: to seek
competitiveness, ending the state's electricity monopoly and
increasing social investment in Parana," the statement adds.


ENERSIS: $64M Profit In 1st Nine Months Offsets Brazilian Woes

Enersis disclosed Tuesday its core markets recorded a 91 percent
surge in pre-tax profits or $64.2 million for the nine months to
September 30, the Financial Times says.

Accordingly, these strong results have offset problems in Brazil.  
The increase is primarily due to the volume and price rises in
Chile, Argentina and Peru.

Improvements in productivity, lower administration and sales
costs, and the recovery of billing arrears around the region also
contributed, says Enersis.

The Company, however, admits the currency depreciation and poor
returns from minority interests dragged down the non-operational
side, where losses widened 21.3 per cent to $414 million.

TELEFONICA CTC: Unit Posts 7.8% Profit, Expects Triple In '02

Unlike its parent company, data systems subsidiary Telefonica
Data posted 7.8 percent increase profits in the first three
quarters this year compared to the same period in 2000.

According to a report by the South American Business Information,
the unit expects a further increase, at least three times that
amount, in profits next year.

The unit recently inaugurated its new Datacenter, which it
projects will draw more clients next year as it can offer them 30
percent to 40 percent savings on computer system needs.

The Datacenter offers four types of services: housing and
hosting, content copying, storage and network applications and
operations services.


GRUPO MEXICO: Moody's Reviews Subsidiaries' Bonds For Downgrade

Moody's Investors Service placed under review several foreign
bonds issued by the subsidiaries of Grupo Mexico SA with a strong
possibility that it may be downgraded, says Bloomberg.

The action comes in the wake of falling metal prices, which the
ratings agency fears might hurt the company's ability to pay its

A total of $2.1 billion in dollar-denominated debt issued by
Arizona-based Asarco Inc., Grupo Mexico Export Master Trust No. 1
and Grupo Minero Mexico was included in the review.

An analyst believes a "downgrade would be fairly justified" since
the Company's condition has become delicate over time due to
plummeting copper prices.

Copper prices fell 23 percent to around 67 U.S. cents a pound in
the third quarter and zinc fell 30 percent to about 38 cents a

Grupo Mexico owes $3.2 billion in debt, of which about $646
million will mature next year.

Asarco's $1 billion and $50 million fixed 7 percent bond maturing
December 1 are rated "B1" and "B3", respectively, by Moody's,
four and six notches below investment grade.

The $600 million bonds issued by Grupo Mexico Export Master Trust
No. 1 is presently rated "Baa2", the second-lowest investment
grade; while the $500 million issued by Grupo Minero Mexico is
rated "Ba1," one notch below investment grade.

GRUPO MEXICO: Admits It Can't Pay $450 Million JP Morgan Loan

Subsidiary Asarco Inc. admits it is presently renegotiating its
$450 million loan from JP Morgan Chase & Co. and 15 other banks,
as falling metal prices will deter it from paying the loan when
it matures next year.

A statement released by the Company states it had agreed to pay
the difference between the amount of the 1999 loan and the
collateral used to back it as an advance payment if the value of
the assets diminished.

The recent decline in copper prices has forced the covenant into
effect and the two companies now owe $84 million, which they
cannot pay, the statement says.

In buying the Tucson, Arizona-based subsidiary, the Company
offered receivables, inventories and the shares of its Peruvian
unit, Southern Peru Copper Corp., as collateral for the loan.

The downturn has cost the Company's third-quarter profit dearly,
dropping 85 percent to $13.2 million from $86.2 million a year

Copper for December delivery fell 1.6 percent, to 60.6 cents a
pound on the Comex division of the New York Mercantile Exchange
Wednesday -- the lowest price since 1987 -- as weakening
economies reduce industrial demand for wires and pipes, Bloomberg

The loan matures November next year.

GRUPO TELEVISA: Study Sees 10-15% Presales Drop Next Year

A study made by Credit Suisse First Boston projects between 10
percent and 15 percent decline in publicity presales at TV Azteca
and Televisa next year, Reforma says.

The study says the drop will be due to uncertainty generated by
the nation's economic crisis.  So far this year, both companies
have fallen short of their goals for presales, leading them to
extend the time limit of their presale programs, says Reforma.

An anonymous analyst says the presale programs of the two
companies, which were scheduled to end on October 31, will likely
go on until mid-November.

Televisa sold a little over $1 billion during its 2001 presales
plan, while TV Azteca sold $390 million.

According to one analyst, the reluctance of both companies to
publicize the progress of their 2002 presales is causing the
uncertainty in the market.


ANTELCO: Workers Say Privatization Process "Unconstitutional"

Employees of state-owned Antelco filed early this week a suit
against the Paraguayan government, claiming that the stringent
regulations imposed against them is "unconstitutional."

