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

            Tuesday, May 15, 2001, Vol. 2, Issue 95

                           Headlines




A R G E N T I N A

AEROLINEAS ARGENTINAS: Gov. Calls Unions, Airline To Meeting


B R A Z I L

BANESPA: Union Reps Meet With Santander To Discuss Future
CESP: Two Firms Still Undecided On Stand Regarding Privatization
CVRD: Executive Responds Query Regarding Trends In Core Products


C H I L E

COMPANIA MINERA: Announces Liquidation Of Assets
STARMEDIA: To Lay Off 25% Of Workforce To Breakeven By 4Q01


E C U A D O R

FILANBANCO: Minister Fights To Silence Financial Status Rumors


M E X I C O

EUZKADI: To Mediate Dispute Between Workers And Management


V E N E Z U E L A

VENEPAL: Gets 60-Day Extension To Incorporate New Partner


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A R G E N T I N A
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AEROLINEAS ARGENTINAS: Gov. Calls Unions, Airline To Meeting
------------------------------------------------------------
Seeking to negotiate an end to the crisis buffeting Aerolineas
Argentinas, the government has called a meeting between unions
and the Argentinean airline, according to a report Friday in
Ambito Financiero. The government, according to the labor
ministry, does not support the idea of liquidating the airline.
Instead, it urged the airline and unions to focus their
negotiations on the payment of salaries and the financing of the
airline, which are considered to be key areas.

Argentinean businessman Eduardo Eurnekian was scheduled to meet
May 11 with Sepi representatives, whom the government held talks
with earlier. Mr. Eurnekian, who has expressed an interest in
acquiring Aerolineas Argentinas, will seek to gain more
information about its financial situation, its debts and its
creditors.



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B R A Z I L
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BANESPA: Union Reps Meet With Santander To Discuss Future
---------------------------------------------------------
Last week, Brazilian trade union CNB-CUT representatives met with
Brazilian bank Banespa's new parent group, Spanish bank Banco
Santander Central Hispano SA (BSCH), to discuss the future of
Banespa, Expansion reported Thursday. The union representatives,
after failing to fulfil their aim, announced that they do intend
to carry out industrial action if jobs at the Brazilian bank
could not be guaranteed.

"BSCH had acted unfairly and staff had taken up the redundancy
offer due to fear, since the bank had warned that it was not
interested in retaining staff over the age of 40," the union
said.

Meanwhile, Maria Jesus Paredes, secretary general of the
financial services division of Spanish trade union Comisiones
Obreras (CC OO), attributed the blame to the head of BSCH's
operations in Latin America, Francisco Luzon, claiming that he
"aimed to correct the high price paid for Banespa by cutting
costs".

CC OO is the largest union representing workers of BSCH and in
the sector. The union has requested that the bank offer equal
treatment to its Latin American employees. Additionally, it has
also requested the appointment of an international delegate for
employment-related matters 'with sufficient authority within the
bank'.


CESP: Two Firms Still Undecided On Stand Regarding Privatization
----------------------------------------------------------------
Of the six firms qualified to bid for the Sao Paulo-based
electric power energy generating company Cesp Parana, two are
still undecided whether they will take part in the auction, South
American Business Information reported Friday. Duke Energy and
Electricidade de Portugal (EDP) are still riding the fence at
this point. Other qualified bidders are AES Corp, NRG Energy
Inc., Electricite de France and Cemig. Cesp Parana, which debts
amount to R$7.4 billion (more than 80 percent in US dollars),
will be privatized May 16 with a starting price of R$1.739
billion for a 38.67 percent stake (R$48 per thousand shares).


CVRD: Executive Responds Query Regarding Trends In Core Products
----------------------------------------------------------------
Investor relations director at mining major CVRD (Companhia Vale
do Rio Doce), Gabriel Stoliar, said that Rio de Janeiro-based
miner is increasing its focus on tailor-made products for
customers, Business News Americas reported Friday. Stoliar's
statement came in response to a question about trends in the
company's core products. According to Stoliar, longer-term that
means a greater emphasis on pellets as steelmakers worldwide want
to raise product quality and put more added-value items on to the
market. However, right now they are happy to take more iron ore
fines because of low international steel demand and prices.

"That is why iron ore [sales] is not increasing, but the mix of
sales is changing," he added.

CVRD's iron ore and pellet sales were 30.2Mt in 1Q01, 13.1
percent up on same-period 2000 but on par with the intervening
quarters. The first quarter is traditionally the weakest quarter
for iron ore demand. The company's iron ore sales were 26.6Mt,
pellets 3.6Mt in 1Q01; 26.2Mt, 4.4Mt in 4Q00; and 22.6Mt and
4.1Mt in the first quarter of 2000.



