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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

            Friday, May 18, 2001, Vol. 2, Issue 98

                           Headlines


A R G E N T I N A

AEROLINEAS ARGENTINAS: SEPI Limits Early Retirement Payments
LAPA: Struggling Financially, Returning Airplanes


B R A Z I L

CESP: Sao Paulo Gov. To Appeal Court Ruling This Week
LIGHT: Suffers 1Q01 Losses Due To Brazilian Currency Devaluation
VESPER: Undergoes Restructuring


C H I L E

GENER: Posts 95-Percent Drop In Net Results
INVERRAZ: Faces Lawsuit Filed By State Street Bank And Trust


M E X I C O

BANCRECER: Scotiabank Inverlat Still Considers Acquisition
GRUPO VITRO: Optimistic In Securing A $250-Million Loan
GRUPO VITRO: Announces Acquisition Of Stake In Spanish Company
HYLSAMEX: Attracts Another Potential Bidder
MOTOROLA: Dismissing 600 Workers Due To Slow Global Demand
SAVIA: Corrects News Articles Regarding Debt Structure
TELEVISA: Considering Options Regarding Publishing Division
TELEVISA: Sees Reduction In Telmex's Cablevisoin Participation


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A R G E N T I N A
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AEROLINEAS ARGENTINAS: SEPI Limits Early Retirement Payments
------------------------------------------------------------
Part of the restructuring plan implemented by the Spanish state
holding company (SEPI) at the airline Aerolineas Argentineas is
setting a limit to early retirement payments for a maximum of 18
years' pay, according to a Buenos Aires Economico report Tuesday.
The move, which surprised workers, could be a strategy to avoid a
large number of employees applying for early retirements, which
the airline cannot fund, sector sources said. The increasing fear
that Aerolineas Argentinas will soon go into liquidation has lead
many employees to consider early retirement. Analysts find it
strange that the limit on redundancy pay will be an incentive for
younger and lower paid workers to take early retirement, contrary
to the aim of Sepi's restructuring plan, which aims to reduce the
number of long serving, higher paid workers. Sepi is aiming to
cut 1,300 jobs.


LAPA: Struggling Financially, Returning Airplanes
-------------------------------------------------
Lineas Aereas Privadas Argentinas (LAPA) is said to be
experiencing significant financial trouble, South American
Business Information revealed Wednesday. Reports say LAPA has
returned a Boeing 767 and plans to do the same with one or the
two aircraft B757, which the airline operates. Some B737 aircraft
from the leasing company Pegasus to which LAPA owes $12 million
are also at risk.

Sources in the sector are talking about renewed discussions with
Delta Airlines. LAPA has a share code agreement with Delta for
the daily flights to Atlanta in the United States. Meanwhile
others close to the company are talking about concrete offers to
the Brazilian airline TAM. Rumors still circulate that the
company will soon decide to call in the receivers, and that
redundancies will take place following the fleet reduction.



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

CESP: Sao Paulo Gov. To Appeal Court Ruling This Week
-----------------------------------------------------
Brazil's Sao Paulo state government this week is expected to
appeal a court ruling that suspended power generator Cesp
Parana's privatization, a state government source related in a
report Wednesday in Business News Americas. Cesp was to be
auctioned on the Sao Paulo stock exchange May 16 had Judge Leila
Paiva not upheld an appeal by the Workers Party (PT) on Monday
night to suspend the Cesp Parana sale. The PT action questions
the minimum price of R$1.7 billion (US$751 million).

Sao Paulo governor Geraldo Alckmin's announcement of an
indefinite suspension however, is not due to the court's ruling,
but to the uncertainty in the sector because of the rationing
plan that begins June 1.

"This problem in the courts will be resolved in the next few
hours, but the indefinite suspension is due to uncertainty over
rationing, as players and investors in the sector are anxious to
know the details of the rationing plan, which should be
publicized by the federal government next Friday," the source
said.

Meanwhile, Sao Paulo energy secretary Mauro Arce shunned PT's
claim that no new evaluation has been made of Cesp Parana and the
price has remained the same since December 2000, the date of the
first privatization attempt.

"We will prove the company has been reevaluated, we will show the
criteria adopted, and in this way the suspension should be
lifted," he explained.

According to Bovespa, the qualified companies for the Cesp Parana
sale are:

1) Duke Energia Parana
2) Elecgen Participacoes
3) Obdulio Participacoes
4) EDP Brasil
5) Energen Empresa Brasileira de Geracao de Energia
6) Enerpaulo Energia Paulista
7) Ochola Participacoes
8) Cemig
9) AES Termo Bariri
10) Electricidade de Portugal Internacional


LIGHT: Suffers 1Q01 Losses Due To Brazilian Currency Devaluation
----------------------------------------------------------------
Rio de Janeiro-based electricity distributor Light said that the
devaluation of the real currency against the U.S. dollar made a
strong impact on the company's first-quarter earnings, Brazil
Financial Wire reported Wednesday. According to Paulo Pinto,
director of investor relations, the net financial effect of the
devaluation could be translated into a R$ 278 million loss. Had
it not been for the real's devaluation, Light would have turned a
first-quarter profit, instead of posting a R$166-million loss in
the period. The exchange rate boosted Light's dollar debts.
Currency changes also led to the increase in the price of the
electricity it buys from generator Itaipu, which sells in foreign
currency. Currently, Itaipu supplies 24 percent of the
electricity purchased by Light. Light said it spent R$511 million
to buy Itaipu power, a 48 percent on year rise. According to
Pinto, the inflated cost of the energy reflects the exchange rate
factor and also a price hike imposed recently by Furnas, another
generator.


