TCRLA_Public/020121.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, January 21, 2002, Vol. 3, Issue 14

                           Headlines


A R G E N T I N A

ARGENTINE BANKS: Government To Ease Banking Restrictions
HSBC BANK/BANCO FRANCES: Authorities Raid, Launch Investigation
SCH: Continuing Stringent Banking Rules May Cause Argentine Exit


B R A Z I L

BAYER AG: Shuts Down Brazilian Plant
CELESC: To Seek Partners For New Subsidiaries In 15-20 Days
COPEL: Parana's Sale Decision To Come Early February
COPEL: Debt-Negotiations With Itau To Be Completed Soon
VARIG: To Boost Capital With R$40.287M Debenture Issue


M E X I C O

AHMSA: Won't Meet Bank Creditors' Payment Plan Deadline
CINTRA: IPAB To Put On The Block This Year
ENRON: Still to Formalize Cogeneration Project Sake With CRE
EUZKADI: Disgruntled Workers To Protest Plant Closure
GRUPO MASECA: CEO Leaves Post After Sale to Bimbo
GRUPO MEXICO: Shares Up On Subsidiary's Timely Debt Payment
ISPAT MEXICANA: Employees End Strike After Intense Negotiations
PRECISION AUTO: Announces Sale of Mexican Subsidiaries


P A N A M A

BANCO DISA: Regulator Orders Liquidation


     - - - - - - - - - -


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

ARGENTINE BANKS: Government To Ease Banking Restrictions
--------------------------------------------------------
President Eduardo Duhalde said Thursday Argentina will take steps
to relax current banking restrictions, a measure that will allow
most depositors to withdraw dollar savings by first turning them
into pesos, reports Reuters.

"Depositors with up to $5,000 ... can voluntarily turn those
funds into pesos. If they want to convert them to pesos at 1.40
(to the dollar) they can now spend that money, by check, debit
card, credit card," Duhalde said.

According to the Economy Ministry, the measure will be in effect
until February 15.

Two weeks ago, President Eduardo Duhalde froze more than a third
of Argentina's $67 billion in bank deposits, in a bid to prevent
banks from failing. All U.S. dollar certificate of deposit
accounts were effectively seized for at least a year. Funds
greater than $3,000 in individuals' dollar savings accounts were
frozen, along with deposits of more than $10,000 to checking
accounts.

Another measure allows dollar loans to be repaid from dollar
deposits in the same bank while peso loans can be repaid with
peso deposits from any bank, the Economy Ministry said.

Anyone working in Argentina has had their cash withdrawals
limited to no more than 1,500 pesos each month under the bank
curbs but the new measures announced Thursday night allow savers
to invest the balance in term deposits.

Two-thirds of savings in Argentina's banks were in dollars by the
end of 2001, after the peso had been pegged at par to the dollar
in 1991. Duhalde devalued the peso a couple of weeks ago amid a
four-year recession.

The change should affect about 78 percent of depositors, Duhalde
said. Deposits fell to a total of about $69 billion by December
from $85 billion at the start of 2001 as a recession since mid-
1998 sparked debt default and devaluation fears.


HSBC BANK/BANCO FRANCES: Authorities Raid, Launch Investigation
---------------------------------------------------------------
Argentine police searched the offices of HSBC Bank, BBVA Banco
Frances SA and other banks in Buenos Aires as part of an
investigation into the transfer of deposits out of the country,
reports Bloomberg.

Court documents revealed that at least two Argentine judges are
investigating allegations that banks in the country "subverted
the economy" by allowing depositors to transfer billions of
dollars overseas.

The probe, resulting from allegations brought by a number of
legislators, adds to the financial difficulties for the banks
that all reported losses in Argentina after the government's debt
default and peso devaluation. Argentines believe that banks are
to blame for the nation's economic crisis, analysts said.

"People are angry at banks because they are being misinformed by
the government," said Claudio Maulhardt, an analyst at ABN Amro
Bank.

The Association of Argentine Banks, the largest banking
organization, in order to counter Argentines' perception, took
out full page adds in national newspapers, calling on political
leaders to shoulder blame for the country's financial collapse.

