TCRLA_Public/020125.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, January 25, 2002, Vol. 3, Issue 18



AGUAS ARGENTINAS: S&P Lowers $140MM Fixed-Rate IADB B loan
BHN: S&P Cuts Ratings Following Economic Deterioration
SALTA HYDROCARBON: S&P Lowers Rating On Royalty Trust
TGN/TGS: S&P Downs Transactions On Negative Economic Conditions
AEROLINEAS ARGENTINAS: Exec. Committee, Unions Reach Agreement


TELECOM AMERICAS: BCI To Acquire 75% of Canbras
CEMIG: Minority Shareholders Urge Brazilian State To Pay Debt
CESP: Sao Paulo Postpones Privatization to Next Year
EMBRATEL: Weak 1Q02 Results Expected, Stiff Competition Looms
ENRON: Sao Paulo Court Freezes R$12.6MM Of MAE Credits
TRANSBRASIL: Group Of Investors Buys Control For Under A Buck
VARIG: Establishes VEM, Aircraft Maintenance Subsidiary


TELEX-CHILE: Southern Cross Agreement Under Scrutiny


AEROMEXICO/MEXICANA: Top Execs Defend Financial Condition
BANCA QUADRUM: Clock Ticking on Shareholders' Ability to Rescue
BITAL: Del Valle's Decision To Make Way For Foreign Partnership
CINTRA: Airline Industry Downfall Likely To Delay Sale
CINTRA: Union Endeavors To Participate In Privatization
FANSTEEL INC.: Mexican Subsidiary Excluded In Chapter 11 Case


LANIFICIO DEL PERU: Creditors Selling Machinery, Equipment

     - - - - - - - - - -


AGUAS ARGENTINAS: S&P Lowers $140MM Fixed-Rate IADB B loan
Standard & Poor's cut Tuesday its rating on Aguas Argentinas
S.A.'s (SPE) $140-million fixed-rate IADB B loan to `CCC-,' from
`CCC+' following recent economic developments in Argentina.

* See S&P's detailed notes below.

BHN: S&P Cuts Ratings Following Economic Deterioration
Standard & Poor's lowered Tuesday its ratings on BHN II Mortgage
Trust and BHN III Mortgage Trust following recent economic
developments in Argentina. Below are the transactions affected


                                  To         From
- BHN II Mortgage Trust
  1997-1 A1 & A2 bonds            CC      CCC+/Watch Neg
- BHN III Mortgage Trust
  1997-2 A1 & A2 bonds            CC      CCC+/Watch Neg

* See S&P's detailed notes below.

           Andrea Zelkowicz
           Capital Markets
           Tel. (54-11) 4347-5179
           Fax. (54-11) 4347-5874
           Buenos Aires, Argentina

           Claudio J. Vettier
           Financial Controller
           Tel. (54-11) 4347-5115
           Fax. (54-11) 4347-5113
           Buenos Aires, Argentina

           Gabriel G. Saidon
           Chief Financial Officer
           Tel. (54-11) 4347-5759/5212
           Fax. (54-11) 4347-5874/5113
           Buenos Aires, Argentina

SALTA HYDROCARBON: S&P Lowers Rating On Royalty Trust
Standard & Poor's slashed Tuesday its rating on Salta Hydrocarbon
Royalty Trust To `B-' from `BB+,' still on CreditWatch with
Negative Implications.

* See S&P's detailed notes below.

TGN/TGS: S&P Downs Transactions On Negative Economic Conditions
Standard & Poor's lowered Tuesday its ratings on TGN and TGS S.A.
transactions following recent economic developments in Argentina.
Below are the transactions affected (To/From):


                                 To        From
TGN IFC Trust I                 CCC-       CCC+
TGN IFC Trust II                CCC-       CCC+
TGN CRIBs Financial Trust I     CCC-       CCC+
  $176 million IADB B loan      CCC-       CCC+
  $75 million
  fixed-rate IADB B loan        CCC-       CCC+

* See S&P's detailed notes below.

S&P Notes:  In particular, the rating actions are the result of
unclear rules regarding the transferability of funds abroad to
service debt and meet import payments, the increased
deterioration in creditworthiness caused by the depressed
Argentine economic environment, the unsettling devaluation that
followed the end of convertibility to U.S. dollar, the conversion
to Argentine pesos of most prices and tariffs, the uncertainties
regarding the terms under which concession contracts will be
renegotiated, and the difficulties in transferring funds within
the financial system.

