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       T R O U B L E D   C O M P A N Y   R E P O R T E R

                  L A T I N   A M E R I C A

         Wednesday, January 31, 2001, Vol. 2, Issue 22

                           Headlines



B R A Z I L

BANESPA: BSCH Expects To Increase Profit To $750M By 2003
CAEMI: CVRD Offers To Pay US$300M For Iron Ore Producer
CEB: Division Won't Lead To Privatization
TELEMAR: To Launch New Internet Products In Rio
VESPER: Brazilian Operations Reportedly Facing Crisis


E C U A D O R

ANDINATEL/PACIFICTEL: Government Prefers Capitalization Process


M E X I C O

AHMSA: Likely To End Suspension Of Payments In May
BUFETE: Bank Creditors Deny Reports Regarding Deal With Bolanos
CINTRA: IPAB To Pick Sale Agent By Third Week Of February
ICA: To Participate in Low-Income Housing Industry
TRANSPORTACION MARITIMA: Debtholders Consent by Over 75%
TRIBASA: Advent Looks To Acquire Stake In ITA
TRIBASA: In Negotiations With European, Saudi Companies
TU VENCIDAD.COM/OBSIDIANA.COM: Reportedly In Financial Crisis
UNEFON: Executives Resume Talks With AT&T, Bell South And Endesa
UNEFON: Likely To Break Even By Third Quarter Of 2001


V E N E Z U E L A

VENEPAL: To Sell Colombian Plant Holdings To Irish Company


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

BANESPA: BSCH Expects To Increase Profit To $750M By 2003
---------------------------------------------------------
Spain's largest bank, Banco Santander Central Hispano, said it
expects newly acquired Brazilian unit Banespa to lift net
attributable profit to $750 million by 2003, Reuters reported
Monday.

"We have found Banespa is even better than we expected," BSCH Co-
Chairman Emilio Botin said after BSCH announced a 43-percent
increase in net attributable profit which came in at 2.26 billion
euros ($2.08 billion) in 2000, slightly lower than market
predictions.

"We forecast that in 2003 Banespa will have net profit $750
million," he said. "It is an excellent investment with a high
strategic value."

BSCH purchased 30 percent of Banespa in November and later
launched a bid for the remaining 67 percent of the bank in an
all-cash deal worth about $1.2 billion.


CAEMI: CVRD Offers To Pay US$300M For Iron Ore Producer
-------------------------------------------------------
Companhia Vale do Rio Doce (CVRD) offered to pay US$300 million
for the acquisition of Caemi Mineracao e Metalurgica SA, Brazil's
No. 2 iron ore producer, in mid-January, South American Business
Information said Saturday. The offer exceeded the amount proposed
by its consultants by 36 percent. CVRD is reportedly competing
with other two bidders namely: Australian-based BHP Ltd., which
holds 50 percent of Samarco iron ore, and the South African Anglo
American, which owns two Brazilian mines. According to JP Morgan,
Caemi, with a US$1 billion turnover, is worth US$220 million.


CEB: Division Won't Lead To Privatization
-----------------------------------------
The recent division of Brasilia power company CEB into generation
and distribution assets does not mean that the municipally-owned
company is heading for privatization, Valdir Leal, CEB
administration director, told BNamericas.com in a report released
Monday. The move, which saw the creation of a new company, CEB
Geracao, was part of an effort to comply with the terms of its
concession contract with electricity regulator Aneel, Leal
explained. The new company will assume CEB's holdings in other
larger generating projects while CEB will retain control of
distribution assets. In 2001, it will invest US$56 million
(R$110mn) in general improvements, with extension and
installation of sub-stations and strengthening of the network.


TELEMAR: To Launch New Internet Products In Rio
-----------------------------------------------
Telemar announced in a Reuters report released Monday that it
would invest 1.8 billion reais ($912 million) in Telemar Rio. The
company plans to introduce a range of new Internet products to
its Rio network amid a modernization push this year.

"Rio will be the laboratory to bring to Brazil the world's most
modern telephone services," Jose Fernando Pauletti, Director at
Telemar Rio, said at a news conference. "We are going to put to
rest the idea that we are inefficient."

The move by Brazil to split up and sell off its state-run
telephone network in 1998 brought in private investors to
overhaul the state system. According to Telemar, its Rio unit was
in the worst state of all the carriers it took over and customer
complaints have continued to roll in.

Telemar Rio has consumed 1.5 billion reais in annual investment
since 1998 and is now 92 percent digitalized, the company said.


VESPER: Brazilian Operations Reportedly Facing Crisis
-----------------------------------------------------
Vesper is reportedly facing serious problems in Brazil where it
operates in 80 municipalities as a mirroring company, South
American Business Information said Monday. According to the
officers of the fixed telephone services carrier, its performance
is way below the expectations for the first year of operations.
There is a great possibility that it will go through a
restructuring process. Bell Canada is planning to sell off its
34.4 percent stake. Velocom hopes to acquire that piece for
US$875 million. Both companies, along with Qualcomm, are partners
of Vesper.