VESPER: Undergoes Restructuring
-------------------------------
Brazilian WLL fixed telephone services company Vesper is
undergoing a restructuring, South American Business Information
reported Wednesday. The strategy could possibly see the sale of
the company's call centers, as well as the dismissal of some
employees. Vesper laid off 1,000 workers recently. The company is
the mirroring company of Telefonica, at Sao Paulo state and
Telemar at Rio de Janeiro state. Last year, the company
registered losses of R$843 million and reported earnings of R$172
million. Its stockholders VeloCom (52.7 percent), Bell Canada
International (32.1 percent) and Qualcomm (15.2 percent) are
searching for a new partner to bring fresh capital to the table.

BCI earlier announced plans to divest its participation in the
telecom carrier, as it intends to focus on cellular mobile
communications through Telecom Americas.



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C H I L E
=========

GENER: Posts 95-Percent Drop In Net Results
-------------------------------------------
Chilean generator Gener, which has been controlled by US company
AES since December 2000, reported its first quarter profit of
US$1.41 million, a 95-percent decrease from the comparable period
just a year ago, Business News Americas reported Wednesday. The
pro-forma result, which does not consider a series of financial
events, produced profits of US$14.30 million, an 18.3-percent
increase on the pro-forma result in the comparable period in the
previous year.

The company arrived at this result by isolating the extraordinary
factors from 1Q00 (US$4.25 million profits from sales of Agua
Negra and the effect on AES-Gener of US$4.46 million fines
charged by Central Puerto), and in both periods canceling the
impact of monetary correction and differences.

"AES-Gener included in 1Q01 results costs related to the change
of property process and staff cuts, which impacted to the tune of
6.95 billion Pesos (US$11.5 million) on the consolidated result
for the period," the company said.

Power sales in Chile in 1Q01 amounted to US$82.28 million, a
27.7-percent rise in Peso terms on 1Q00. The company attributed
this increase to an increase in sales to regulated and non-
regulated clients.


INVERRAZ: Faces Lawsuit Filed By State Street Bank And Trust
-------------------------------------------------------------
A U.S. bank, the State Street Bank and Trust Company, is taking  
legal action against Errazuriz Investments (Inverraz), which is
owned by Chilean businessman Francisco Javier Errazuriz, Santiago
Times reported Wednesday. The lawsuit comes after the company
failed to make scheduled repayments on debts it owed to the
lending institution. In 1994, Inverraz borrowed from the bank
US$50 million, and in 1996, it again borrowed US$65 million.

Errazuriz earlier proposed to repay just US$50 million in cash,
however, the lending institution rejected its proposal. He
therefore proposed repaying US$75 million, on condition that the
bank approved his decision to sell the Chilean Nitrate and Iodine
Company (Cosayach) to the Mining and Chemical Society of Chile
(SQM). Errazuriz had to ask the bank's permission because a
clause in their contract said he could not sell any of Inverraz's
holdings while still in debt to the bank.

Now, Errazuriz is still trying to figure out how he will pay the
remaining balance. However, the businessman said there was no
hurry to pay the balance of the company's debts, since creditors
are not making any special demands. He added that he was
unwilling to rush a deal as important as the Cosayach sale. SQM
will pay Inverraz US$140 million for Cosayach, which would allow
the company to pay off all its debts.



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

BANCRECER: Scotiabank Inverlat Still Considers Acquisition
----------------------------------------------------------
Mexico's Grupo Financiero Scotiabank Inverlat admits it still has
an interest in acquiring Bancrecer though the possibility of
acquiring the bank is not that vital to its group strategy, South
American Business Information reported Wednesday. According to
the report, Scotiabank, which is 50-percent Canadian owned, is
wary of struggling with Bancrecer as Citibank has done with
Confia, acquired in 1998. However, it will analyze the rules of
sale when they are published.


GRUPO VITRO: Optimistic In Securing A $250-Million Loan
-------------------------------------------------------
Mexican glass maker Grupo Vitro, with liabilities totaling $1.6
billion, expects to secure a $250-million syndicated loan in
July, Company Director of Finance and Planning Juan Orozco
Carrera revealed in an Infolatina report Wednesday. According to
Orozco, Vitro will use the money to restructure its short-term
debt, saying that the company had $100 million in debt repayments
scheduled for the current year. Orozco also revealed Vitro was
attempting to restructure a $175-million Yanky bond issue, which
matures in May 2002. The Director said the group could divest
several non-productive assets in order to restructure the debt,
with respect to which it is seeking a second syndicated loan.