In some cases, the rating actions are also the result, among
other things, of the recent lowering of the local currency
ratings on certain Argentinean entities, reflecting the lack of
liquidity in the financial system, the further contraction in
consumer spending as a result of the deposit withdrawal
restrictions and macroeconomic uncertainties, and the increased
regulatory risk for utilities. Standard & Poor's considers that
price and cost-setting mechanisms by these entities have been
severely altered through changes in currency or government price-
fixing, intervention, or regulation. These mechanisms, defined as
the formula or method that governs price setting, are a crucial
factor in determining a company's or utility's creditworthiness,
as they have a direct effect on a company's revenues and,
therefore, on its capacity to maintain stable financial
performance. The uncertainty about any potential adjustment to
prices to compensate for devaluation, inflation, and in the case
of utilities, the unresolved pass-through of dollar-denominated
costs, could seriously affect cash flows.

In the case of the Aguas Argentinas S.A. (SPE), TGN IFC Trust I,
TGN IFC Trust II, TGN CRIBs Financial Trust I, and TGS S.A. (SPE)
transactions, the ratings were lowered because principal and
interest repayment in respect of these transactions is dependent
on the creditworthiness of underlying corporate obligors whose
local currency ratings have been lowered to triple-'C'-minus.
Specifically, the TGN CRIBs Financial Trust I transaction
benefits from a transfer and convertibility insurance policy
issued by Overseas Private Investment Corp. (OPIC). The Aguas
Argentinas S.A. (SPE), TGS S.A. (SPE), TGN IFC Trust I, and TGN
IFC Trust II transactions benefit from an International Finance
Corporation or Inter American Development Bank preferred creditor
status umbrella. These transactions are, therefore, constrained
by the credit quality of the respective underlying corporate

In the case of the BHN II Mortgage Trust and BHN III Mortgage
Trust transactions, where the senior bonds are supported by
subordination, a liquidity reserve fund, and revenue spread, the
ratings were lowered and removed from CreditWatch after the
Central Bank of Argentina enacted a regulation converting certain
dollar-denominated debt granted by financial institutions into
Argentine pesos, at a one-to-one exchange rate. This conversion
applies to debtors with mortgages originally granted up to
$100,000. In addition, proposed government measures, which
include a devaluation and continuing exchange controls, may
continue to increase the vulnerability of these transactions.
These government measures and the severe economic crisis could
have a dramatic impact on borrowers' willingness and ability to
pay their debts, and will probably result in a significant
reduction in the cash flow of the BHN II and III transactions.

In the case of the Salta Hydrocarbon Royalty Trust, the ratings
have been lowered and remain on CreditWatch with negative
implications following Standard & Poor's assessment of the
Province of Salta's oil and gas industry risk, on which the
transaction's cash flow is dependent. Recent economic measures,
coupled with the many uncertainties surrounding the sector, have
resulted in a significant increase in the risk to the oil and gas
industry in the province of Salta. Although the economics for the
sector are still uncertain, further deterioration is possible
since natural gas prices will have to be lowered as a result of
the currency devaluation.

Realization prices for oil are still undetermined since the
Argentinean Congress passed a law authorizing the introduction of
export duties. In addition, retail prices are very likely to be
controlled in order to control inflation. Since the new economic
rules for the sector are not clear yet, investments will very
likely be cut down significantly, affecting future production
capacity. The ratings on Salta Hydrocarbon Royalty Trust remain
on CreditWatch with negative implications due to the continuing
high volatility and uncertainty in the current economic,
political, and financial situation in Argentina.

CONTACT:  Standard & Poor's, Buenos Aires
          Jorge Solari, (54) 114-891-2114
          Juan Pablo De Mollein, (54) 114-891-2113
          Diana Mondino, (54) 114-891-2100

AEROLINEAS ARGENTINAS: Exec. Committee, Unions Reach Agreement
The Executive Committee of Aerolineas Argentinas is expected to
sign this week an agreement for new working conditions with seven
unions, said the committee's president, Antonio Mata.

According to a report released by El Cronista, Mata cancelled a
proposed salary reduction of up to 25 percent, saying that the
airline had cut its fixed costs by 50 percent.

Mata said that 35 percent of the firm's sales, roughly US$300
million, are generated abroad.

