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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

            Monday, May 21, 2001, Vol. 2, Issue 99

                           Headlines



A R G E N T I N A

AEROLINEAS ARGENTINAS: Still Unresolved; Gov. Seeks Arbitration
ALFAJORES BALCARCE: May File For Bankruptcy
ALPARGATAS: Fitch Warns Of Bankruptcy
ALPARGATAS: Posts 27-Percent Narrower Loss After Restructuring


B R A Z I L

CESP: Brokerage Says First-Quarter Loss Below Expectations
CVRD: Cade Invites IBS To Analyze Monopolistic Positions
ESCELSA: Blames Soft Real For 1Q01 Losses


C H I L E

TELEX-CHILE: Readies To Meet Challenges In The Market


M E X I C O

AHMSA: Close To Striking Final Deal With Bank Creditors
BANCRECER: IPAB Delays Announcement Of Bidding Terms
CINTRA: Aeromexico Plans To Initiate Replacement Program
HYLSAMEX: Grupo Alfa To Sell Flat-Steel Division Separately
SAVIA: Pulsar Readies To Sell 20-Percent Stake
TELEVISA: Could Spin-off Publishing Division Due To Weak 1Q01


V E N E Z U E L A

SIDOR: Labor Minister Heads Government-Sponsored Mediation Talks


     - - - - - - - - - - -


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A R G E N T I N A
=================

AEROLINEAS ARGENTINAS: Still Unresolved; Gov. Seeks Arbitration
---------------------------------------------------------------
The dispute between the management of Argentine national carrier
Aerolineas Argentinas and workers' unions remains unresolved
despite the obligatory reconciliation period imposed by the
Argentine government, Expansion reported Wednesday. The
Argentinean aeronautical technical staff union Apta refuses to
accept a plan to cut jobs drawn up by the Spanish state
industrial holding company Sepi, Aerolineas' majority
shareholder. Meanwhile, The Argentinean government said it would
propose arbitration for the airline in an attempt to resolve the
dispute.


ALFAJORES BALCARCE: May File For Bankruptcy
-------------------------------------------
Alfajores Balcarce, one of Argentina's most traditional
manufacturers of cakes and pastries, is likely to face
bankruptcy, according to an Ambito Financiero report published
Wednesday. The company, which recently called a creditors'
meeting, faces considerable debts and has been forced to reduce
its workforce from 700 to 300 staff. Balcarce has not paid its
staff for three months, triggering a workers' protest on Tuesday.

The average length of service among employees is between 30 and
40 years. If the company were to close, many staff would find it
impossible to find other employment since most of them have spent
their entire working lives at the Argentine confectionery group.

Company director Rodolfo Martigena noted that Balcarce was
considering a number of methods to resolve the current crisis,
although he admitted that the situation was highly complicated.


ALPARGATAS: Fitch Warns Of Bankruptcy
-------------------------------------
In a recent report, credit rating agency Fitch raised significant
concers over the bankruptcy risk of textile and shoe manufacturer
Alpargatas, South American Business Information reported Tuesday.
Fitch maintained a `D' rating for traunches of medium-term
eurobonds totaling up to US$150 million, negotiable bonds of up
to $250 million and subordinated negotiable variable bonds of up
to $80 million. Fitch pointed out the company's operating
restructuring and its debt left the local company in the hands of
the American funds Newbridge and Farallon. Meanwhile 68 percent
of the company's short term debt is still to be restructured.


ALPARGATAS: Posts 27-Percent Narrower Loss After Restructuring
--------------------------------------------------------------
Due to the financial restructuring completed in December,
Alpargatas SA posted a net loss of 26.3 million pesos, 27-percent
narrower compared to the 36.3 million posted a year earlier,
according to an AFX Europe report published Tuesday. However,
according to Chairman Guillermo Gotelli, the delay in the
completing the restructuring had a significant impact on business
operations because of the magnitued of financial restrictions
brought about by the process.

The company posted a 65-percent drop in sales to 10.6 million
pesos. Footwear sales stood at 4.9 million pesos, textiles at 2.1
million, and retailing grew 43 percent to 3.6 million pesos.
Alpargatas operating loss reached 6.5 million pesos, compared
with a loss of 279,380 pesos a year earlier. Financial charges
were cut 55 percent, to 7.8 million, with large portions of
liabilities recapitalized.

More than half of the interest charges accrued in the first
quarter of this year will be paid in the long term, Alpargatas
said.

According to Gotelli, the company is optimistic that last week's
sector competitiveness agreement for the textile, garment and
footwear industries will lay the foundation for a recovery of
working capital and improved costs.