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

ANDINATEL/PACIFICTEL: Government Prefers Capitalization Process
---------------------------------------------------------------
The Ecuadorian government has opted for a capitalization process
as part of a plan to incorporate private investment into state-
run telecom operators Andinatel and Pacifictel. "We will begin
the capitalization scheme this year based on the recommendations
of an investment bank," Boris Piedra, telecom specialist for
special privatization agency Conam, told BNamericas.com in a
report published Monday. Under the capitalization method a
foreign investor would agree to invest a minimum amount in the
telcos in exchange for management control.

Conam earlier favored the sale of 51 percent stake in the state
companies. However, previous privatization attempts using the
auction model in 1997 and 1998 collapsed due to allegations of
corruption and political tampering.

Bids from six pre-qualified investment banks were to have been
received and opened on January 15 but Conam's change of direction
means the entire process has been delayed until March. Conam will
likely select a bank in April, Piedra said.

The Ecuadorian government is recently renegotiating telecom
concessions with Andinatel and Pacifictel in order to open the
telecom market to full competition as early as February.



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

AHMSA: Likely To End Suspension Of Payments In May
--------------------------------------------------
Altos Hornos de Mexico (AHMSA), Mexico's largest steelmaker, is  
likely to sign a final restructuring agreement with creditors as
early as Feb. 15, Reforma/Infolatina reported Monday. Last Week,
the management of the debt-laden Mexican steelmaker discovered a
new legal route that could possibly hasten the company's course
toward a restructuring agreement that includes bondholders.

Should the agreement be signed on February 15, chances are good  
the company would lift its ongoing suspension of payments in May.


BUFETE: Bank Creditors Deny Reports Regarding Deal With Bolanos
---------------------------------------------------------------
Bank creditors of Bufete, the heavily-indebted Mexican
construction company, denied reports emerging last week stating
they are backing an agreement between Bufete and Grupo Serbo's
Sergio Bolanos, Reforma/Infolatina reported Monday. The report
hinted that Bolanos would assume Bufete's bank debt and that it
has received a major discount on the debt from the creditor banks
of the company.

Sources close to the banks later denied that Bolanos had been or
ever would be offered discounts on Bufete's debt but they
reportedly refused to rule out the possibility that arrangements
of that nature could, in the future, be made with current Bufete
Chairman Jose Mendoza.


CINTRA: IPAB To Pick Sale Agent By Third Week Of February
---------------------------------------------------------
Mexican bank bailout agency IPAB will choose an agent to handle
the sale of the airline holding company by the third week of
February at the latest, according to a report released Monday by
Reforma/Infolatina. Subsequently, the firm selected will
reportedly have a period of two to three months to submit a
detailed proposal. As a result, it is unlikely that any of the
airlines controlled by Cintra will go on the auction block before
the fourth quarter of this year.

IPAB owns a majority stake in Cintra, the airline holding
company, which controls both Aeromexico and Mexicana. The Federal
Competition Commission (CFC) last year ruled that the company
must be broken up and sold.


ICA: To Participate in Low-Income Housing Industry
--------------------------------------------------
Empresas ICA Sociedad Controladora SA, Mexico's largest
construction company, revealed plans to enter the low-income
housing industry to diversify its revenue sources and compete
against other construction companies that specialize in the home
market, Bloomberg said Monday.

"We will launch the commercial brand name of ICA Vivienda to
demonstrate ICA's interest in participating in the low-income and
middle-class home-building market," the company said in a
statement.

Analysts believe that ICA is entering the housing market at the
right time, as a surge in Mexico's housing needs will assure the
company a steady stream of revenue that may offset the cyclical
construction industry.

"This is a business that represents a constant flow of revenue
that may soften construction cycles," said Carlos Perezalonso, a
construction analyst at ABN Amro.

ICA will hold a news conference Wednesday, when it will announce
its plans to participate in the home-building industry.


TRANSPORTACION MARITIMA: Debtholders Consent by Over 75%
--------------------------------------------------------
Transportacion Maritima Mexicana, S.A. de C.V. (NYSE: TMM and
TMM/A), the largest Mexican multi-modal transportation and
logistics company, has received the consents from holders of more
than 75% of the aggregate principal amount outstanding of its 9-
1/4% notes due 2003 and the holders of its 10% senior notes due
2006 to amendments and waivers to certain provisions of the
indentures under which the notes were issued in connection with
TMM's contemplated consolidation with Grupo TFM and contemplated
merger with Grupo Servia. These consents include treating Grupo
TFM as an unrestricted subsidiary under the indentures in the
event of the consolidation and modification and waiver of
additional covenants and provisions to allow consummation of the
referenced merger. The corporation that will survive the merger
will be named Grupo TMM. The consent solicitation process began
December 12, 2000, and expired January 26, 2001.