At present, due to the deteriorating economic condition in
Argentina, Aerolineas Argentinas is forced to choose between two
possibilities: a forced balance or losses of US$5 million. As a
result, the Company will continue with its internal restructuring
plan and renegotiations with suppliers.

One of Mata's plans is to build a corporate building for
Aerolineas Argentinas once the situation with the creditors is
solved. This building would concentrate the airline's operations
near the international airport Ezeiza.

The other plan is to merge Aerolineas Argentinas and Austral this
financial year. The Company is also negotiating shared code
agreements with the airlines Mexicana de Aviacion and Varig and a
passenger's distribution agreement in the provinces for Air


TELECOM AMERICAS: BCI To Acquire 75% of Canbras
In accordance with reporting requirements under applicable
securities legislation, Bell Canada International Inc. (NASDAQ:
BCICF) (TSE: BI.) ("BCI") announced Wednesday that it has reached
an agreement with Telecom Americas Ltd. ("Telecom Americas") and
its shareholders, pursuant to which companies to be controlled by
BCI will hold 42,195,654 common shares (the "Common Shares") of
Canbras Communications Corp. ("Canbras") through a reduction in
Telecom Americas' share premium account. The value of BCI's
effective interest in the Common Shares distributed pursuant to
the reduction in capital represents in the aggregate
approximately CAN$80,410,000 (or CAN$1.93 per Common Share
distributed to BCI, reflecting an approximate 7% discount to the
average closing price of Canbras' common shares over the last 20
trading days).

This transaction is part of the Telecom Americas Reorganization
Plan announced on December 3, 2001. The closing of this
transaction is subject to customary conditions and BCI expects to
receive the Common Shares on or about February 7, 2002. Other
than through its interest in Telecom Americas, BCI currently has
no equity interest in Canbras. Upon the closing of this
transaction, BCI will indirectly own or exercise control over
76.6% of the common shares of Canbras. Taking into consideration
minority interests, BCI will hold an effective equity interest in
Canbras of 75.6%.

BCI owns and develops advanced communications companies in Latin
America. A subsidiary of BCE Inc., Canada's largest
communications company, BCI is listed on the Toronto Stock
Exchange under the symbol BI and on the NASDAQ National Market
under the symbol BCICF. Visit our Web site at

CONTACT:  Bell Canada International Inc.
          Peter Burn (Media), Vice-President, Corporate
          TEL:  (514) 392-2357

          Bell Canada International Inc.
          Brian Quick (Investors), Vice-President, Finance
          TEL:  (514) 392-2369

          BELL CANADA - Investor Relations:
          Howard N. Hendrick, EVP and CFO
          1000, rue de La GauchetiSre Ouest
          Bureau 1100
          Montr,al (Qu,bec) Canada
          H3B 4Y8
          Telephone: (514) 392-2323

          Deloitte & Touche LLP
          1 Place Ville Marie, Suite 3000
          Montr,al (Qu,bec) Canada
          H3B 4T9
          Tel:  514-393-7115
          Fax: 514-393-7140

          Computershare Trust Company of Canada
          1800 McGill College Avenue
          Montreal (Quebec) Canada
          H3A 3K9
          Tel. (514) 982-7555 or 1 800 332-0095

          Computershare Trust Company of New York
          88 Pine Street
          19th Floor
          Wall Street Plaza
          New York, NY 10005

CEMIG: Minority Shareholders Urge Brazilian State To Pay Debt
Minority shareholders in Cia. Energetica de Minas Gerais (Cemig),
Brazil's largest electricity generator, are seeking a meeting
with management to discuss a decision to forego a debt payment by
a Brazilian state, says Bloomberg.

The National Association of Capital Market Investors (Animec),
which was created in 1999 to defend Brazilian minority investors,
said it is trying to get support from shareholders representing a
5 percent stake in Cemig.

The association says Cemig management failed to defend minority
shareholders' interests by allowing Minas Gerais state, which
owns 51 percent of the utility's voting shares, not to pay BRL336
million (US$141 million) of debt to the Company,

"If the government owns Cemig, it has to pay it and the board has
to make them pay," said Waldir Correa, president of the
association and owner of 100,000 reais of Cemig shares. "The
state has to pay Cemig even though it controls the Company. That
is abuse of power and we want to show management is responsible
for that."

Cemig's minority shareholders may also sue management for alleged
financial mismanagement.

