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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, June 5, 2001, Vol. 2, Issue 109

                           Headlines


A R G E N T I N A

AEROLINEAS ARGENTINAS: Union Agrees To Talk With Sepi
AEROLINEAS ARGENTINAS/AUSTRAL: Crisis Cuts Market Share
LAPA: Passenger Traffic Increases Despite Bankruptcy  


B O L I V I A

EL MUTUN: Government Wants Quick Sale Process


B R A Z I L

CVRD: Two Firms To Join Forces In Cenibra Stake Bid
DAIMLERCHRYSLER: Campo-Largo Plant Future Up In Air
ERICSSON TELECOMUNICACOES: Negative 1Q01 Results Posted


C H I L E

TELEX-CHILE: Streamlining Includes Cutting 184 Workers


M E X I C O

AEROMEXICO: Flight Attendants Strike After Talks Fail
AEROMEXICO: Remains Focused on Serving Passengers
AHMSA: Reaches Debt-Restructuring Deal With Creditors
AHMSA: Creditors Consider Govt Support Upon Signing Deal
BANCRECER: Transparencia Mexicana To Oversee Sale
SAVIA:Creditors Approve Seminis' Plan For Debt Restructure
SAVIA: Monday's Meeting Will Decide Future


V E N E Z U E L A

NISSAN: Escapes Insolvency With Renault's Help

     -  -  -  -  -  

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

AEROLINEAS ARGENTINAS: Union Agrees To Talk With Sepi
-----------------------------------------------------
There is now room for more optimism regarding a solution to the
crisis at Aerolineas Argentinas, according to an El Pais report
published Saturday. Rodolfo Daer, head of the moderate wing of
Confederacion General del Trabajo, confirmed Asociacion del
Personal Tecnico Aeronautico, the group that most resisted the
change in the new labor agreement, agreed to hold direct and
unconditional talks with Spanish state industry holding company
Sepi.

Sepi, the largest Aerolineas' shareholder, said it would only
agree to inject new funds into the struggling airline if all
unions sign the agreement first. Sepi's injection is seen
necessary to help the airline avoid bankruptcy.


AEROLINEAS ARGENTINAS/AUSTRAL: Crisis Cuts Market Share
-------------------------------------------------------
Argentine airline Aerolineas Argentinas has lost 25.9 percent of
its market share in international flights in the last month,
according to an Expansion report released Saturday. The company,
controlled by the Spanish state industry holding company Sepi, is
in the midst of an acute crisis, brought about by the lack of
agreement between the company management and one of its trade
unions.

Meanwhile, 15 percent of passengers previously using Aerolineas'
domestic flights subsidiary Austral, have flown with the
competition. Aerolineas has been unable to fill 20 per cent of
its flights and has halved the number of scheduled flights.

Since strikes began at the end of April, competitors Southern
Winds, Dinar and Lapa have seen 49,000 new customers.


LAPA: Passenger Traffic Increases Despite Bankruptcy  
----------------------------------------------------
Two days after it filed for legal relief through bankruptcy,
Lineas Aereas Privadas Argentinas SA (LAPA) announced that
operations were proceeding not only normally, but with 20 percent
more passenger traffic. The increase is due to the labor crisis
at Aerolineas Argentinas, according to a May 22 report in
Aviation Daily. LAPA's management assured in an internal memo
that no jobs or paychecks were in jeopardy.

LAPA, Argentina's second-largest airline holding company carrying
30 percent of the country's domestic market, recently filed for
protection from creditors. The move was made to ensure continued
operations and the preservation of jobs amid increasing costs of
fuel, excessive taxes and the current recession plaguing the
region. LAPA lost $85 million last year. Its major creditors are
fuel suppliers YPF Repsol, Shell, Esso, ILFC, GE Capital and
other leasing firms.



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B O L I V I A
=============

EL MUTUN: Government Wants Quick Sale Process
---------------------------------------------
Bolivian deputy mining minister Epifanio Mamani revealed that the
government wants to hasten up the sale process of one of the
world's largest iron ore deposits, El Mutun, Business News
Americas reported Friday.

