/raid1/www/Hosts/bankrupt/TCRLA_Public/010611.mbx        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, June 11, 2001, Vol. 2, Issue 113

                           Headlines


A R G E N T I N A

AEROLINEAS ARGENTINAS: Govt. Threatens To Auction Routes
AEROLINEAS ARGENTINAS: APTA, AAA "Playing With Future"
AEROLINEAS ARGENTINAS: CGT Head Recommends Spanish Boycott


B R A Z I L

VARIG: FRBPar Negotiates Selling Part Of Its Stake


C H I L E

GENER: Accepts Two Bids For Assets, Shuns Other Two
PSINET: Letter Of Intent For The Sale Of Latin American Ops
TELEFONICA CTC: Number Of Workers Fired Reaches 1,639


M E X I C O

AEROVOX: Files US Bankruptcy; Mexican Division Not Included
BANCRECER: Likely To Sell For Twice Its Book Value
BRIDGESTONE-FIRESTONE: May Close Two Plants Due To Price Wars
CINTRA: Airline Experts Reveal Conspiracy Between Airlines
GRUPO SIMEC: ICH Expects To Conclude Restructuring By July


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

AEROLINEAS ARGENTINAS: Govt. Threatens To Auction Routes
--------------------------------------------------------
Economy Minister Domingo Cavallo revealed plans by the government
to call for bids for the routes that Spain's state-owned holding
Sociedad Estatal de Participaciones Industriales (SEPI) unit
Aerolineas Argentinas SA has ceased to fly, AFX Press said in a
report Friday.

"Bids may be called if the current concession holder does not use
them," Cavallo said.

The announcement by Cavallo came shortly after the company
indefinitely suspended flights to New York, Miami, Sao Paulo and
Rio de Janeiro due to its current financial condition.


AEROLINEAS ARGENTINAS: APTA, AAA "Playing With Future"
------------------------------------------------------
Spanish state holding company SEPI Chairman Pedro Ferreras
accused the technical workers' union APTA, and the pilots' union
AAA of "playing with the future" of the Argentinean airline.
Ferreras cited the unions' intransigence over its viability plan
for the company, El Pais reported Thursday. According to SEPI's
chairman, the financial restructuring plan for Argentine airline
Aerolineas Argentinas cannot be altered at this stage following
the $617 million cash injection by the Spanish people in October.
Ferreras said it would be "pure nonsense" to appeal to misplaced
patriotic sentiment in what is purely a question of economics. In
his opinion, to do so would give a bad impression to investors
worldwide.

All unions have to agree to SEPI's plans before it invests the
$350 million needed to finance the airline. The funds are needed
to keep it in operation while it applies the viability plan,
begins the airline's reconversion and looks for a new investing
partner.

Meanwhile, The Argentinean government remains optimistic about
finding a solution to the current crisis at the airline. On
Wednesday, President Fernando de la Rua met with Eduardo
Eurnekian, owner of Aeropuertos Argentina 2000, the Argentinean
airport operator.

Eurnekian is the only party to have expressed an interest in
becoming an investing partner in Aerolineas Argentinas. Sources
close to the unions and the airline admitted its bankruptcy is
imminent. They say it likely to happen towards the end of the
week when fuel suppliers refuse to refuel aircraft.


AEROLINEAS ARGENTINAS: CGT Head Recommends Spanish Boycott
----------------------------------------------------------
Hugo Moyano, the head of the Argentinean workers' union CGT,
called on Argentineans to boycott all Spanish companies present
in Argentina, reported El Mundo Thursday. Moyano's suggestion
came after negotiations regarding the future of Argentina's flag
carrier, Aerolineas Argentinas, collapsed.

Aerolineas is majority-controlled by the Spanish state industrial
holding company Sepi. Moyano recommended closing accounts with
Spanish-owned banks, not to fill up at service stations owned by
Spanish oil group Repsol YPF and suspension of contracts with
telecoms operator Telefonica. He has also called for a 24-hour
general strike this Friday as a way of extracting a solution to
the dispute over the future of Aerolineas from SEPI.