CONTACTS:  BANCO FRANCES
           Gervasio Collar Zabaleta, Chairman
           Antonio Martinez Jorquera, CEO
           Jorge Bledel, Head of Treasury and Wholesale Banking

           Their address:
           Reconquista 199
           1003 Buenos Aires, Argentina
           Phone: +54-11-4346-4000
           Fax: +54-11-4346-4320


SCH: Continuing Stringent Banking Rules May Cause Argentine Exit
----------------------------------------------------------------
Spain's biggest bank Santander Central Hispano (SCH) may be
forced to desert Argentina if the government continues to impose
its current banking restrictions, a banking source familiar with
the situation revealed in a Reuters report.

"The bank is still not prepared to put more money into Argentina
for now, that hasn't changed. But the signals are changing every
day and the latest signs have been positive," the banking source
said.

"Saying the bank is threatening to leave doesn't make sense...but
of course if things deteriorate we would have to consider this.
If the rules of the game aren't changed we will be forced out,"
the source added.

However, an official spokesman for SCH said that the bank has yet
to make a decision on its Argentine investment.

SCH, one of the biggest investors in Latin America, said on
Tuesday it was raising its stake in Argentine unit Banco Rio to
near 100 percent from 79.1 percent in what it said was simply the
fulfilment of a commitment made with the original owners of the
stake.

CONTACTS:  SANTANDER (SCH)
           Emilio Botin-sanz De Sautuola Y Garcia De Los Rios -
           Chairman, OR
           Angel Corcostegui Guraya - First Deputy Chairman, OR
           Jaime Botin-sanz De Sautuola Y Garcia De Los Rios -
           Second Deputy Chairman, OR
           Matias Rodriguez Inciarte - Deputy Chairman, OR
           Angel Corcostegui Guraya - Deputy Chairman & Chief
           Executive

           SCH Address:
           Paseo De Pereda, Numeros 9 AL 12
           Santander, Spain
           Phone   +34 94 2206100
           http://www.santandercentralhispano.es/

           BANCO RIO
           Ana Patricia B. S. de Sautuola y O'Shea, Chairman
           Jose L. E. Cristofani, Executive Vice Chairman and CEO
           Pablo Caride, Corporate Finance
           Bartolome Mitre 480
           1036 Buenos Aires, Argentina
           Phone: +54-(0)14-341-1081-1580
           Fax: +54-(0)14-341-1074-1084

           BANCO RIO LEGAL ADVISOR:
           Shearman & Sterling
           599 Lexington Avenue
           New York, NY 10022-6069, USA
           Tel: (+1 212) 848-4000
           Fax: (+1 212) 848-7179
           Firm Managing Partner: Robert C. Treuhold



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

BAYER AG: Shuts Down Brazilian Plant
------------------------------------
Bayer AG, Germany's third-largest drugmaker, is going to shut
down its Latin American engineering plastics plant based in
northeastern Brazil by August this year, according to a report
released by Dow Jones Newswires.

Bayer said it is cheaper to import the product from Germany than
produce it locally. The move will result in the layoff of 150
workers.

Bayer, best known for inventing aspirin, suffered the worst
crisis in its 139-year history in August when Baycol, also known
as Lipobay, was linked to more than 50 deaths worldwide.

The withdrawal of the product cost Bayer 600 million pounds and
trapped the company in court actions.

Earlier, Bayer said it would sell its three chemical units,
Haarmann & Reimer, Rhein Chemie Rheinau and PolymerLatex GmbH &
Co KG, to help reduce the company's debt levels to a single-digit
billion-euro figure in the medium term.

CONTACTS:  Manfred Schneider, Chairman
           Pol Bamelis, Member of the Board
           Attila Molnar, Member of the Mgt. Board

           Bayer AG
           5090 Leverkusen, Building W 1
           Bayerwerk, Germany
           Phone: (800) 269-2377
           Fax: (212) 571-3050


CELESC: To Seek Partners For New Subsidiaries In 15-20 Days
-----------------------------------------------------------
Aldo Schumacher, director of investor relations at Celesc,
announced that Brazil's Santa Catarina state-based electricity
will call for bids from private companies, within 15 to 20 days,
to become partners in two new generation and telecom
subsidiaries, reports Business News Americas.