"We're going to bring it forward because there are so many
interested in investing in the deposit," Mamani said, adding, "we
want El Mutun to start producing on a world-class scale."

The auction for the deposit and currently disused steel plant in
Santa Cruz department close to Brazil is now expected to be
launched in two months, he said. The government estimates a
required investment of US$50 million in order to put the complex
into production, while Bolivia will benefit to the tune of some
US$150 million.

Among the firms which have shown interest are Argentina's Techint
group, Germany's Lurgi, Sidersul of Brazil, UK-based Rio Tinto,
and Fermy Investment - a group made up of Bolivian, Argentine and
US businessmen. Just recently, Comibol, Bolivia's state mining
corporation, short-listed five banks for a contract to manage the
sale.



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

CVRD: Two Firms To Join Forces In Cenibra Stake Bid
---------------------------------------------------
Brazil's Aracruz Celulose SA and Votorantim Celulose e Papel SA
(VCP) stated they would team up to bid for a 51.48 percent
controlling stake in the pulp company Cenibra, which Cia. Vale do
Rio Doce (CVRD) will put on the auction block soon, Bloomberg
reported Friday. The successful buyer will garner one of Brazil's
biggest pulp companies, producing about 800,000 metric tons a
year of eucalyptus pulp, said Marcelo Mesquita, an analyst at UBS
Warburg in Rio de Janeiro.

"I think this is could be a big positive," said Mesquita. "It
could mean they are the only two real bidders, so they've decided
to. rule and avoid a price war," he added.

Another interpretation is that the two companies are boosting
their bidding power by joining forces against possible rivals.
Those could include companies such as Finland's UPM-Kymmene Oyj
and Brazil's Cia. Suzano de Papel e Celulose, according to
Mesquita. The sale of the stake, which according to UBS Warburg,
could raise about $600 million, is part of CVRD's efforts to
reduce holdings outside its main mining and transportation
businesses.

Cenibra is one of Brazil's biggest pulp companies, said Mesquita.
Its production compares with annual output of about 1.25 million
tons for Aracruz and about 800,000 tons for VCP although its
Japanese partners take some of its output, he said.

A group of Japanese companies, including Itochu Corp., controls
the remaining 49 percent in Cenibra and has rights of first
refusal of the CVRD stake in the pulp producer.


DAIMLERCHRYSLER: Campo-Largo Plant Future Up In Air
---------------------------------------------------
The decision whether or not to continue the production of
DaimlerChrysler's Dakota pick-up in Campo Largo, State of Parana,
will be known within the next weeks, according to a South
American Business Information report Friday. DaimlerChrysler will
decide to sell off the plant or produce other vehicles in the
medium term.

Should the plant be closed, the company will have to pay R$100
million to the government and R$200 million to suppliers. The
production at the plant, which demanded some US$315 million in
investments, was suspended last April when it operated at 10
percent capacity.


ERICSSON TELECOMUNICACOES: Negative 1Q01 Results Posted
-------------------------------------------------------
Ericsson Telecomunicacoes S/A, the main Brazilian manufacturer of
telecommunications equipment, registered a loss of R$74.668
million in the first quarter of this year against a profit of
R$9.176 million posted in the comparable period a year ago,
according to a report Friday in South American Business
Information. The company attributed the result, which is its
worst since 1999 when its performance was harmed by the
devaluation of the Brazilian currency, to the bad performance of
its cell phone equipment divisions worldwide.

Ericsson decided to outsource the production of cell phone
equipment and made an alliance with Sony by October 2000 aiming
to resume the good performance in such segment. Between January
and March 2001, the financial expenses were equivalent to 12.7
percent of the company's net income. The company's liabilities
are of accounts payable to the group companies representing the
imports of components and equipment worth R$1.458 billion.

Ericsson Telecomunicacoes also installs and maintains
telecommunications equipment such as stored program control,
digital telephone exchanges for local, national and international
traffic, crossbar exchanges, telephone sets, transmission
equipment for telephone networks and other related activities.



