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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

            Tuesday, May 1, 2001, Vol. 2, Issue 85

                           Headlines



B R A Z I L

CESP: State To File Lawsuit To Postpone Sale
CVRD: Announces Acquisition Of Ferteco
DAIMLERCHRYSLER: To Sell Off Phased Out Pickup Truck Plant
PAO DE ACUCAR: Posts Profits For 1Q01


C H I L E

GENER: Moody's Affirms Baa2 Rating, Takes Off Review
GENER: Transalta Completes Purchase Of MEGA For $2 Million
GENER: Shuns Setting Up Diesel-Fired Turbines
TELEX-CHILE: Capital Increase To Be Tabled At May 25 Meeting


C O L O M B I A

CHEC: In Financial Difficulty


M E X I C O

BANCRECER: Sale Invitations Will Be Published Mid-May
CINTRA: IPAB Agrees To Postpone Sale Of Two Airlines
MOTOROLA: Unions Condemn Bonus Payments Given To Executives


V E N E Z U E L A

GRAFITTI: Calls In Creditors To Restructure Short Term Debt
MAVESA: Announces Termination of ADR Program
SIVENSA: Government May Purchase Stake Owned By BHP


     - - - - - - - - - -


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B R A Z I L
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CESP: State To File Lawsuit To Postpone Sale
--------------------------------------------
Minas Gerais state is planning to file a lawsuit aiming to put
off the sale of Cia. Energetica de Sao Paulo (CESP), which is
slated for May 15, according to state governor Itamar Franco in a
Bloomberg report published Friday. Franco revealed that the
lawsuit would argue it is unconstitutional to prevent Brazilian
government-controlled companies from taking part in the bidding,
yet allow the participation of foreign state-owned companies. He
cited state-owned Cia. Energetica de Minas Gerais, the country's
No. 1 integrated utility, which has expressed interest in bidding
for Sao Paulo's 38.7 percent stake in Cesp.

"How can foreign state-owned companies bid for CESP and Cemig
can't?" the governor said in a statement.

Sao Paulo state revealed earlier its stake in Cesp is worth at
least 1.74 billion reais ($784 million). Besides Electricidade de
Portugal SA and Electricite de France SA, seven other foreign
utilities have shown interest in bidding for Cesp, including AES
Corp. and Duke Energy Corp.


CVRD: Announces Acquisition Of Ferteco
--------------------------------------
Companhia Vale do Rio Doce (NYSE: RIO PR) (CVRD), the world's
largest producer and exporter of iron ore, announced the
acquisition of 100 percent of Ferteco Mineracao S.A. (Ferteco)
from ThyssenKrupp Stahl AG (TKS), one of the leading European
steel-making groups, for US$566 million. It has also chosen a new
president for the newly-acquired company. CVRD board president
Roger Agnelli said the ex-director of the company's iron ore
division, Juarez Saliba, would head the Rio de Janeiro based
Ferteco.


DAIMLERCHRYSLER: To Sell Off Phased Out Pickup Truck Plant
----------------------------------------------------------
Germany-based DaimlerChrysler is to sell off its Campo Largo
(Parana) pickup truck plant, which it already phased out after
consuming some US$315 million in capital investments, South
American Business Information reported Friday. Market sources
estimate the plant to be worth between R$10 million and R$15
million. According to reports, DaimlerChrysler paid R$3.8 million
for the plant, which had a capacity of 40,000 units annually but
has only assembled 4,600 vehicles last year. The plant owes the
state government some R$100 million in taxes and R$200 million
with its suppliers brought about by a breach of contract.


PAO DE ACUCAR: Posts Profits For 1Q01
-------------------------------------
The Brazilian supermarket chain Pao de Acucar, also known as
Companhia Brasileira de Distribuicao (CBD), reported a net profit
of R$51.981 million for the first quarter of 2001, O Globo-Brazil
reported last week. The company's net turnover amounted to
R$1.973 billion, while net assets stood at R$3.014 billion over
the same period.

In addition, the grocery chain also recorded gross turnover of
R$9.55 billion for 2000, overtaking the local subsidiary of
Carrefour, the French supermarket group, as Brazil's largest
company in the sector. CBD enjoys a market share of 14.1 percent,
according to Abras, the Brazilian supermarket association.



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C H I L E
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GENER: Moody's Affirms Baa2 Rating, Takes Off Review
----------------------------------------------------

Approximately $200 Million of Debt Securities Affected

Moody's Investor Service has confirmed the senior unsecured
rating of Gener S.A. (Gener) at Baa2 and has removed the ratings
from review for possible downgrade.

The rating was placed under review for possible downgrade on
April 17, 2001 following The AES Corporation's (AES) completion
of a tender offer for 98.5% of Gener's common stock equal to
approximately US$1,356 million, which was initially financed with
approximately $400 million of debt.

The rating outlook for Gener is stable.

The rating confirmation reflects AES' plan to return Gener to
being a generation company operating in Chile. Included in AES'
plan is the expected completion of the sale of Gener's
Argentinian business to Total FinaElf for approximately $657
million, including the assumption of $45 million of subordinated
debt.