Meanwhile, Animec is also accusing the utility of charging the
state lower interest rates than what it pays on its bonds. Cemig
is charging the state interest of about 10 percent a year on its
debt while the utility is paying about 20 percent on real-
denominated bonds it sold in November, Correa said.

A Cemig spokesman declined to comment on the association's
charges, saying he had not received any formal complaint from

CONTACTS:  Djalma Bastos De Morais, Chairman
           Geraldo De Oliveira Faria, Vice Chairman
           Cristiano Correa De Barros, Finance Director

           THEIR ADDRESS:
           Avenida Barbacena, 1200
           Sto Agostinho  30123-970 Belo Horizonte - MG
           Phone   +55 31 299 4900
           Home Page

CESP: Sao Paulo Postpones Privatization to Next Year
The government of Sao Paulo decided to put off until next year
the privatization of state-owned generator Cesp Parana, Business
News Americas reports.

A Sao Paulo government source explained that the process had to
be postponed because of the difficult international economic
situation, the crisis in Argentina and general elections in

"The present panorama is not very promising, with the
international crisis following the terrorist attacks in the US,
and now the serious crisis in Argentina, which affects us as an
emerging country in the eyes of potential investors. From March
the run up to the elections begins, making the situation even
more complicated," the source said.

The government of Sao Paulo has twice suspended the sale of Cesp
Parana, because of the international financial crisis and the
power crisis in Brazil.

Cesp Parana, which has 6,900MW in installed hydro powered
capacity,had debts of BRL8.1 billion in June 2001, of which 80
percent is denominated in U.S. dollars.

EMBRATEL: Weak 1Q02 Results Expected, Stiff Competition Looms
Embratel Participacoes SA's preferred shares fell 1.1 percent to
9.74 reais on expectation the Company's results may suffer on
increasing competition starting in the first quarter this year
when Brazil's telecommunication agency opens the market to other

Embratel is expected to lose 23 percent of its long distance
income this year because of the entry of competitors into the
market place, causing a loss of clients, as well as a possible
drop in prices due to this competition.

Embratel's entry into the local market will only partly
compensate for these losses. The process of installing local
exchange networks is not simple or cheap compared to long
distance service backbone.

Embratel says that it is working within the expectation of loss
of revenue and intends to concentrate on the segment where it has
a competitive advantage, data communications, and on increasing

Embratel is the country's largest long-distance telephone company
and currently only competes with Intelig Telecomunicacoes Ltda.

           Rua Presidente Vargas, 1012
           Centro - Rio de Janeiro - RJ
           CEP: 20179-900
           Tel: 2519 9662
           Fax: 2519 6388

           Mariana Palmeira, 55 21 2519-3654

           Silvia Pereira
           Investor Relations Manager

           Marcos Baptista

           Graziela Fortunato

           Marcio Debellian

ENRON: Sao Paulo Court Freezes R$12.6MM Of MAE Credits
Eucatex succeeded in having Sao Paulo court freeze R$12.6 million
in credits, which Enron Comercializadora has in the energy spot
market MAE (Mercado Atacadista de Energia), Gazeta Mercantil

Enron is authorized by Aneel (Agencia Nacional de Energia
Eletrica) to negotiate the acquisition and sale of energy to
major consumers (industries and companies). Eucatex had a
contract with Enron to sell energy from its thermal electric
power plant Salto (Sao Paulo).

The court based its decision on Eucatex's claim that the U.S.-
based company has broken its contract by asking for an end to the
power generation and not paying for the energy it received in the
first month of generation.

Enron, for its part argued that Eucatex, which has invested R$22
million in the generation plant, broke one of the clauses of the
contract related to guarantees.

TRANSBRASIL: Group Of Investors Buys Control For Under A Buck
A group of investors, headed by Dilson Prado da Fonseca, is going
to pay a symbolic BRL1 for control of grounded airline
Transbrasil, assuming BRL1 billion (USD$422 million) in debt and
immediately investing $25 million in the airline, reports

According to a Transbrasil director, Fonseca, who owns air taxi
service Fly Brazil, is expected to announce Tuesday the details
of the operation.

On December 3, the Brazilian Civil Aviation Department (DAC)
grounded Transbrasil, formerly the country's fourth-largest
airline, after failing to come up with enough cash to buy fuel.
It is still unclear whether Transbrasil will meet or extend the
Feb. 3 deadline set by DAC, the date when the company must resume
flying its 23 routs or lose them.