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

CESP: Brokerage Says First-Quarter Loss Below Expectations
----------------------------------------------------------
Power company Cia. Energ‚tica de Sao Paulo's (Cesp) first-quarter
loss of R$352.3 million came in below expectations, according to
Brazilian brokerage Sudameris in a Brazil Financial Wire report
Thursday. Sudameris had pegged Cesp's first-quarter loss at R$
587.7 million.

According to Sudameris analyst Marcos Severine, the 10.6 percent
devaluation of the Brazilian real during the first quarter had a
softer-than-expected impact of R$ 578.7 million on Cesp's
results, while the bank had estimated that figure at R$ 629.5
million. In addition, Cesp benefited from R$ 177 million in one-
time tax credits. Severine added that 83.5 percent of the power
utility's debt load is dollar-nominated.

"The company is doing well, but there are concerns about exchange
rate pressure on its debts."

At the end of March, the company's total debts stood at around R$
9.083 billion.


CVRD: Cade Invites IBS To Analyze Monopolistic Positions
--------------------------------------------------------
Antimonopolies commission Cade has invited the Brazilian iron and
steel institute IBS, which represents the industry, to
participate in an analysis process. The commission is analyzing
CVRD's monopolistic positions in the iron ores and railroad
sectors, South American Business Information reported Thursday.
The move by CVRD or Companhia Vale do Rio Doce to acquire Caemi,
which will allow it to control almost a hundred percent of the
national iron ores market, has raised concern from IBS.

According to IBS sources, CVRD increased its share of the
domestic iron ores market to 70.1 percent following its
acquisition of Ferteco, Samitri, Samarco and Socoimex. Counting
the indirect ownership in Serra Geral and Urucum, along with
Caemi's future acquisition, that market share increases to 86.7
percent. As for the railroad market, CVRD presently holds 61.2
percent, which will be increased to 96.4 percent in light of the
pending Caemi acquisition.


ESCELSA: Blames Soft Real For 1Q01 Losses
-----------------------------------------
Due to the devaluation of the real against the dollar, state
distributor Escelsa (Esprito Santo Centrais Elctricas S.A.)
registered first-quarter losses of R$41.28 million, against
profits of R$13.44 million in the comparable period the year
prior, Business News Americas said Tuesday. The real's
devaluation directly affected the company's balance of payments
because its debts are priced in the foreign currency.

In addition, electricity sold by Escelsa increased 8.3 percent in
the period to 2,570GWh, while the number of clients increased 4.3
percent to 1.4 million.


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

TELEX-CHILE: Readies To Meet Challenges In The Market
-----------------------------------------------------
In order to prepare the company to face challenges in the market,
Telex-Chile will go through deep changes in its infrastructure,
South American Business Information reported Thursday. The
strategy consists of investing in successful areas, especially in
voice, Internet and voice transmission using broadband
technology. Telex-Chile has been developing key projects with
this technology since December as services related to broadband
are vital for the future of the company.

Telex-Chile previously announced plans to sell-off its principal
asset, Chilesat SA, after missing an $8.9 million capital
installment payment. Chilesat, the company's most valuable asset
even with debts of US$76 million, was to be put up for sale in
order to help pay down its liabilities. Telex, which was once
valued at US$1 billion, currently has total liabilities of US$142
million.



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

AHMSA: Close To Striking Final Deal With Bank Creditors
-------------------------------------------------------
Informed sources expect a final debt-restructuring agreement will
be signed, sealed and delivered in early June. Following a
meeting between the senior executives of struggling Mexican
steelmaker Altos Hornos de Mexico (AHMSA) and bank creditors in
New York almost two weeks ago the outlook for a deal is
optimistic, Reforma/Infolatina reported Thursday. The signing of
the draft agreement has dragged on for the past several weeks due
to the conflicts brought about by its legal interpretations.

On the other hand, AHMSA holding company Grupo Acero del Norte
(GAN) is yet to reach individual agreements with its bank
creditors or with bondholders. Speculation continues that
negotiations between GAN and bondholders could possibly drag on
through October. As a consequence, AHMSA is still unlikely to see
its two-year suspension of payments being lifted before November.


BANCRECER: IPAB Delays Announcement Of Bidding Terms
----------------------------------------------------
A spokesman for bank deposit guarantee agency IPAB revealed that
the institution would not release terms of the auction of
government-intervened bank Bancrecer until the end of the month,
according to a report in South China Morning Post Thursday. The
spokesman didn't provide any reasons for the delay. Bancrecer was
originally scheduled to be sold off in the first quarter of the
current year. The bank was loaded with liabilities when the
government took over its control in 1999. Swelling debts, brought
about by the 1994 devaluation of the peso that sent interest
rates soaring above 100 percent, caused millions of debtors to
default on loans.


