/raid1/www/Hosts/bankrupt/TCRLA_Public/010612.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

            Tuesday, June 12, 2001, Vol. 2, Issue 114

                           Headlines


A R G E N T I N A

AEROLINEAS ARGENTINAS: Government Rejects Nationalization Plea
AEROLINEAS ARGENTINAS: 15 Directors Fired Fraud Allegations
SUPERMERCADOS NORTE: Receives 80% Tenders by Early Tender Date


C H I L E

BOLIDEN LTD.: To Sell Chilean Assets To Falconbridge
STARMEDIA: Announces Appointment Of New President


M E X I C O

BANCRECER: To Release Bidding Rules Next Week
BRIDGESTONE-FIRESTONE: Reports Regarding Plant-Closure Not True
CINTRA: Pilot, Airline Staff Seek Representation On Board
DESC: Continues With Divestment Program
GRUPO TELEVISA: Cablevision, Microsoft To Do Interactive TV
GRUPO TELEVISA: Awaits Proposal From Telemundo
GRUPO TRIBASA: $100M Tax Debt Fate Lies In Government's Hands
XEROX: Files Year 2000 10-K, No Material Change


P A N A M A

PYCSA PANAMA: Default Likely; Project Debt Rating: `CC'\Watch Neg


V E N E Z U E L A

GRAFFITI: Sees Recovery Ahead


     - - - - - - - - - -


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

AEROLINEAS ARGENTINAS: Government Rejects Nationalization Plea
--------------------------------------------------------------
Unions, many citizens and a former president of Aerolineas have
called on the government to nationalize struggling carrier
Aerolineas Argentinas, according to a report Saturday in Reuters.

"The government should nationalize Aerolineas and then re-
privatize it with guarantees there will be no dismissals or
salary reductions," technicians union leader Ricardo Cirielli
related.

However, the government opposes the idea of nationalizing the
ailing flagship carrier. Instead, it will urge the carrier's
Spanish owners, Spain's State Industrial Holdings Company, SEPI,
to clean up its finances to make it attractive for a future sale.  

"The Argentine government is not in a position to nationalize
Aerolineas," Labor Minister Patricia Bullrich said.

SEPI, which owns more than 90 percent of Aerolineas, suspended
flights to the United States, New Zealand and Australia earlier
this week in a cost cutting move and said a nine-day strike by
employees protesting management austerity plans in April cost the
airlines $76 million.

"Removing Aerolineas' routes reduces the airline's value. What
we want is that they (SEPI) do the same process of cleaning up
Aerolineas' finances as they did with Iberia and then sell it,"
Bullrich said.


AEROLINEAS ARGENTINAS: 15 Directors Fired Fraud Allegations
-----------------------------------------------------------
Argentinian airline Aerolineas Argentinas discovered "clear
signs" of a multi-million dollar fraud by a group of Argentinean
directors, El Mundo reported Friday. The exact dollar value in
question and the names of the directors are not yet known.
According to the report, the airline has already dismissed 15
directors implicated in the scheme, some of whom are at top
management level.

The Spanish state industrial holding company SEPI, which controls
the airline, has confirmed it would not make any further payments
to keep the airline afloat until its plan has been accepted by
the rebel technical staff union APTA. The current situation in
Argentina is explosive, with protest actions taking place
Thursday in the country's major airports. The Argentinean
workers' union CTA also organized marches and demonstrations in
Buenos Aires.


SUPERMERCADOS NORTE: Receives 80% Tenders by Early Tender Date
-----------------------------------------------------------------
Supermercados Norte S.A. ("Norte") announced that as of 5:00
p.m., New York City time, on June 7, 2001 (the "Early Tender
Date"), it had received tenders and consents from the holders of
approximately US$112 million principal amount of its 10-7/8%
Senior Notes due 2004, representing approximately 80% of the
outstanding principal amount of the Notes (other than Notes held
by Norte or its affiliates). In addition, affiliates of Norte
have tendered approximately US$80 million principal amount of
Notes in the Tender Offer.