However, Transbrasil, in its statement published this week, said
the new owner should allow the Company to resume flying routes in
the next few days and even expand its current fleet of seven

VARIG: Establishes VEM, Aircraft Maintenance Subsidiary
VARIG Brazilian Airlines, Latin America's largest airline and the
anchor for Star Alliance in South America, announced Wednesday
that it has formed VARIG Engineering and Maintenance (VEM), a
subsidiary created to handle aircraft maintenance, repair and
overhaul (MRO).

Evandro Braga, a veteran VARIG engineering and maintenance
executive, has been named President of the new unit which is
based at Tom Jobim International Airport in Rio de Janeiro,
Brazil. Braga leads a team of 4,000 professionals, employed
principally at the Company's 2 modern industrial maintenance
parks in Rio de Janeiro and Porto Alegre in Southern Brazil, as
well as 47 other maintenance stations.

"The global value of aircraft maintenance services is expected to
reach US $35 billion in 2002," Braga said. Because of the vast
experience and respected VARIG name, "VEM is well positioned to
achieve its target of US $250 million in billings this year, and
grow to US $500 million in 5 years," Braga added.

"The foundation of VEM is the excellent reputation built over 75
years by its sister company, VARIG, long admired for its quality
maintenance," Braga said. "We currently operate the largest
maintenance facility in Latin America and have plans in place to
double our capacity by constructing new hangers and offices, an
investment of over US $50 million."

Braga pointed out that the global fleet of commercial aircraft
over 50 seats exceeds 14,000 units. "Small and mid-sized airlines
recognize the economic benefits of having their maintenance
provided by third-party specialists. VEM will be actively seeking
such domestic and international business opportunities because of
the high quality of our work and the many specialized areas of
expertise we offer at cost-effective prices."

VEM will offer heavy maintenance checks, avionics, line
maintenance, aircraft conversions, painting, and engine work
among a comprehensive list of service capabilities. He said that
VEM would also offer services for corporate and military

VEM has certifications from various principal government agencies
which control and coordinate all maintenance, repair and overhaul
activities in the United States, Europe and South America. These
include the FAA (Federal Aviation Administration) of the United
States, the JAA (Joint Aviation Authorities) of Europe, DAC
(Departmento de Aviacao Civil) in Brazil and the DNA (Direccion
Nacional de Aeronavegabilidad) of Argentina.

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


TELEX-CHILE: Southern Cross Agreement Under Scrutiny
The approval of the agreement between Southern Cross and most of
the creditors (Bank of America, Investamerica, Telrad, British
Telecom, Scotia Bank Sudamericano, BBVA, Banco Bhif, etc.), which
holds 51 percent of Telex Chile, is now in question.

According to a report released by El Diario, DLJ Chile Ltda, a
subsidiary of CSFB and Donaldson, Lufkin & Jenrette, perceives
the agreement, which paves the way for Southern to have
substantial control of Telex Chile, as non-legitimate.

Southern Cross, which holds 18 percent of Telex Chile, allied
with GE Capital and Telex's creditors in an agreement to delay
payment on US$134 million for 120 days while it seeking to
capitalize Telex.

Plans were to launch a public offer for 28.69 percent equity in
Telex and inject US$96 million of new capital. The new raise was
to be part of the US$370-million capital increase soon to be
voted on at a shareholders meeting. The deal would give Southern
access to 34 percent of Telex Chile. Santander Investment is
advising Southern Cross in the negotiations.


AEROMEXICO/MEXICANA: Top Execs Defend Financial Condition
The Chamber of Deputies' aviation sub-commission, after doing a
preliminary analysis on Aeromexico's and Mexicana's financial
statements, concluded that the two airlines will end 2001 with
figures worse than the previous year, reports Mexico City daily
el Economista.

Legislators, who are monitoring the performance of Cintra, which
owns the airlines, revealed that both airlines struggled through
high maintenance costs, low occupancy, and low revenues. In the
first half of 2001, the airlines' cash flow declined, the market
shrank, and the airlines didn't replace their expensive planes,
according to the officials.

The airlines' health were further complicated by the events
following September 11, making their existing financial problems
more evident, they added.

However, the CEOs of both airlines denied that their respective
companies are in shaky financial shape, saying that they have
completely fulfilled the payment obligations for all of their
debts, and at no moment have they considered steps toward
bankruptcy or any other similar legal alternative to declare a
suspension of debt payments.

Recent market rumors have suggested that both companies may be
considering a suspension of payments.