Word is circulating that the group is looking to sell-off its
subsidiary Plasticos Bosco. The Bosco subsidiary has sales of
around $60 million per year, equivalent to 2 percent of
Monterrey-based Vitro's total annual sales. Its liabilities
reportedly total around $60 million.

Vitro anticipates a promising outlook for the year as it
forecasts growth rates similar to that of the Mexican economy in
2001. The company believes that the peso-dollar parity effects on
exports will have to be compensated for with better productivity
and efficiency in fixed-cost applications.


GRUPO VITRO: Announces Acquisition Of Stake In Spanish Company
--------------------------------------------------------------
Leading Mexican glassmaker Grupo Vitro has acquired a 60-percent
stake in Cristalglass Vidrio Aislante, according to an El
Economista/Infolatina report Wednesday edition. The terms of the
transaction were not disclosed. According to the report, Grupo
Vitro's subsidiary Vitro Plano acquired the majority stake in
Cristalglass, a Spanish flat-glass company, which annual sales in
Spain, France and Portugal totaling $60 million. Cristalglass
employs 300 workers and commands some 30-percent of its target
market, Spain's construction industry. Flat glass currently
accounts for about 37 percent of Grupo Vitro's consolidated
sales. Mexico-based Vitro currently operates subsidiaries and
distribution centers in seven countries.


HYLSAMEX: Attracts Another Potential Bidder
-------------------------------------------
Hylsamex, the Mexican steel-making subsidiary of Grupo Alfa, has
apparently attracted another potential investor. However, still
no official word whether the unnamed company is interested in
acquiring either a majority or a minority stake in the struggling
firm, according to a report in Infolatina Wednesday. The
announcement came several weeks after Monterrey-based Alfa played
host to executives from two international steel manufacturers,
which are eyeing for a stake in Hylsamex. These two companies are
widely believed to have already completed due diligence
proceedings, and according to reports, Alfa is expected to make
an official announcement within eight weeks. Alfa recently
announced plans to divest either a minority or majority stake in
Hylsamex in an attempt to lighten the group's overall debt load.


MOTOROLA: Dismissing 600 Workers Due To Slow Global Demand
----------------------------------------------------------
The world's second-largest cellular phone maker Motorola Inc.,
through its subsidiary Motorola de Mexico SA, will axe 600 jobs
at its Chihuahua plant, Bloomberg reported Wednesday. The
decision comes as the backdrop of weaker global demand for mobile
telephones continues to loom.

"The demand for such products can be covered with the production
done during the five working days of the week," the company said
in a statement in explanation to its move for firing employees,
who were hired to work on Saturdays and Sundays. The company
informed it would put an end to the weekend shift at the plant
starting May 27.

Motorola will retain 1,900 workers at the Chihuahua plant, and
plans to keep 4,667 employees at another plant located in
Nogales, in Sonora state, on the U.S. border.


SAVIA: Corrects News Articles Regarding Debt Structure
------------------------------------------------------
Savia S.A. de C.V. (NYSE: VAI) (BMV: SAVIA) today corrected
erroneous media reports regarding a US$1 billion bond maturing
today. Savia's debt structure does not contain any bonds and
therefore no US$1 billion bond maturity.

Savia continues its negotiations with its lending banks, with
which it has already reached an agreement in principle. A final
agreement is expected to be reached during the month of May. The
lending banks include Chase Manhattan Bank, Bank of America,
Nomura Securities, BBVA-Bancomer, Banamex, Euroamerican Capital
Corporation and Banco Latinoamericano de Exportaciones. ING Bank
holds a coupon zero credit facility maturing in the year 2006.


TELEVISA: Considering Options Regarding Publishing Division
-----------------------------------------------------------
Mexican media giant Grupo Televisa is mulling over options of
whether to sell its entire publishing division or just find a
strategic partner for it, Reforma/Infolatina reported Wednesday.
The issue has reportedly been taken up by the group's board of
directors, which include Chairman Emilio Azcarraga Jean and
directors Bernado Gomez, Alfonso de Angoitia and Jose Baston.
However, they haven't struck a final decision about it yet. The
company's publishing division primarily publishes magazines, both
in Mexico and other Latin American countries.

Televisa recently unveiled a cost-cutting program aimed to save
the company more than $60 million annually.


TELEVISA: Sees Reduction In Telmex's Cablevisoin Participation
-------------------------------------------------------------
The main reason why Mexican media giant Grupo Televisa plans to
see a reduction in Telefonos de Mexico's (Telmex) involvement in
its subsidiary Cablevision is bureaucratic. Telmex's minority
ownership brings about regulatory hindrances to the company's
planned expansion, Reforma/Infolatina reported Wednesday. Telmex
owns 49 percent in Cablevision. Televisa plans to expand
Cablevision's operations beyond Mexico City, but it is having a
hard time carrying out its plans because of the severe
restrictions set by regulatory authorities as to the extent on
which Telmex may participate in cable-TV services outside the
capital. Also contributing to Televisa's plans is the deepening
rivalry between the company and Telmex in a number of
communications services.

The first step in the process reportedly will be the entry of a
new partner in Cablevision. A previous TCR-LA report suggested
that the company is now in preliminary talks with Telewest,
France's leading cable-TV provider.




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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