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B R A Z I L
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VARIG: FRBPar Negotiates Selling Part Of Its Stake
--------------------------------------------------
Varig holding company FRBPar (Fundacao Ruben Berta
Participacoes), which has an 87 percent stake in the airline,
admitted negotiating the sale of a portion of its position in
order to cut down US$1.3 billion in debts, South American
Business Information reported Thursday. However, FRBPar, which
plans to divest a 37 percent stake in South America's biggest
airline, has held off hiring advisers due to Varig's low market
value. The company says it will analyze offers starting at US$30
billion. The sale of ownership in the other companies controlled
by the Varig group will also be taken into account.

Varig, believed to be facing a significant financial threat,
posted gross profits of R$250 million last year, but ended up
with losses of more than R$170 million. Losses in the first
quarter of this year amounted to R$196 million.

In a related story, a Varig spokeswoman last week revealed that
the airline was in talks with European aircraft maker Airbus
Industrie over its attempt to sell 12 A330 wide-body jets. Varig,
whose fleet is dominated by Boeing Co. planes, will shortly
decide on the Airbus offer, which would include options on
another 12 planes. The planes, which seat almost 300 passengers,
would replace Boeing 767s on routes to North America.


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

GENER: Accepts Two Bids For Assets, Shuns Other Two
---------------------------------------------------
AESGener, the Chilean subsidiary of US power company AES, on
Wednesday awarded its 26.02 percent stake in shipping line CCNI
to Compania Sud Americana de Vapores. The company's 26.7 percent
share in port services operator Agencias Universales (Agunsa)  
went to Sudamericana Agencias Aereas y Maritimas (SAAM),
according to Business News Americas. The two winning companies
are reportedly part of the Claro group.

Meanwhile, AESGener abandoned auctions for its 69.87 percent
stake in Puerto Ventanas port and its 21.18 percent of port
operator Cabo Froward because the offers received did not meet
bidding requirements. A new auction will not be scheduled for the
port assets, but interested parties may negotiate directly with
AESGener. The companies interested in Puerto Ventanas included
Puerto Lirquen linked to the Matte group and former Puerto
Ventanas president Oscar Garreton. Contracts for the assets
awarded will be signed on June 14.


PSINET: Letter Of Intent For The Sale Of Latin American Ops
-----------------------------------------------------------
PSINet Inc. (OTC BB:PSIXE) today announced that it has signed a
letter of intent with an investment group led by Cori Capital
Partners, L.P. and consisting of additional investors, including
senior members of PSINet's Latin American management team,
pursuant to which the investment group has offered to purchase
PSINet's Latin American operations and facilities in Argentina,
Brazil, Mexico and Uruguay.

The proposed purchase is subject to a number of conditions,
including regulatory approval and approval under the bankruptcy
proceedings.

PSINet expects that its operations in Argentina, Brazil, Mexico
and Uruguay will continue to operate in the normal course of
business, providing reliable services to its customers. PSINet's
operating subsidiaries in Latin America are not part of the
filing under Chapter 11 of the US Bankruptcy Code.

PSINet is considering strategic alternatives for its operations
in Chile and is in discussions with a potential purchaser group.
No assurance can be given that those discussions will result in a
sale of PSINet's Chilean operations.

Headquartered in Ashburn, Va., PSINet Inc. is a leading provider
of Internet and IT solutions offering flex hosting solutions,
global eCommerce infrastructure, end-to-end IT solutions and a
full suite of retail and wholesale Internet services through
wholly-owned PSINet subsidiaries. Services are provided on
PSINet-owned and operated fiber, web hosting and switching
facilities, currently providing direct access in more than 900
metropolitan areas in 20 countries on five continents.