To counter those rumors, Mexicana CEO Fernando Flores said that
the airline has no upcoming payments to any of its creditors or

Aeromexico CEO Alfonso Pasquel, on the other hand, defended his
airline, saying it is punctual in its payments, and is in a
healthy financial situation.

BANCA QUADRUM: Clock Ticking on Shareholders' Ability to Rescue
Shareholders of Banca Quadrum have about a month to decide
whether to rescue the intervened bank or turn it over to the Bank
Savings Protection Institute (IPAB) for liquidation or sale.

Pablo Escalante, CNBV vice president, announced that the decision
would come at the end of February, following the institution's
shareholders meeting.

The bank requires some MXN800 million in financing to stay
afloat. The funds would have to be put up by shareholders in
order to regain control from the CNBV.

If shareholders decide to rescue the bank, they'll have 60 days
to inject the funds, said Escalante.

BITAL: Del Valle's Decision To Make Way For Foreign Partnership
The decision of Antonio del Valle and his brothers, Adolfo and
Ignacio, to give up their estimated 24 percent interest in Grupo
Financiero Bital will clear the way for the bank to find a
foreign partner. Bital seeks the outside help to provide the
US$400 million it needs to complete the purchase of failed bank
Banco del Atlantico SA and strengthen its finances, reports
Bloomberg. Analysts say the bank, which has MXN113.7 billion
(US$12.4 billion) in assets, was short of cash.

"To remain independent and retain control would have meant
injecting capital, and I don't know that they had the capital to
do it," said Robert Lacoursiere, a former banker and now director
of Latin American equity research at Lehman Brothers Inc..

Del Valle had previously said he never wanted to cede a stake in
the bank to a non-Mexican partner.

Bital head Jose Luis Berrondo Avalos, on the other hand, said
control of the bank will not be put in the hands of foreigners.
According to him, the Berrondo and Esteves families didn't go to
the trouble of taking control of the bank only to turn it over to
another owner.

"That's the last think we would do. If we're doing all of these
movements, it's because we're going to meet commitments move
ahead with financing, not because we're going to leave it to
others," said Berrondo.

The Del Valle Family agreed to exchange their 24 percent stake in
Bital for 75 percent of Grupo Industrial Camesa SA, a maker of
wire and carbon steel-wire rope and electromechanical cable for
the mining, fishing and oil industries, held by Luis Berrondo,
Jorge Esteve, and their relatives.

Once the transaction is completed, the del Valles will control
Camesa, while the Berrondos and the Esteves will together hold 49
percent of Bital's shares. The value of each stake is worth about
$95 million, making the swap an even trade.

CINTRA: Airline Industry Downfall Likely To Delay Sale
The current slump in the international airline industry could
force Cintra's board of directors, Banamex, BBVA-Bancomer
(BMV:GFBB) and the Bank Saving Protection Institute (IPAB) to
postpone the sale of the airline holding company, reports Mexico
City daily Reforma.

According to an IPAB spokesperson: "the mandate of the Bank
Protection Savings law says it's a priority to obtain the
greatest value from recoveries as possible, and that's what we're
doing, maintaining the creation of value in the company."

U.S. airlines that would be interested in investing in Mexicana
or Aeromexico, two of Mexico's leading airlines owned by Cintra,
are unlikely to be willing or able to pay a reasonable price for
them, said the spokesperson.

IPAB owns 50.5 percent of Cintra, while Banamex and BBVA-Bancomer
together own 23 percent.

CINTRA: Union Endeavors To Participate In Privatization
A union of Mexican pilots will step up efforts to take part in
the privatization of Cintra. According to a report by Mexico City
daily Reforma, Jaime Luis Gonzalez, head of the Mexican Union
Association of Pilots (ASPA), disclosed that the union is
interested in approaching billionaire Carlos Slim to take part
with airline employees in the upcoming operation.

"The first approaches are being done through Labor Minister
Carlos Abascal, and Mr. Slim hasn't rejected the idea," Gonzalez
said. The Labor ministry is assisting because it recognizes the
importance of maintaining employment in the airline industry,
Gonzalez added.

Some 10 percent of Mexico's airline workers were laid off last
year, said Gonzalez.

Slim, whose empire includes Grupo Carso and Telefonos de Mexico,
is a good candidate for the purchase of Cintra because of his
record of turning around struggling companies, said Gonzalez.