Additionally, AES plans to move Gener's Colombian and Dominican
Republic businesses to another AES subsidiary, and plans to sell
Gener's remaining businesses including its port and shipping
business and its oil and coal businesses. Upon completion of
these transactions, debt levels and debt service requirements at
Gener and its affiliates will greatly reduce.

Gener's remaining business and assets will be its Chilean
generation business. Gener estimates that its cash coverage of
interest will approximate 3.0 times beginning in 2002, and the
revenues that support these expected cash flows will originate
largely from long-term contracts with distribution companies and
with unregulated industrial customers.

Moody's notes that node prices, the price paid by distributors,
have cumulatively increased by 20% in central and southern Chile
over the past eighteen months. This analysis acknowledges the
5.1% node price increase for central and southern Chile and the
6.6% node price increase for northern Chile adopted earlier in
the month, both of which should further strengthen Gener's
contracted coverage ratios.

Confirmed at Baa2 and removed from review for possible downgrade
is Gener's US$200 million 6.5% senior unsecured bond due January
15, 2006.

Headquartered in Santiago, Chile, Gener is principally an
electric generation company with investments principally in
Chile, Colombia, Argentina, and Dominican Republic.

Headquartered in Arlington, Virginia, AES is a leading global
power company comprised of competitive generation, distribution
and retail supply businesses.

AES generating assets include interests in one hundred thirty-
seven facilities totaling over 49 gigawatts of capacity. Its
electricity distribution network has over 920,000 km of conductor
and associated rights of way and sells over 126,000 gigawatt
hours per year to over 17 million end-use-consumers.


GENER: Transalta Completes Purchase Of MEGA For $2 Million
----------------------------------------------------------
TransAlta announced today it will acquire the remaining 50 per
cent interest of Merchant Energy Group of the Americas (MEGA)
from Gener S.A. for approximately $2 million US, pending
regulatory approval.

TransAlta filed the application for regulatory approval today,
which is expected to take about 45 days. This will give TransAlta
full ownership of the U.S.-based company. In June 2000, TransAlta
acquired its original 50 per cent position in MEGA as a platform
for growth in gas-fired power generation in the U.S. MEGA was
established in 1998 and is based in Annapolis, Maryland.

TransAlta is an international electric energy company with more
than $7 billion in assets. The company is focused on achieving
strong earnings growth and enhancing its competitive edge as a
low-cost operator of generation and transmission assets, and a
successful developer of gas-fired independent power projects. The
company is concentrating its growth in Canada, the United States,
Australia and Mexico. TransAlta owns and operates more than 8,000
megawatts of generation plus significant transmission assets in
Alberta.


GENER: Shuns Setting Up Diesel-Fired Turbines
---------------------------------------------
Aside from the environmental problems it foresees, Chilean
electricity generator Gener rejected the use of diesel-fired
turbines because of the high costs demanded in the move, South
American Business Information reported Friday. The response came
on the issue originally by the government concerning the
possibility of power energy rationing next year. Gener, however,
would rather explore alternative energy projects in the short-
term which include the use of gas. Gener is controlled by U.S.-
based AES Corp.


TELEX-CHILE: Capital Increase To Be Tabled At May 25 Meeting
------------------------------------------------------------
Chilean telecom holding Telex-Chile, related in a statement that
the company's board has ruled out all discussion regarding the
proposed US$60 million capital increase from the agenda of an
extraordinary shareholders meeting scheduled for April 27,
Business News Americas reported last week. Instead it will
provide general information on the legal, economic and financial
status of the company. The subject regarding the capital increase
will be discussed during a separate extraordinary shareholders'
meeting, which has been called for May 25.



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C O L O M B I A
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CHEC: In Financial Difficulty
-----------------------------
State-owned Chec, the Caldas hydroelectric power station in
Colombia, is believed to be experiencing financial turmoil,
according to a South American Business Information report
released Friday. The company is owed over P$100 billion in
subsidies (P$86 billion from 1994-98 government, which could now
equal P$130 billion). The value of the company's assets stands at
approximately US$1 billion but it has been investing about P$4
billion pesos annually in the maintenance of its network
(8,000kms over 11,000 square kilometers for 320,000 users). The
company reported net losses of P$36 billion on sales of P$160
billion over the last two years.



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M E X I C O
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BANCRECER: Sale Invitations Will Be Published Mid-May
------------------------------------------------------
Mexican bank bailout agency IPAB announced that invitations to
the upcoming sale of government-intervened bank Bancrecer would
be addressed in mid-May this year. IPAB said that the text for
the documents has been finalized, South American Business
Information said Friday. Thirty Days after that, the "data room"
at Bancrecer will then be opened. According to the report,
Transparencia Internacional's Mexican section will act as the
witness of honor at the auction/reprivatization of the bank.