As a result of the tender of Notes by the Early Tender Date,
sufficient consents have been delivered to approve, at the
noteholder meeting called for June 20, 2001, the following: (i) a
supplemental indenture that amends the Indenture relating to the
Notes to eliminate substantially all of the restrictive covenants
in the Indenture, (ii) the delisting of the Notes from the Buenos
Aires Stock Exchange and (iii) the withdrawal of the Notes from
the public offering regime of the Comision Nacional de Valores
(the Argentine National Securities Commission). The supplemental
indenture relating to the amendments will be entered into only
after approval at the noteholder meeting, and the amendments will
become effective only if the Notes are accepted pursuant to the
Tender Offer.

Holders of Securities who have not yet tendered their Notes in
the Tender Offer may do so at any time prior to the expiration of
the Tender Offer, which is 5:00 p.m., New York City time, on
Thursday, June 21, 2001, unless extended. However, Notes tendered
after the Early Tender Date will no longer be entitled to receive
the Early Tender Price, but will continue to be eligible to
receive the Tender Offer Price of U.S.$1,010.00 per U.S.$1,000
principal amount of Notes tendered, plus any accrued and unpaid
interest on the Notes to but excluding the settlement date.

Norte's obligation to accept for payment, or to pay for, any
Notes tendered in the Tender Offer remains subject to certain
conditions. There can be no assurance that the Tender Offer will
be consummated.

Concurrently with the Tender Offer, Norte has made a "Change of
Control Offer" in order to satisfy Norte's obligations under the
Indenture following the acquisition of a controlling stake in
Norte on April 11, 2001 by Carrefour S.A., the French retailer.
The Change of Control Offer will expire at 5:00 p.m., New York
City time on Thursday, June 21, 2001, unless extended (the
"Change of Control Expiration Date"). Holders who tender Notes in
the Change of Control Offer at or prior to the Change of Control
Expiration Date will receive cash consideration of U.S.$1,010.00
per U.S.$1,000 principal amount of Notes tendered, plus any
accrued and unpaid interest on the Notes to, but excluding, the
settlement date. The Change of Control Offer is unconditional.

A Note may be tendered in the Tender Offer or the Change of
Control Offer, but not both. Consummation of one offer is not
conditioned on the consummation of the other.

This announcement is not an offer to purchase, a solicitation of
an offer to purchase or a solicitation of consents with respect
to any security. The Tender Offer and Change of Control Offer are
being made solely by the Offers to Purchase dated May 11, 2001.

Supermercados Norte, S.A. is Argentina's leading retailer.
Operating under the brand names Norte, Tia and Lozano, Norte is
Argentina's only nationwide supermarket operator.

The dealer manager for the offers is:

Merrill Lynch & Co.
Attention: Liability Management
888-ML4-TNDR (toll free) or
If outside the United States,
212-449-4914 (call collect)

Merrill Lynch Argentina S.A. Sociedad de Bolsa
Bouchard 547, 23rd Floor
Attention: Tomas Gaona
C1106ABG Buenos Aires, Argentina
Telephone: (5411) 4317-7600

The information agent for the offers is:

MalCon Proxy Advisors, Inc.
800-475-9320 (toll-free)
Banks and brokers please call:
212-619-4565 (collect)



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

BOLIDEN LTD.: To Sell Chilean Assets To Falconbridge
----------------------------------------------------
(All dollar amounts are in United States dollars)

Boliden Limited announced today that it has signed the agreement
of purchase and sale negotiated between itself and Noranda Inc.
and Falconbridge Limited (Purchaser) before May 18, 2001 with
respect to the sale of its interests in the Lomas Bayas SX-EW
copper project and adjacent Fortuna de Cobre copper deposit in
Chile (Chilean Assets). Under the agreement, Boliden has agreed
to sell the Chilean Assets to the Purchaser for the previously
announced purchase price of (a) $175 million plus cash balances
($2.1 million) less outstanding third party debt obligations
($112.7 million) plus (b) $15 million if the Purchaser exercises
its right to retain Fortuna de Cobre before the fifth anniversary
of closing.