After announcing the bids, potential bidders will have 60 days to
acquire the rules and present their bids to Celesc, Schumacher
said.

Schumacher's announcement came after Santa Catarina governor
Esperidiao Amin formalized Wednesday (January 16) the law to
divide Celesc into generation, distribution and transmission
companies.

According to Amin, Celesc Distribucion will remain under Santa
Catarina state control, while private capital will be allowed to
participate in the generation and transmission companies, which
will also be run by independent teams under management contracts.

CONTACTS:  CELESC
           Francisco De Asis Kuster, Chairman
           Enio Andrade Branco, Finance Director

           Their Address:
           Rodovia SC 404 - Km 3
           Itacorubi 88034-900 Florianopolis - SC
           Brazil
           Phone   +55 48 231 6011
           Home Page http://www.celesc.com.br


COPEL: Parana's Sale Decision To Come Early February
-----------------------------------------------------
Brazil's Parana state government decision about privatizing
integrated power company Copel awaits further details from the
federal government as to its specific plans to revitalize the
electricity sector, says Business News Americas.

According to a Parana government source: "the final decision on
the sale of Copel will be made around the beginning of February,
because if the government of Parana decides to go ahead with
privatization, there are deadlines to meet in the process, and
April is the deadline for transferring state assets, because of
the general elections in Brazil in November."

Meanwhile, the government of Parana has appealed to the high
court (STJ) to reconsider its ruling which upheld the suspension
of the Copel privatization process. The STJ concurred with a
ruling by the regional federal court (TRF) suspending the sale
until all injunctions against the sale has been dealt with.

Copel was originally scheduled to be sold on October 31 of last
year, but the auction was cancelled due to a lack of interest.
Belgium's Tractebel showed most interest, but considered the
minimum price of $1.85 billion too high.


CONTACTS:  Alexandre F. Beltrao, Chairman
           Ingo H. Hbert, CEO
           Ferdinando Schauenburg, CFO/Chief Investor Relations
                                             Officer

           Rua Coronel Dulcidio, 800
           80420-170 Curitiba, Paran , Brazil
           Phone: +55-41-322-3535
           Fax: +55-41-331-4145



COPEL: Debt-Negotiations With Itau To Be Completed Soon
-------------------------------------------------------
Debt negotiations between Copel and Itau bank have been in
progress for some months. The talks center on the 500 million
reais ($211 million) in debt the government of Parana has with
the bank, guaranteed with Copel shares, an unnamed source
revealed in a Business News Americas report.

Official discussions should be completed within the next few
weeks, the source said, adding, the government should not have
any problem paying this debt, which expires March 31.


VARIG: To Boost Capital With R$40.287M Debenture Issue
------------------------------------------------------
The Brazilian airline Varig will issue R$40.287 million worth of
debentures in an attempt to boost its capital stock, reports
Gazeta Mercantil. The operation, authorized by Company
shareholders, makes way for a single-tranche issue of the new
paper.

Simultaneously, the Company's board of directors also authorized
the restructuring of contracts with Boeing. The contract
negotiations should reduce the Company's debt by $370 million,
says the report.

Varig has been hampered by slow ticket sales and rising operating
costs since the September 11 attacks along with most other
airlines. The company has announced it would cut 10 percent of
its 17,500 workers and roll back fleet growth plans.

VARIG CONTACTS:  VARIG Brazilian Airlines, Miami
                 Jeff Kriendler, 305/866-2115
                 email: jkriendler@aol.com

                 Legal Department:
                 Rua 18 de Novembro nr. 800 Navegantes
                 Zip : 90240-040
                 City : Porto Alegre / RS - Brazil
                 Telephone numbers: (51) 358-7039/7040
                                   (51) 358-7010/7042

                 INDEPENDENT ACCOUNTANTS
                 Arthur Andersen S/C
                 Rua Alexandre Dumas 1981
                 Cep: 04.717-906 - Centro / Sao Paulo / S P-
                 Brazil
                 Tels.: (11) 5504-8200
                 Fax:  (11) 5504-8373