CINTRA: IPAB Agrees To Postpone Sale Of Two Airlines
----------------------------------------------------
Mexico's bank deposit protection agency, IPAB, agreed to a six-
month delay the sale of Aeromexico and Mexicana, the country's
two flagship airlines, in an attempt to thwart a Congressional
bill that critics fear would dampen foreign investment in the
carriers, Financial Times reported Monday. Opposition parties, in
return, said they would hold off on a controversial aviation bill
aimed at diffusing a decision by Mexico's anti-monopolies
commission, CFC, ordering the airlines to be sold separately. The
bill would ensure continued state participation in the airlines
through tariff regulation and voting rights.

Industry unions strongly oppose the break-up of Cintra, a holding
company jointly operating the two airlines. Under the proposed
bill, the sector would be declared a "priority area" outside the
CFC's jurisdiction. As part of the political compromise reached
at the weekend, Cintra's fate now depends on a new national
aviation policy.


MOTOROLA: Unions Condemn Bonus Payments Given To Executives
-----------------------------------------------------------
Union leaders have condemned bonus payments of more than o2.5
million paid to Motorola executives days before the company
revealed 3,100 job losses, BBC News reported Sunday. They
questioned the rationale behind the payments when the firm has in
recent years lost its number one position in the global league of
mobile phone makers to Finland's Nokia.

"I would imagine that Motorola shareholders will also be
disgusted that a company which has lost almost half its world
market share in mobile phones should reward its executives in
this way," Bill Spiers, general secretary of the Scottish Trades
Union Congress, said. According to Spiers, Motorola workers would
be "angry and sickened" by the award of bonuses of up to o870,000
to directors three weeks before the mobile phone giant announced
the closure of its Scottish plant. The company last week, decided
to close its Scottish plant, in Bathgate, West Lothian, after
announcing trading losses of $200 million for the first three
months of 2001. Workers made redundant from the plant are
expected to receive o1,300 each for every year of service,
although talks over the level of compensation are still ongoing.

The company has six plants making mobiles - in Mexico, Brazil,
Singapore, China, Germany and Bathgate. The German and Scottish
plants are understood to be most at risk because of the higher
costs in Europe.



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V E N E Z U E L A
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GRAFITTI: Calls In Creditors To Restructure Short Term Debt
-----------------------------------------------------------
Due to a temporary lack of liquidity, troubled Venezuelan fashion
store chain Graffiti has called on its creditors to restructure
its debts from 60 days to a longer period, according to South
American Business Information report published last week.
Graffiti reportedly has assets totaling more than Bs$120 billion
(more than its debts) and has 10,000 employees. The company
recently paid Bs$140 billion to the tax offices. Its debt with
Banco de Venezuela has come down from Bs$24 billion to
Bs$3billion. The fashion store chain had alarmed banking
creditors by talking of foreign expansion but it had only meant
the concept, not the reality of opening stores abroad. Grafitti's
Asia Directo plan is still meant to go ahead with the
establishment of a show-room in Miami for wholesalers to order
while new stores in Valencia and Margarita Island are on stand-
by.

Graffiti is owned by Distribuidora Al Galope, the Venezuelan
textile group widely believed to be experiencing financial
difficulties. Distribuidora Al Galope has reportedly paid back
Bs$8 billion in January 2001 but was hit with a 40 percent dip in
sales in February.


MAVESA: Announces Termination of ADR Program
--------------------------------------------
Mavesa, S.A. announced today that, as a result of Primor
Alimentos' acquisition of over 98% of the outstanding shares of
Mavesa common stock, including shares represented by American
Depositary Shares (ADSs), Mavesa has instructed The Bank of New
York, as depositary for the ADSs, to terminate the American
Depositary Receipt (ADR) program under which Mavesa's ADRs have
been issued.

The ADR program is scheduled to terminate on May 29, 2001.
Holders of ADRs will receive a notice from The Bank of New York
in the next several days relating to the termination of the ADR
program.


SIVENSA: Government May Purchase Stake Owned By BHP
---------------------------------------------------
In an effort to rescue the $850 million Orinoco Iron plant from
the brink of financial breakdown, Venezuela may buy Australian
company BHP Ltd.'s 50 percent stake, Bloomberg said Friday. BHP,
earlier wrote off its investment in the plant, which produces
briquettes used to boost the iron-ore content of the scrap metal
that is the primary material of steel mini-mills. However,
according to Francisco Rangel, president of Venezuela's state
heavy industry Corporacion Venezolana de Guayana, talks for the
bailout plan are still in the preliminary stages.

"We are going to defend Orinoco Iron with anything we have," said
Rangel, in an interview after a seminar.

The Venezuelan government's purchase of BHP's stake would give
Orinoco Iron more breathing room while waiting for a recovery in
hot iron briquette prices. BHP's partner in the plant is
International Briquettes Holding, Inc., a unit of Siderurgica
Venezolana Sivensa. Sivensa, which is currently in talks to
restructure more than $200 million in bank debts, said Orinoco
Iron, which began production last year of hot iron briquettes,
needs a cash infusion of $240 million.




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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