Javier Segovia, president of TMM, noted, "The financial
consolidation of TMM and TFM will better reflect the significant
and important progress that TMM has made at TFM and TMM's overall
strategic position as the leading provider of rail freight and
multi-modal services in Mexico, and will demonstrate that value
to TMM's bondholders and shareholders. In addition, the merger
will provide for optimization of the new Grupo TMM's tax
planning. We are pleased that we are able to announce the
completion of these important benefits for TMM's shareholders and
bondholders."

For further information, please contact Salomon Smith Barney,
which acted as the exclusive Solicitation Agent for the consent
solicitation, at 390 Greenwich Street, fourth floor, New York, NY
10013, Attention: Liability Management Group, or by telephone at
800-558-3745.


TRIBASA: Advent Looks To Acquire Stake In ITA
---------------------------------------------
U.S.-based capital fund Advent is seen most likely to be the
winning bidder of a 3.75 percent stake in formerly-Tribasa owned
Mexican airports company ITA, according to a Reforma/Infolatina
report released Monday. ITA is going to be sold by state-run
development bank Nacional Financiera (Nafin), which took control
of it from Tribasa as payment on company bonds held by the bank.
Tribasa's former partner in ITA is a consortium created to
operate airports in the country's southeast consisting of
Aeropuerto de Copenhague, Spain's Cintra and French-based GTM.


TRIBASA: In Negotiations With European, Saudi Companies
--------------------------------------------------------
Cash-strapped Mexican construction firm Tribasa is looking for a
third party to oversee the company's day to day operations,
Reforma/Infolatina reported Monday. According to Tribasa, it has
already held informal talks with two unnamed companies, one
European and one Saudi Arabian.

The move is part of an effort to comply with the financial-
restructuring agreement reached with the bank creditors steering-
committee chair, Bank of America. The company sought would likely
also become Tribasa's strategic partner.


TU VENCIDAD.COM/OBSIDIANA.COM: Reportedly In Financial Crisis
-------------------------------------------------------------
Mexican web portals Tu Vencidad.com and Obsidiana.com, led by
Mark Zaltzman and Sonia Dula respectively, are reportedly in
financial trouble, Reforma/Infolatina said Monday. In an effort
to extricate themselves from the situation, they have sought to
form partnerships with other, better-positioned local portals.
However, proposals from both firms have been rejected so far.
Their respective situations are seen as proofs of a testing
period of consolidation underway in the Mexican Internet
industry. Late in 2000 the cash-strapped sector suffered massive
staff cuts at other portals, such as Emas.com and Alo.com


UNEFON: Executives Resume Talks With AT&T, Bell South And Endesa
----------------------------------------------------------------
Unefon executives are now back in talks with AT&T Wireless, Bell
South and Spain's Endesa over the sale of its 49-percent stake in
the company, reported El Economista/Infolatina Monday. Separate
talks reportedly resumed following the disclosure of TV Azteca
Chairman Ricardo Salinas Pliego's plans to sell the position to
Spanish telecoms giant Telefonica, which recently denied openly
that it was about to strike a deal with Salinas.

Unefon is currently searching for a major new partner, which
would support its financially ambitious expansion plans. The
company intends to utilize fully the transmission frequencies it
owns, potentially giving it nationwide coverage.


UNEFON: Likely To Break Even By Third Quarter Of 2001
-----------------------------------------------------
Executives at Unefon said in an El Economista/Infolatina report
released Monday that the mobile carrier could become the
country's fastest growing telephone company and could reach a
point of financial equilibrium in the third quarter of this year.
According to industry analysts and company executives, Unefon
will begin to break even when its subscriber base reaches
400,000. The company expects to acquire some 200,000 new
subscribers by the end of January.



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V E N E Z U E L A
=================

VENEPAL: To Sell Colombian Plant Holdings To Irish Company
----------------------------------------------------------
Juan Calvo, vice-president of Venepal's board, told Reuters in a
report released Monday that it is in talks with Jefferson Smurfit
Group to sell to the Irish packaging company its stake in
Colombian plant Packing Venepal de Colombia. Venepal, a
struggling Venezuelan paper maker, controls 58 percent in the
Colombian cardboard box factory.

Calvo disclosed he flew to the United States last week with the
company's president Pedro Vallenilla to meet officials from
Smurfit and discuss the possible sale. However, he refused to
comment on a report that Smurfit might also be interested in
buying a controlling stake in Venepal before a September deadline
with creditors runs out.

A 1999 debt restructuring deal converted half the company's $76-
million debt into a six-year bond on condition that Venepal finds
a new partner within six years to take on the debt. If not, banks
can take control of 64 percent of the company.

U.S. container-board producer Smurfit Stone Container, an
affiliate of Jefferson Smurfit Group, has a 20-percent stake in
Venepal. Venepal officials had earlier said the company would
sell assets in Colombia as part of a restructuring deal.




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 Janice Mendoza, Editors.

Copyright 2001.  All rights reserved.  ISSN 1529-2746.

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