FANSTEEL INC.: Mexican Subsidiary Excluded In Chapter 11 Case
Fansteel Inc. (OTC Bulletin Board: FNST) announced Wednesday that
its Chapter 11 Case and those of its U.S. subsidiary debtors in
possession, each of which were commenced on January 15, 2002,
will now be administered in the United States District Court for
the District Of Delaware, by Judge Joseph Farnum.  Pursuant to
court orders entered on January 17 and 22, the Company and its
affiliated Debtors' have obtained approvals for a variety of
"First Day Motions", including approval of interim DIP Financing,
of its cash management systems, of payments for employee wages
and benefits, and of payments to critical vendors.

As previously announced, Fansteel has entered into an agreement
with the CIT Group/Commercial Services Inc. ("CITCS") whereby
CITCS has agreed to purchase receivables of the Company for a
purchase price of up to $10 million. The agreement with CITCS is
subject to bankruptcy court approval and the results of a public
auction to be held in Delaware at 10:00 A.M. on February 27,
2002.  A hearing to approve "bidding procedures' is scheduled to
commence at 12:30 P.M. on February 14, 2002.

Also as previously announced, the Company has also entered into
an agreement with HBD Industries to provide interim debtor in-
possession financing (the "DIP Financing") of up to $3 million,
which would be repaid from the proceeds of the sale of
receivables to CITCS or the winning bidder at the auction.  HBD
Industries is controlled by certain members of Fansteel's board
of directors, E.P. Evans, R.S. Evans and T.M. Evans, Jr., who
collectively also own approximately 46.56% of Fansteel's
outstanding common stock.  Upon court approval, which is expected
shortly, the proceeds of the DIP Financing will be available to
supplement the Company's cash flow.

Management is continuing its consideration of the sale of one or
more of its businesses and additional long-term debtor in
possession financing as methods to obtain additional
funding.  However, there can be no assurance that any asset sales
(which will require 20 days notice and an auction in bankruptcy
court) or further debtor in possession financing will occur.

Fansteel and its subsidiaries continue to operate their
businesses in the U.S. and abroad.  Fansteel's non-U.S.
subsidiaries, including those in Mexico and the Caribbean, are
not part of the filing.  Fansteel intends to continue to
manufacture, market and distribute its core products and to
provide customer service and support for these products.  In
accordance with applicable law and court orders, pre-petition
claims against Fansteel and its U.S. subsidiaries will be frozen
pending court authorization of payment or consummation of a plan
of reorganization.

CONTACT:  Gary L. Tessitore, Chairman, President and CEO
          Michael R. McEntee, VP and CFO

          THEIR ADDRESS:
          1 Tantalum Place
          North Chicago, IL 60064
          Chicago City
          Phone: 847-689-4900
          Fax: 847-689-0307

Mexican financial regulator the National Banking and Securities
Commission (CNBV) has yet to define the future of three banks,
Sureste, Anahuac and Industrial. The three institutions are the
CNBV's continued intervention, reports El Universal

Viability studies have been started for two of the three banks.
By the end of June their respective futures will be decided, said
CNBV Vice President Pablo Escalante.

The analysis will contemplate possible restructurings of the
banks for their later sale or liquidation by the Bank Savings
Protection Institute (IPAB). These three banks have yet to be
transferred to IPAB.

Two of the banks could remain intact because they have a certain
amount of brand value, but "the viability study will have the
last word," said Escalante. Domestic and international companies
have voiced interest in Sureste's branch network, he added.


LANIFICIO DEL PERU: Creditors Selling Machinery, Equipment
Friday, creditors of textile company Lanificio del Peru will put
the Company's machinery and equipment on the block at a base
price of US$2.422 million, reports South American Business

According to the report, this is the second time that the
creditors are putting the company's assets up for sale after the
first auction in December 2001, with a US$2.8 minimum bid, failed
to attract bids.

In the process of being liquidated Lanificio will also have its
brands, including New Way, Lanitex, Bebe Lido, Karlita and
Tapizon, auctioned.

The Peruvian government is the textile company's main creditor,
with 57 percent total ownership.

CONTACT:  Mr. Silvana Cabrera
          Lberto Del Campo 285,
          San Isidro, Lima 27
          Tel: +511-2643186
          Fax: +511-2641971


S U B S C R I P T I O N   I N F O R M A T I O N

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Psamathe P. Alfeche and Fe Ong Vao, Editors.

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

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