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

TELEX-CHILE: Streamlining Includes Cutting 184 Workers
------------------------------------------------------
In a bid to ensure annual net savings of $3.3B, Telex Chile,
which registered losses totaling $5.965B in the first quarter,
announced the dismissal of 184 workers, South American Business
Information reported Friday. Aside from the dismissal, the
company will also be narrowing the business's focus and merging
areas which share similar processes. Additionally, Telex Chile is
looking for a strategic partner in order to strengthen its
assets.

Jorge Awad, company president, recently made an announcement the
company's board unanimously approved a plan to sell its entire
assets portfolio. However, he didn't indicate whether the assets
will go on the auction block as a whole or individually.



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

AEROMEXICO: Flight Attendants Strike After Talks Fail
-----------------------------------------------------
The domestic and international flights of Aerovias de Mexico SA
(Aeromexico), Mexico's largest airline, have been cancelled due
to a strike lodged by the airline's flight attendants, Bloomberg
reported Friday. The flight attendants initiated the strike after
talks with company officials over their demands for a 17-percent
wage increase collapsed. Aeromexico will lose an estimated 40
million pesos a day ($4.4M) from canceled flights.

"This is regrettable because with half of what the company loses
each day with the strike, it could have solved the dispute," said
Alejandra Barrales, head of the flight attendants' union and a
legislator for the left-of-center Party of the Democratic
Revolution.

Flight attendants may be willing to lower their wage demands to
between an 11 and 15 percent increase if the company also agrees
to change some of its labor practices, such as not paying the
cabin crew for time spent in the air while transferring to
another job assignment.


AEROMEXICO: Remains Focused on Serving Passengers
-------------------------------------------------

While the strike between The Asociacion Sindical de Sobrecargos
de Aviacion (ASSA), the union representing AeroMexico's flight
attendants, and AeroMexico is still in effect, AeroMexico has
taken steps to ensure that passengers will arrive at their
destinations with minimal inconvenience.

AeroMexico has placed additional customer service personnel at
its airport facilities and reservation centers in the U.S. and
Mexico. These additional representatives are assisting passengers
in making alternative arrangements.

At some airports in Mexico where AeroMexico is not able to use
its own check-in and ticket counters due to strike conditions,
arrangements have been made with partner airlines for AeroMexico
personnel to use their facilities to help its passengers.
AeroMexico has agreements with other airlines to honor AeroMexico
tickets for any available seat on matching routes. Passengers
whose flights have been affected thus far have been re-routed on
other airlines. AeroMexico code-share flights on its partners'
equipment will continue to operate.

AeroMexico remains committed to our customers worldwide and we
remain focused on restoring our flight schedule a soon as
possible minimizing passenger inconveniences as much as possible,
said Rolf Hoehn, AeroMexico's U.S. Division Vice President.

Negotiations continue as representatives from the company and
from ASSA have been summoned once again by the Labor Authorities
to resume negotiations, we remain hopeful that we will reach an
agreement soon.


AHMSA: Reaches Debt-Restructuring Deal With Creditors
-----------------------------------------------------
Struggling Mexican steel group Altos Hornos de Mexico (Ahmsa) has
finally struck a record-breaking debt-restructuring agreement
with its creditors, South American Business Information said
Friday. The agreement which provides for a creditor
capitalization of US$530 million, the ailing steelmaker can now
get out of temporary receivership where it has languished for
more than two years now. The agreement also calls for the sale of
non-core assets for approximately US$135 million including an
oxygen plant, waste treatment plants and land. The process, which
involves banks BBVA-Bancomer, Banamex and Bank of America, will
then leave Ahmsa a debt of US$1.14 billion, 65 percent of which
will be refinanced for maturity in September 2009.

As reported, Ahmsa's present controller which holds a 51 percent
stake, Grupo Acerero del Norte (GAN), will hold onto its
investment, while creditors will now own 40 percent. The
remaining 9.9 percent will stay in the hands of the minority
shareholders. Ahmsa, currently operating at 85 percent capacity,
is estimated to be worth US$2.1 billion. According to the banks,
they will not sell or look for new partners for two years.


AHMSA: Creditors Consider Govt Support Upon Signing Deal
--------------------------------------------------------
When creditors of leading Mexican steelmaker Altos Hornos de
Mexico (Ahmsa) signed the debt-restructuring plan with the
company, they took into consideration a recent formal call by a
group of Mexican steelmakers for the government to put emergency
restrictions on steel imports. Unidentified sources at Ahmsa and
the company's committee of bank creditors revealed the demand in
an Infolatina report Friday.