                 INVESTOR RELATIONS MANAGER/STOCKHOLDER SERVICES
                 Leir s  Stortti
                 E-mail: leir.stortti@varig.com.br
                 Av. Almte. Silvio de Noronha, n  365 -
                 Bloco "A" - s/416
                 Centro - Rio de Janeiro - RJ
                 Cep.:  20021-010
                 Tels.: (21) 3814-5401/5402/5403/5415
                 Fax:  (21) 3814-5543



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

AHMSA: Won't Meet Bank Creditors' Payment Plan Deadline
-------------------------------------------------------
Altos Hornos de Mexico, the embattled iron and steel company,
won't be able to complete its proposed $1.85 billion debt
restructuring by January 20, the deadline set by the Company's
bank creditors, reports Business News Americas. Monclova-based
Ahmsa's proposals also have to be submitted to US stock market
regulatory SEC.

"The attorneys are fine-tuning the sub-editing aspects of the
documentation," said company spokesperson Francisco Orduna.

Ahmsa's failure to complete the proposal on time has upset
creditor banks. According to them, Ahmsa's lawyers have taken
four weeks to do work which has taken the banks' attorneys just a
week to perform.

CONTACTS:  Alonso Ancira Elizondo, CEO, Vice Chairman, Pres.&CEO
           Jorge Ancira Elizondo, Chief Financial Officer
           Manuel Ancira Elizondo, Chief Operating Officer

           Their Address:
           Prolongacion B. Juarez s/n,
           Monclova , Coahuila 25770
           Mexico
           http://www.ahmsa.com
           Phone: +52 86 33 81 72
           Fax: +52 86 33 65 66


CINTRA: IPAB To Put On The Block This Year
------------------------------------------
Cintra, the holding company for Mexicana and Aeromexico, is now
on Mexican bank bailout agency IPAB's list of assets to be put up
for sale this year, reports Mexico City daily Reforma. The
process of selling the airline could begin by March or April,
says the report.

Apprehensions regarding the sale of the airlines this year remain
due to the battered financial condition of the international
airline industry and concerns that the airlines wouldn't fetch an
acceptable price.

Just recently, Joseph Mohan, sales director at U.S.-based
Continental Airlines, disclosed that his company is still
interested in acquiring Cintra.

Analysts were expecting Cintra to close 2001 with net losses
amounting to almost P$1 billion as it struggled to stay afloat
amid a global economic recession stemming from the September 11
terrorist attacks in the United States.

CONTACTS:  Jaime Corredor Esnaola, Chairman
           Juan Dez-Canedo Ruiz, CEO
           Rodrigo Ocejo Rojo, CFO

           Xola 535, Piso 16, Col. del Valle
           03100 M,xico, D.F., Mexico
           Phone: +52-5-448-8050
           Fax: +52-5-448-8055

           OR
           C.P. Francisco Cuevas Feliu, Investor Relations
           Xola 535, Piso 16
           Col. del Valle
           03100 M,xico, D.F.
           Tel. (52) 5 448 80 50
           Fax (52) 5 448 80 55
           infocintra@cintra.com.mx


ENRON: Still to Formalize Cogeneration Project Sake With CRE
------------------------------------------------------------
Enron has agreed to sell 80 percent of its stake in an
electricity cogeneration project with Vitro to Suez-owned
Tractebel, reports Mexico City daily Reforma.

However, according to Ruben Flores, an official from the Energy
Regulatory Commission (CRE), the agreement has still not been
formalized with the CRE.

Normally, when a company wants to pull out of this kind of
project, it finds a buyer and then presents the deal to the
commission for a change in permission, said Flores.

"Formally, the CRE has not received any official communication
from the companies to modify the existing permission," informed
Flores.

The project involves construction of a 284-megawatt cogeneration
plant to supply electricity to Vitro, which is investing US$400
million in the project.