Cori Capital Partners, L.P. is a private equity vehicle sponsored
by Violy, Byorum & Partners Holdings, LLC, CDP Capital
International, a subsidiary of Caisse de depot et placement du
Quebec (CDP Capital), and Fenway Partners. The investment group
has retained Violy, Byorum & Partners Holdings, LLC, as its
exclusive financial advisor and Paul, Weiss, Rifkind, Wharton &
Garrison as legal counsel.

This release contains information about management's view of
PSINet's future expectations, plans and prospects that constitute
forward-looking statements for purposes of the safe harbor
provisions under the Private Securities Litigation Reform Act of
1995. Actual results may differ materially from those indicated
by these forward-looking statements as a result of a variety of
factors including, but not limited to, the doubt as to PSINet's
ability to continue as a going concern, risks associated with
efforts to restructure the obligations of PSINet and Metamor,
risks associated with proceedings commenced by PSINet and its
subsidiaries under the U.S. Bankruptcy Code, competitive
developments, risks associated with PSINet's growth, the
development of the Internet market, regulatory risks, and other
factors that are discussed in the Company's Form 10-K and other
documents filed with the SEC.


TELEFONICA CTC: Number Of Workers Fired Reaches 1,639
-----------------------------------------------------
The number of employees dismissed at Telefonica CTC Chile, the
country's biggest telephone company, has grown to 1,639 or 17.7
percent of the total workforce, Bloomberg revealed Thursday. The
slashing of workforce is aimed at generating annual savings of
more than $47 million in an effort to reverse two years of
losses.

However, even if the company can get back to profitability in the
third quarter, analysts still remain dubious about the company's
future since it is still suffering from losses in its mobile
phone unit and slow growth in other business.

"Cost saving are always good, but they won't solve their
problems," said Barbara Angerstein, an analyst at the brokerage
firm Celfin SA.

Meanwhile, Chilean Labor Minister Ricardo Solari called the
firings by one of the country's biggest private employers
"regrettable." He urged Telefonica CTC to pay affected workers
all the benefits they deserve under the law.



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

AEROVOX: Files US Bankruptcy; Mexican Division Not Included
-----------------------------------------------------------
Aerovox Incorporated (Nasdaq.NM:ARVX) today announced that its
U.S. operation yesterday filed a voluntary petition for
reorganization pursuant to the provisions of Chapter 11 of the
United States Bankruptcy Code in the United States Bankruptcy
Court for the District of Massachusetts, Eastern Division.

The petition allows for reorganization of the Company's U.S.
debts. The Company's two foreign subsidiaries, BHC Aerovox Ltd.,
in Weymouth, England and Aerovox de Mexico, located in Juarez and
Mexico City, Mexico, are not included in the petition.

The Company plans to maintain its operations under the protection
of the bankruptcy code and will continue to pursue strategic
alternatives through its investment banker, Loeb Partners
Corporation. The Company is also currently involved in
negotiations to obtain debtor-in-possession financing.

The Company today also reported the receipt of a letter dated May
31, 2001 from NASDAQ notifying the Company that it has failed to
maintain a minimum market value of public float of $5,000,000 and
a minimum bid price of $1.00 over the last thirty consecutive
trading days, as required by The Nasdaq National Market
Marketplace Rules. The letter states that the Company will have
until August 29, 2001, to regain compliance or written
notification will be given that the Company's securities will be
delisted. The Company may appeal such a decision. The Company
does not at this time believe that it will be able to regain
compliance with these listing requirements. In light of the
bankruptcy filing, NASDAQ may suspend or terminate trading of the
Company's securities.

Aerovox Incorporated is a leading manufacturer of film, paper and
aluminum electrolytic capacitors. The Company sells its products
worldwide, principally to original equipment manufacturers as
components in electrical and electronic equipment. Aerovox has
operations in New Bedford, Massachusetts; Huntsville, Alabama;
Juarez and Mexico City, Mexico; and Weymouth, England.