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C H I L E
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COMPANIA MINERA: Announces Liquidation Of Assets
------------------------------------------------
Compania Minera Dayton of Chile, subsidiary of the Canadian
Dayton Mining Corp. announced the liquidation of the assets of
the mine operated in the IV Regi¢n, project known as Andacollo
Oro, South American Business Information revealed Friday. The
company, as part of the liquidation process, cancelled creditors'
US$22.7-million investment in the project, which has been in
operation for 4 years. In all that time, the project was never
able to pay its US$60 million debt. Compania Minera was forced to
liquidate the project because of the gold's very low price.

Earlier, the mining company entered an agreement with Henry
Butcher Ltd. (UK) and Caterpillar Leasing Chile for the re-
distribution of equipment, ores processing facilities and
additional systems. The plant for gold recovery, however, will
not be negotiated as it's currently processing ore.


STARMEDIA: To Lay Off 25% Of Workforce To Breakeven By 4Q01
-----------------------------------------------------------
Starmedia Network Inc., one of Latin America's leading Internet
companies, announced it would dismiss a quarter of its 800 staff
in an effort to cut operating expenses by 30-35 percent this year
and guarantee its 4Q01 breakeven target, Business News Americas
reported Friday. The layoffs will affect all departments, but the
company stressed it would not be shutting down any of its 10
offices in the US, Latin America and Spain. The program will see
the company take a one-time charge of between US$4 - $6 million
in 2Q01.

Starmedia plans to slash services that are not significant
revenue generators, such as homepage building services, which are
expensive to maintain and difficult to monetize, according to CEO
Fernando Espuelas. Instead the company will focus on "high margin
revenue deals," such as its recent marketing alliance with global
food company Danone, Espuelas added.

The company recently reported a first-quarter net loss of $31.2
million, or 46 cents per share, against a net loss of $35.1
million, or 54 cents per share in the same period a year ago.
First-quarter sales were $16 million, up 59 percent from the
year-ago period, but down from $20.1 million in fourth-quarter
2000.



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E C U A D O R
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FILANBANCO: Minister Fights To Silence Financial Status Rumors
--------------------------------------------------------------
Jorge Gallardo, Ecuador's economy minister, wants to squelch
rumors that state-owned Filanbanco, which was intervened and
taken over by the government amid the 1998-1999 financial crisis
that hit the country's banking sector, is in any financial
difficulties, Business News Americas said Friday. Gallardo
admitted that the bank had been making provisions of some US$12.8
million a month related to bad loans. However, according to
Gallardo, after taking office in January, the bank's new
administrators already have plans to restructure some US$450
million from its portfolio of loans graded at "D" and "E", which
require 60 percent and 100 percent provisions.

Monday, ING Barings will sign a technical assistance convention
with Filanbanco to help prepare the bank for a sale and return to
the private sector by year-end, the economy minister said. ING
Barings will help administer the Ecuadorean banking group,
streamlining operations and looking at selling off some offices.



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M E X I C O
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EUZKADI: To Mediate Dispute Between Workers And Management
----------------------------------------------------------
Jalisco Economic Promotion Minister Abraham Gonzalez said that
the state government would attempt to mediate a labor dispute
between union representatives and management at a Euzkadi tire
plant located in the state capital of Guadalajara,
Reforma/Infolatina reported Friday. The government is stepping up
efforts to find a solution to the conflict, which stems from the
company's recent announcement of a plan to dismiss 250 workers
"as an extreme measure to save the plant."

"We're trying to approach the parties - listen to management,
listen to the union - to gather the information required to make
a judgment and familiarize ourselves with the different points of
view and the issues at stake," Gonzalez said.

Euzkadi previously issued a statement explaining that the job
cuts were needed because of the contraction of the Mexican tire
market, high costs/low levels of production, indiscriminate
imports and rigid labor conditions.



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

VENEPAL: Gets 60-Day Extension To Incorporate New Partner
---------------------------------------------------------
Creditor banks of struggling paper maker Venepal have agreed to a
60-day extension to mid July, the deadline given to incorporate a
strategic partner that would reinforce its finances, according to
a report Friday in South American Business Information. Smurfit
Carton de Venezuela, after having signed an agreement of intent
on March 15, 2001, remains the candidate most likely to become
the company's new partner. Smurfit already purchased a cardboard
plant in Colombia from Venepal and has the subsidiary Cartones de
Venezuela in Venezuela. Currently creditor banks hold US$37
million of bonds from Venepal, and the strategic partner is
expected to strengthen the collateralization of these bonds.




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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