CONTACTS:  Mark Palmer of Enron Corp., +1-713-853-4738
           Enron Corp.
           Investor Relations Dept.
           P.O. Box 1188, Suite 4926B
           Houston, TX 77251-1188
           (713) 853-3956
           Email: investor-relations@enron.com

           Enron Corp.
           Public Relations Dept.
           P.O. Box 1188, Suite 4712
           Houston, TX 77251-1188
           (713) 853-5670


EUZKADI: Disgruntled Workers To Protest Plant Closure
-----------------------------------------------------
The National Revolutionary Union of Euzkadi Workers (SNRTE),
which represents 1,200 workers of Compania Hulera Euzkadi's
recently closed tire plant in El Salto, Jalisco, announced two
massive marches this month to protest the plant's "illegal"
closure, reports the Associated Press.

"Anyone who knows the law can see the closing is
unconstitutional," says Jesus Torres, SNRTE Secretary General.

On January 22, the SNRTE will lead workers, family members and
residents from the town of El Salto, in the western state of
Jalisco, to the nearby factory. They plan to picket the plant in
an effort to prevent the Company from recovering the equipment
inside.

The second march is will leave Guadalajara on January 30 and is
planned to arrive on February 5 at the presidential residence of
Los Pinos in Mexico City.

The SNRTE has been locked in a bitter dispute with Euzkadi, owned
by German-based Continental Tire, for almost two years over
attempts by the Company to boost productivity to what it calls
"international standards."

The conflict heightened in August 2001, when the union rejected
an attempt by Euzkadi to renegotiate the labor contract. The
Company proposal, says Torres, would have rolled back important
gains, such as a five-day work week and salaries well above the
Mexican average, previously achieved by the union.

In December, Euzkadi announced it would close the plant, blaming
union intransigence and poor productivity.


GRUPO MASECA: CEO Leaves Post After Sale to Bimbo
--------------------------------------------------
Jose Maria Gonzalez left his post as Chief Executive Officer of
Gruma SA, the largest tortilla maker in the U.S., after serving
the Company for eight months, says Bloomberg.

Gonzalez resigned after reportedly having fulfilled a vow to
"turn around or dispose of" the Mexican company's bread making
unit.

"He was hired for a specific mission," said Fabiola Molina, an
analyst with Grupo Financiero Banorte SA. "He completed that
mission and he's leaving."

Gonzalez, who first tried to salvage Gruma's money-losing bread
factories in Mexico and Costa Rica by cutting staff and reducing
delivery routes, sold the unit in November to Grupo Bimbo SA for
$70 million.

CONTACTS:  Rogelio S nchez
           Email: rogelio_sanchez@gruma.com
           Tel. (52)81 8399-33-11

           Lilia G˘mez
           Email: lilia_gomez@gruma.com
           Tel. (52)81 8399-33-24

           Cecilia RodrĄguez
           Email: cecilia_rodriguez@gruma.com
           Tel. (52)81 8399-33-49

           CORPORATE HEADQUARTERS
           Gruma S.A. de C.V. y Subsidiarias
           Calzada del Valle 407 Ote.
           San Pedro, Garza GarcĄa, N.L. M,xico CP 66220
           (52)81 8399-33-00

           DEPOSITARY & REGISTRAR OF AMERICAN DEPOSITARY RECEIPTS
           Citibank N.A., A member of Citigroup
           Depositary Receipts Department
           111 Wall Street, 20th Floor/ Zone 7
           New York, New York 10043
           Tel. (212) 657.4665
           Fax. (212) 825.5398/2103
           E-mail: miguel.perez-lafaurie@citicorp.com
           Website: http://www.citibank.com/adr



GRUPO MEXICO: Shares Up On Subsidiary's Timely Debt Payment
-----------------------------------------------------------
Shares of Grupo Mexico SA, the world's third largest copper
producer, climbed 73 centavos, or 6.4 percent, to 12.18 pesos, a
three-month high, according to a report released by Bloomberg.

The Company recently announced that its subsidiary Southern Peru
Copper Corp. will prepay $150 million in foreign debt due over
the next seven years before establishing a new credit line for as
much as $550 million to finance its expansion in the Andean
nation.

Standard & Poor's agency called the measure "positive," though it
continues to rate the company three notches below investment
grade at "BB-."