Boliden's agreement is conditional upon the Purchaser
discontinuing the lawsuit recently commenced by it against
Boliden. After careful examination and discussions with the
Company's advisors and potential equity investors, it was
concluded that the risks and uncertainties related to the claims
for specific performance and damages made by the Purchaser in the
lawsuit outweighed the benefits to be gained by Boliden from
continuing to own the Chilean Assets, particularly in the context
of the Company's recently announced equity and other refinancing
initiatives.

The Company also announced that it has received most of the
approvals required to implement the refinancing and restructuring
proposal made by it to its principal corporate lenders and the
counterparties to its foreign currency hedge contracts. The
Company expects to receive the remaining approvals in the near
future. Once these approvals have been received, the Company
intends to proceed with its recently announced rights and common
share offerings.

Boliden is engaged in mining, processing and selling metals and
mineral products, principally copper and zinc, with operations in
Europe, Chile and Canada.


STARMEDIA: Announces Appointment Of New President
-------------------------------------------------
ISP StarMedia announced the appointment of Mr. Enrique Narciso as
Starmedia Network's new president, replacing Mr. Jack Chen, who
is to become vice-chairman of the board of directors, South
American Business Information reported Friday. Starmedia recently
had its equity coverage downgraded by European investment bank
ING Barings from `hold' to `sell' following a US$36-million
capital injection from U.S.-based telco BellSouth, Primedia and
JP Morgan Chase.

StarMedia, which registered losses of US$31.2 million over the
1st quarter of this year, down from losses of US$35.1 million
over the same period last year, managed to reduce expenses from
US$55 million to US$36 million.

As reported earlier, Starmedia believes it is adequately funded
through the end of 2001 and probably the next four quarters even
if the target of EBITDA breakeven proves elusive. The company
expects to end the year with US$39 million in cash. However,
analysts still believe that bankruptcy may still be a possibility
in the near term.



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

BANCRECER: To Release Bidding Rules Next Week
---------------------------------------------
Struggling Mexican bank Bancrecer SA is expected to publish next
week the rules for the auction of its 47.5 percent stake in
pension fund unit Afore BanCrecer Dresdner, Bloomberg reported
Friday. According to Carlos Septien, BanCrecer's chief executive,
the separate sale of the pension fund may generate more cash than
simply selling the bank itself. The government is overseeing the
sale of BanCrecer and the Afore unit as it attempts to recover
part of the 110 billion pesos ($12 billion) it injected into the
bank in the past three years to protect depositors from losing
their savings. The government expects to complete the sale of the
pension unit before it sells the bank, which may take until the
end of the year to be concluded. It is not yet known who may bid
for Afore.

Dresdner Pension Fund Holdings, a unit of Germany's Dresdner Bank
AG, owns a 44 percent stake in Afore BanCrecer. Meanwhile Allianz
Mexico SA, a subsidiary of Allianz AG, the biggest German
insurer, owns a 5 percent stake. The German firms may exercise an
option to acquire a combined 3.5 percent interest in the pension
company before it's put up for sale, which would give them a
controlling position, Septien said.

In addition, Bancrecer has reportedly launched three new retail-
banking products. According to Septien, the products would
increase the potential sale value of the bank. The products
include a special line of credit for consumers whose wages are
paid into a Bancrecer checking account electronically; an auto
loan product; and a checking-account overdraft protection
product.


BRIDGESTONE-FIRESTONE: Reports Regarding Plant-Closure Not True
---------------------------------------------------------------
The Mexican subsidiary of Japanese-owned tire maker Bridgestone-
Firestone on Thursday denied reports regarding plans to close
down two plants in the Mexican capital and the nearby city of
Cuernavaca, Infolatina said Friday. According to company
spokespersons, employees had agreed to negotiate on a wage cut
with the aim of boosting productivity at the plants. Previous
media reports, which suggested that the company is closing down
plants in Mexico due to fierce price competition from imported
Asian-made tires, were based on a comment made by a labor union
representative. The company currently has 1,200 employees in
Mexico and is believed to have proposed cutting the wages it pays
to 800 of them.