BANCRECER: Likely To Sell For Twice Its Book Value
--------------------------------------------------
The forthcoming sale of government-intervened Mexican bank
Bancrecer, to be administered by bank bailout agency IPAB, is
expected to generate up to US$800 million, or two times its book
value, Noe Romero of Mexico City consultants Bursametrica
Management said in an Infolatina Thursday report. Romero picked
the two most-likely foreign-owned successful bidders to be  
Canadian-owned Grupo Financiero Scotiabank Inverlat and U.K.-
owned Hong Kong Shanghai Bank Corporation (HSBC) in the upcoming
auction. According to Romero, Mexican-owned Grupo Financiero
Banorte, which owns the country's fifth-largest bank, also likely
would bid for Bancrecer. IPAB has already published a notice
inviting formal expressions of interest in Bancrecer from
potential bidders.


BRIDGESTONE-FIRESTONE: May Close Two Plants Due To Price Wars
-------------------------------------------------------------
Fierce price competition from imported Asian-made tires could
soon see Japanese-owned tire manufacturer Bridgestone-Firestone
shutting down two Mexican plants, Gonzalo Ugalde, leader of a
confederation of Mexican tire-industry labor unions, disclosed in
an Infolatina Thursday report. However, a final decision as to
the plant closures had not yet been taken.

According to Ugalde, as Bridgestone-Firestone was proposing to
slash wages of its workers at both plants, union representatives
at a meeting with company management on Friday were pushing for
the plants to be closed down and for workers to be provided with
severance packages. The impending closure of the two plants,
situated in the Mexican capital and the nearby city of
Cuernavaca, would result to a loss of 800 jobs, Ugalde informed.


CINTRA: Airline experts Reveal Conspiracy Between Airlines
----------------------------------------------------------
Officials and employees at leading Mexican airlines Aeromexico
and Mexicana still don't see eye to eye with Mexico's antitrust
agency, the Federal Competition Commission (CFC), over the
agency's recommendation that government-owned Cintra, controller
of the two airlines, must be broken up and sold.

In an El Economista/Infolatina report, unnamed airline industry
experts revealed that over the past several months, officials and
employees at the two airlines have combined forces in a bid to
persuade the general public that the assets of holding company
Cintra cannot be put on the auction block separately. They also
revealed that the potential sale value of Cintra's assets had
plummeted from US$1.4 billion to around US$900 million during the
past six months. According to the unnamed experts, the decline in
the value of Cintra's assets is a consequence of two recent
events. Firstly, the testimony made by Aeromexico CEO Alfonso
Pasquel and Mexicana CEO Fernando Flores in the Congress that the
airlines in their respective charges are in deep financial
trouble and likely cannot sustain normal operations for more than
six months. Secondly, Aeromexico and flight attendants union ASSA
deliberately staged a 48-hour strike last week in order to damage
Aeromexico's public image.


GRUPO SIMEC: ICH Expects To Conclude Restructuring By July
----------------------------------------------------------
Head of Investor Relations at Industrias CH (ICH), Jaime Vigil
Sanchez Conde, announced that the liabilities of Mexican steel
products and construction materials manufacturer Grupo Simec,
will be totally restructured by July. A report Thursday in
Reforma/Infolatina sites Vigil saying the process of refinancing
Simec's US$300 million debt was launched in December last year,
shortly after the acquisition.




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.

This material is copyrighted and any commercial use, resale or
publication in any form (including e-mail forwarding, electronic
re-mailing and photocopying) is strictly prohibited without prior
written permission of the publishers.

Information contained herein is obtained from sources believed to
be reliable, but is not guaranteed.

The TCR Latin America subscription rate is $575 per half-year,
delivered via e-mail.  Additional e-mail subscriptions for
members of the same firm for the term of the initial subscription
or balance thereof are $25 each.  For subscription information,
contact Christopher Beard at 301/951-6400.


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