According to EFE/COMTEX, the workers have cited Article 111 of
the Paraguayan Constitution, which states that employees of
public entities that are to be privatized have the right to
"preferential option," whose scope and shape is regulated by the

Lawyers for the employees say the government decree 14.746/01
imposes far more stringent attorney and financial regulations on
the workers than the private groups interested in purchasing the
company, a clear violation of the "preferential option."

The group that filed the suit includes the National Syndicate of
Telecommunication Workers, which on Tuesday prepared a second
legal writ for filing with the Supreme Court.

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

PETROPAR: Recovery Of G$26B In Deposits Proves Problematic   

Paraguayan oil company, Petropar, admits it will have a hard time
recovering some G$26 billion it deposited in now-bankrupt banks.

According to a report by the South American Business Information,
only about G$2.7 billion was recovered by the Company this year.

The bankrupt banks where the Company deposited its money include
Banco Union, Banco del Desarrollo, Banco Paraguayo-Oriental,
Finamerica and BIPSA.


CANTV: AES Withdraws $1.4 Billion Bid for Venezuela's CANTV

U.S. power utility, AES Corporation, has formally withdrawn its
hostile bid for CA National Telefonos de Venezuela, hinting it
may sell part of its holdings in the Company, instead.

According to a report by Bloomberg, AES failed to match the
counter offer of the Company in the form of a "repurchase

AES is only offering $24 per American Depositary Receipt, while
the Company's buy back program offers $30 per ADR and a VEB520
(70 cents) dividend.

"We couldn't compete with the company's repurchase program. We've
formally withdrawn our offer," AES Communicaciones de Venezuela
head Julian Nebreda told Bloomberg.

Analysts believe AES's withdrawal was expected after its third-
quarter profit fell 98 percent and the stock tumbled 64 percent
since August when it offered $1.4 billion for control.

Bloomberg says AES is, instead, considering selling part of its
6.9 percent control in the Company.

CANTV: Shares Dive As Investors Speculate On AES Deal Outcome

Shares of CA Nacional Telefonos de Venezuela fell 7.8 percent
Tuesday at the slightest hint that AES Corporation would drop its
bid for the Venezuelan telephone company.

According to Bloomberg, CANTV Class D shares fell VEB190 ($.25)
to VEB2,250 ($3.03), and the company's American depositary
receipts dropped 5.4 percent to $20.49. Each ADR is equal to
seven Class D shares.

AES formally announced Wednesday that it had withdrawn its bid
for the 43.2 percent controlling stake in the Company.

CANTV: Records $13 Million Net Income In Third Quarter Results

Compania Anonima Nacional Telefonos de Venezuela (NYSE: VNT)
(CANTV), released Wednesday the following results for the third
quarter of 2001: EBITDA of Bs. 238.3 billion ($321 million); net
income: Bs. 9.8 billion ($13 million); and earnings per ADS: Bs.
74 (US$0.10).

    *  Year-to-date Free Cash Flow at Bs. 451.8 billion
       (US$608.1 million) through September 30, 2001.
    *  Normalized operating expenses decreased 13.0% in real
       terms, compared to the third quarter of last year.
    *  Wireless subscribers grew 31.5% over the last 12 months,
       reaching nearly 2.1 million subscribers by the end of
       September 2001.
    *  Internet users grew 37.1% compared to September 30, 2000;
       billed Internet subscribers market share grew from 47.4%
       to 51.0% in the third quarter of 2001.
    *  Wireline productivity increased by 61.2% over the year
       ago quarter, to 366 lines per employee.
    *  On October 24, 2001, a share repurchase program was
       approved at a special shareholders meeting to acquire 15%
       of outstanding shares at a price of US$30 per ADS. The
       share repurchase program expires on November 23, 2001.
    *  An extraordinary dividend of Bs. 520 per share (Bs. 3,640
       per ADS) was also approved by the Company's shareholders
       on October 24, 2001, to be paid in two installments: Bs.
       284 on December 10, 2001 and Bs. 236 on March 18, 2002.

CANTV: CEO Roosen Comments On Hostile Takeover, Pending Plans

Compania Anonima Nacional Telefonos de Venezuela (CanTV)
president and CEO Gustavo Roosen says he is pleased that AES
Corporation has terminated its $1.4 billion hostile unsolicited
tender offer for its American Depositary Shares and shares of
CANTV's outstanding common stock.

"We are pleased that AES has withdrawn its tender offer, which
CANTV's Board of Directors determined was not in the best
interests of CANTV or our shareholders and ADS holders," says

"The company remains fully committed to completing its pending
tender offer in the United States, the share repurchase program
in Venezuela and its previously announced dividends," he adds

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
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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.

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