Several weeks ago, the steel companies requested emergency quotas
and tariffs, for a period of three years, which they believe,
would help to prevent further declines in sales and more job
cuts. The company's CEO, Alonso Ancira, met with Mexican Economy
Minister Luis Ernesto Derbez on Wednesday to discuss details of
the requested measures.


BANCRECER: Transparencia Mexicana To Oversee Sale
-------------------------------------------------
Mexican bank bailout agency IPAB said its sale of government-
intervened bank Bancrecer will be overseen by independent
corruption watchdog Transparencia Mexicana, led by well-known
Mexican political scientist and public intellectual Federico
Reyes Heroles, Reforma/Infolatina reported Friday. Officials of
the agency said formal expressions of interest in Bancrecer would
be invited in a notice that was to be published in the federal
government's Official Gazette on Friday. IPAB, in a press
release, informed that the firms interested in participating in
the bidding process for Bancrecer will need to express their
interest in writing by July 5 at the latest. According to
analysts, the sale of Bancrecer, which is being handled by
Deutsche Bank Alex. Brown Inc., will likely fetch a price of
between $700 million and $900 million.


SAVIA:Creditors Approve Seminis' Plan For Debt Restructure
----------------------------------------------------------
Seminis Inc., a subsidiary of Monterrey, Mexico-based Savia SA,
announced it secured bank creditors' approval to restructure $310
million in loans to stretch out payments, according to a report
Friday in Bloomberg. Under the agreement, Seminis extends the
maturity on debt that came due May 31 of this year until December
2002, said Dieter Holtz, the company's director of treasury.
According to Holtz, the interest rates on the loan start at 250
basis above the U.S. prime rate. They drop as the company makes
payments. The company is expected to make a payment of $35
million this year and another $49 million in 2002. The remaining
$226 million will be repaid in December 2002, Holtz said. Seminis
made a prepayment of $6.25 million in April, leaving it with $365
million in total outstanding debt. Harris Bankcorp Inc., a unit
of the Bank of Montreal, managed the restructuring. Fifteen other
banks also participated including Bank of America Corp. and Bank
One Corp.

In addition, Seminis will take a $12 million charge in the third
quarter because of restructuring costs and layoffs, which are
expected to save $9 million annually. Holtz said it's too early
to say how many employees will be fired and expects a decision by
June. Seminis had 3,295 employees on March 31, down from 3,798 in
August 2000.


SAVIA: Monday's Meeting Will Decide Future
------------------------------------------
The future of cash-strapped Mexican agro-biotechnology company
Savia will be defined in a meeting Monday between company
Chairman Alfonso Romo and its creditors, Infolatina reported
Friday. According to unidentified sources, who are "close to the
process," Romo, at the meeting, would probably offer to cede
creditors a stake in exchange for a commitment to revamp the
terms of its debt along more favorable lines. Banamex, Bancomer-
BBVA, Euroamerica Capital Corporation, Banco Latinoamericano de
Exportaciones, Chase Manhattan and Bank of America, are among the
banks expected to attend the meeting.



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

NISSAN: Escapes Insolvency With Renault's Help
----------------------------------------------
Renault of France helped Nissan escape serious danger of
insolvency in 1999 when it took control of the company, South
American Business Information reported Friday. Renault was able
to reduce its US$8.3 billion debt to US$7.7 billion through a
plan initiated in 2001. The plan calls for cost-cutting and
greater efficiency.

Nissan became well-known in the late '60s in Venezuela for its
Patrol model assembled in Carabobo and on its return to the
national market, has slowly conquered market share despite the
duty paid for importing vehicles. In Venezuela, Iaca
(Internacional de Automoviles CA) imports and distributes the
Japanese firm's models and has done so since 1992. In 2000,
Nissan placed 1,834 units on the Venezuelan market, the Sentra
model leading the way. The firm hopes to sell 2,700 units this
year, with Sentra once again at the forefront (in its B15 and
Clasico (taxi-cab) versions).




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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