CINTRA: Aeromexico Plans To Initiate Replacement Program
--------------------------------------------------------
Leading Mexican airline Aeromexico wanted to initiate its
aircraft replacement program shortly, according to a report
Wednesday in Reforma/Infolatina. However, an expected six-month
delay in the sale of government-owned airline holding company
Cintra, which controls Aeromexico, reportedly will need to end or
be resolved before the replacement program can begin.

Aeromexico planned to begin replacing its 16 DC-9 aircraft, which
are an average 25 years old and badly in need of replacement.
According to its plan, the company will replace four of the
aircraft this year, four next year and eight in 2003.


HYLSAMEX: Grupo Alfa To Sell Flat-Steel Division Separately
-----------------------------------------------------------
Mexican industrial conglomerate Grupo Alfa decided to sell
separately the flat-steel division of its steel-making subsidiary
Hylsamex, or some other individual unit of the steelmaker,
Reforma/Infolatina reported Thursday. The decision comes after
experiencing a series of failures in its recent attempts to
divest Hylsamex as a whole. A worldwide slump in steel prices has
dampened interest among the potential buyers of Hylsamex, which
currently faces liabilities totaling $1.3 billion.

Hylsamex S.A. de C.V. is Mexico's leading producer of steel
products. The company produces iron and steel sheet, coils, bars,
wire, pipe, fencing and rods. The group consists of nine
divisions: Hylsa Flat Products Division, Bar & Rod Division,
Tubular Products Division, HYL, Raw Materials Division, Galvak,
Galvamet, Hylsa-Bekaert and Acerex.


SAVIA: Pulsar Readies To Sell 20-Percent Stake
----------------------------------------------
Struggling to reduce Savia's debts, which stood at an estimated
amount of $900 million, Monterrey-based Grupo Pulsar is now
readying to sell a 20-percent stake in its Mexican agro-
biotechnology subsidiary, according to Pulsar Chairman Alfonso
Romo in a Reforma/Infolatina Thursday issue. Pulsar also remains
in talks with state-run development bank Banobras regarding some
form of financing assistance to restructure Savia's debts.

Meanwhile, Savia is also continuing to take steps leading up to a
definitive debt-restructuring agreement with its bank creditors.
The company fully expects a deal to be struck before the end of
the month, Savia senior Marketing executive Mateo Mazal said.
Savia on May 3 said it had reached a preliminary agreement with
its bank creditors and predicted a final agreement would be
sealed by the end of the month.


TELEVISA: Could Spin-off Publishing Division Due To Weak 1Q01
-------------------------------------------------------------
The board of the Mexican media giant Grupo Televisa, led by
Chairman Emilio Azcarraga Jean, is believed to be contemplating a
spin off of its publishing division, Editorial Televisa,
Reforma/Infolatina related Thursday. Word of the possible move
was triggered after the division posted weak first-quarter
performance, with a 46.3 percent decrease in operating profits,
to 23.9 million pesos. In addition, net sales for the quarter
were down and operating costs were up, particularly in areas such
as redesign of magazine covers. Editorial Televisa's senior
management on Tuesday met to review the division's first-quarter
performance.



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

SIDOR: Labor Minister Heads Government-Sponsored Mediation Talks
----------------------------------------------------------------
Government-sponsored mediation talks were scheduled to take place
May 15 in an effort to put an end to the increasingly bitter and
spreading strike conducted by 6,000 workers at Venezuelan
integrated steelmaker Sidor. According to Business News Americas
report, labor minister Blancanieve Portocarrero was to head the
talks. Reports by the local press suggested that Sidor has warned
of an imminent bankruptcy with losses amounting to more than
US$42 million, while exports are also suffering. The company
fears that foreign companies might start to take away its
domestic market share.

Meanwhile, Sidor's slab-section manager Jose Padilla said he is
prepared for anything to happen on a return to the Ciudad Guayana
plant as equipment is at risk of damage after 15 days without
maintenance. Strikers have denied any access to the steel mill by
chaining and padlocking gates and doors.

He also considered it "strange" that courts have yet to rule on a
petition by 552 anti-strike workers claiming their constitutional
right to work. Legder Penaloza, the lawyer representing the anti-
strikers, said authorities were frightened to enforce a court
ruling in their favor. Sutiss, the Sidor union group, dismissed
the ruling as illegal and arbitrary, and said they would ignore
it. The strike continues regardless of court rulings the union
said.

Dispute at the Venezuelan steelmaker began when management
refused to discuss a new collective agreement until international
steel demand and prices pick up. The union wanted a new agreement
negotiated right away.

Sidor is 70-percent owned by multinational consortium Amazonia,
and 30-percent by state heavy-industry holding company CVG.




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
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Psamathe P. Alfeche and Janice Mendoza, Editors.

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

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