CONTACTS:  Germ n Larrea Mota-Velasco, Chairman and CEO
           Avenida Baja California 200, Colonia Roma Sur
           06760 M,xico, D.F., Mexico
           Phone: +52-5-264-7775
           Fax: +52-5-264-7769

           C.P. Hector Garcia De Quevedo Topete, Corporate Dir.
           Av. Baja California No. 200, Colonia Roma Sur C.P.
           06760 MEXICO, D.F.
           Phone: 55-64-70 66 ext 7238
           Fax: 55-64-3714


ISPAT MEXICANA: Employees End Strike After Intense Negotiations
---------------------------------------------------------------
In an official company news release, Ispat Mexicana, S.A. de C.V.
("Imexsa"), a steelmaking subsidiary of Ispat International N.V.
(NYSE: IST)(AEX: IST NA) stated that the illegal blockade at its
steel plant in Lazaro Cardenas, which began on December 20, 2001
has been lifted and that the process of normalizing the plant has
resumed.

After intense negotiations with the national union of mining,
metallurgical and similar workers of the Mexican Republic (the
"National Union"), and the local section of the National Union,
which has since been recognised by the Federal Labour Authorities
of Mexico, under the auspices of co-ordinator general of
reconcilliation, a settlement agreement was drawn up, which on
approval by the General Assembly of the Workers, led to the
lifting of the blockade.

Imexsa also extended its gratitude to all related parties,
including its customers and suppliers who have shown their
understanding and their support over this period.

CONTACT:  ISPAT INTERNATIONAL LIMITED
          Annanya Sarin, Head of Communications
          Tel. +44-20-7543-1162, or +31-10-404-6738

          B. C. Agarwal, Chief Financial Officer
          Tel. +44-20-7543-1135

          OR
          Citigate Dewe Rogerson
          John McInerney, Investor Relations
          Tel. +1-212-419-4219, for Ispat International Limited


PRECISION AUTO: Announces Sale of Mexican Subsidiaries
------------------------------------------------------
Lou Brown, the CEO of Precision Auto Care, Inc. (PACI), announced
Thursday in a company press release that PACI sold assets owned
by its Mexican subsidiaries to Shell Autoserv Mexico, S.A. de
C.V.. The deal will yield $2.7 million up front with the
potential of earning more in the event that certain contingencies
are met. "The sale of our Mexican assets to Shell Autoserv will
enable the management team to focus more on operations with
better growth and financial return opportunities. The Mexican
operation required a great deal of management attention, effort
and expense."

Robert Falconi, PACI's CFO said that the money generated from the
sale had already been earmarked to be used to pay interest on the
Company's senior debt and to liquidate other liabilities. "PACI's
senior lenders have been very patient with the Company and we are
happy to be able to pay them interest that is due."

Precision Auto Care, Inc.'s affiliate, Precision Tune Auto Care,
Inc., (PTAC) is the world's largest franchisor of auto care
centers, with over 500 operating centers as of January 17, 2002.
PTAC franchises Precision Tune Auto Care centers around the
world.

CONTACT:  Robert Falconi, CFO of Precision Auto Care, Inc.,
          +1-800-438-8863, ext. 214



===========
P A N A M A
===========

BANCO DISA: Regulator Orders Liquidation
----------------------------------------
Panama's banking regulator ordered the liquidation of Bank Disa
effective Jan. 15, 2002, reports Business News Americas. The
decision came after shareholders showed little interest in
carrying out a capital increase and presenting proposals to
potential buyers.

In the same order, the official regulator also has designated
Olegario Barrelier, Gustavo Perez, and Eduardo Pazmi¤o, as
liquidators of the bank.

Depositors and other creditors have been asked to present their
credits, while waiting for the liquidators to present the
preliminary report, expected to be released in 30 days.

To see financial statements:
http://bankrupt.com/misc/Banco_Disa.doc

CONTACT:  BANCO DISA
          Calle 51 Este
          Campo Alegre
          Panama City, Panama
          Telephone 263-5933
          Fax 264-1084
          http://www.bdisa.com



               ***********


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, Edem
Psamathe P. Alfeche and Fe Ong Va¤o, Editors.

Copyright 2002.  All rights reserved.  ISSN 1529-2746.

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