CINTRA: Pilot, Airline Staff Seek Representation On Board
---------------------------------------------------------
Pilots and other employees of Cintra-controlled Mexican airlines
are looking to be represented by a designated member on Cintra's
board of directors, according to an El Economista/Infolatina
report published Friday. Pilots union ASPA spokesperson, Ariel
Alvarez, said pilots want the power to intervene in decisions
affecting the airlines for which they work - including leading
carriers Aeromexico and Mexicana. Alvarez said that if being
awarded a seat on the board meant the union would need to
purchase stock in the company, they would review the possibility.


DESC: Continues With Divestment Program
---------------------------------------
Mexican industrial conglomerate DESC continues with its efforts
to divest some of its interests, according to a report Friday in
Reforma/Infolatina. DESC recently sold its stake in the Punta
Mita resort complex and likely soon would sell its holdings in a
major shopping mall complex in the upscale Mexico City suburb of
Santa Fe. Furthermore, the company could also divest its
processed-foods unit soon. The divestment program, which could
ultimately see DESC retaining only its autoparts manufacturing
division, is seen by analysts as a direct consequence of the
company's financial pressure. The company's troubles essentially
arose after using cash to buy back a major block of its own
shares last year.


GRUPO TELEVISA: Cablevision, Microsoft To Do Interactive TV
-----------------------------------------------------------
Microsoft Corp. (Nasdaq: MSFT) and Cablevision (CVC), a
subsidiary of Grupo Televisa S.A., today announced the first
Latin American trial of advanced interactive TV services.
According to the terms of the letter of intent, Microsoft(R) TV
Server and Microsoft TV Advanced client software will deliver a
complete interactive TV solution using the Motorola DCT5000
advanced interactive set-tops. The trial is scheduled to begin in
Mexico later this year with broad commercial deployment to
follow.

In order to meet customer demand for advanced interactive
services, it is the goal of Cablevision to upgrade 30 percent of
its subscriber base to Motorola's advanced interactive set-tops
powered by Microsoft TV Advanced. Subscribers will receive rich
new features such as an Electronic Program Guide, walled garden
services, e-mail, t-commerce, and select enhanced TV programming
for news, sports and soap operas. Microsoft and Cablevision
expect to deploy at least 350,000 set-tops over the next three
years.

"Cablevision has proven itself as a leader in providing new
technology and services for its Latin American customers," said
Jon DeVaan, senior vice president of the TV Division at
Microsoft. "The trial in Mexico demonstrates Cablevision's
commitment to providing a rich experience with advanced
interactive services and is a great example of the capabilities
of the Microsoft TV platform and the new opportunities it
represents for network operators."

Cablevision's new interactive TV service will mark the fourth
service worldwide and the first service in Latin America to be
based on Microsoft TV Advanced. Other services powered by
Microsoft TV Advanced include UltimateTV(R) service with
DIRECTV(R) in the United States, TV Cabo in Portugal and THOMSON
TAK in France. This announcement also reaffirms Microsoft's
commitment to the Latin American cable market. Microsoft now has
agreements with the largest cable network operators in Brazil and
Mexico: Globo Cabo in Brazil and Cablevision in Mexico.

"Cablevision chose Microsoft's advanced TV platform because we
believe it is the best solution," said Pablo Vazquez, chief
executive officer of Cablevision. "Our customers are demanding
new services now, and we needed an interactive TV platform that
could be deployed quickly to support the most advanced features
and provide us with new revenue streams to build on our current
business. Microsoft's superior platform, combined with the
advanced features of Motorola's DCT5000 digital set-top, will
help us accomplish this."

In addition to the Microsoft TV Advanced software running on
Motorola set-tops, Cablevision intends to use Microsoft TV Server
to provision and manage the delivery of the new interactive TV
services. Microsoft TV Server is a head-end solution designed to
be the foundation of a network operator's service, providing the
tools to provision, manage and operate a large-scale, commercial-
grade interactive TV service. Microsoft TV Server integrates with
Microsoft TV Advanced client software, creating an optimized,
end-to-end interactive TV software platform.

"Cablevision's interactive TV services will be the some of the
most advanced ever delivered in Latin America, and we are pleased
to participate in this trial with Cablevision and Microsoft,"
said Denton Kanouff, vice president and general manager of
Motorola's Worldwide Interactive Network Systems business unit.
"Motorola is committed to launching advanced interactive digital
services with our customers around the world. Cablevision Mexico
has been one of the leaders, having launched Motorola's
interactive digital platform for its customers since September
2000. We are proud to be a longtime partner of both Cablevision
and Microsoft, and our relationships continue to foster new
opportunities for advanced interactive TV services."

The DCT5000 platform is Motorola's most powerful interactive
digital broadband platform, delivering an unprecedented level of
processing and graphics capabilities to the digital interactive
market. The DCT5000 set-top represents the leading edge in next-
generation interactive digital cable systems and consumer set-top
terminals.


GRUPO TELEVISA: Awaits Proposal From Telemundo
----------------------------------------------
U.S. Hispanic television network Telemundo next week will present
a content-procurement proposal to Mexican media giant Grupo
Televisa for the current Televisa-produced content that is not
utilized by competitor Univision. Since 1995 Televisa has
supplied about 10,000 hours of programming per year to Univision,
Reforma/Infolatina reported Friday. If the proposal is accepted,
Telemundo, which is jointly owned by Sony Corp., Bastion Capital,
and AT&T's Liberty Media Group, will see a boost in its market
share from 20 percent to 35 percent. In return, Televisa will get
a 20-percent program royalties and a 25-percent stake in
Telemundo.

Univision, under a 1995 contract with Televisa, has first U.S.
choice of the company's 44,000 hours per year in new content -
until 2017. Under the contract, if Univision fails to exercise
its first-rights option within 180 days of Televisa content's
release, Televisa may sell it to the highest bidder.


GRUPO TRIBASA: $100M Tax Debt Fate Lies In Government's Hands
-------------------------------------------------------------
The fate of the refinancing plan approved by the creditors of the
struggling Mexican builder Grupo Tribasa depends on the outcome
of the study being conducted by the country's ministries of
Finance, and Communications and Transport, Reforma/Infolatina
reported Friday. According to the report, Finance ministry
officials are still studying a proposal from the company to
liquidate $100 million in tax obligations with payment-in-kind of
two highway construction projects.

Meanwhile, Tribasa still awaits the Communications and Transport
ministry officials' decision on whether to extend its current
license to operate the Mexico-Toluca toll highway. If extended,
Tribasa would likely see a boost in its cash flow and increased
ability to pay down debt. Tribasa's current operating license
expires in December 2002.


XEROX: Files Year 2000 10-K, No Material Change
-----------------------------------------------
Xerox Corporation (NYSE:XRX) today is filing its Annual Report on
Form 10-K for 2000 with the Securities and Exchange Commission.
The filing follows the company's announcement last week that its
auditors, KPMG LLP, have certified Xerox's financial statements
for the three years ended Dec. 31, 2000.

The 10-K includes the same audited financial statements filed on
May 31 in the company's 8-K as well as management's discussion
and analysis of results and other materials required for the
comprehensive annual report.



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P A N A M A
===========

PYCSA PANAMA: Default Likely; Project Debt Rating: `CC'\Watch Neg
-----------------------------------------------------------------
Standard & Poor's believes that PYCSA Panama S.A. is likely to
default on its June 15, 2001 bond payment of about $7.8 million,
which includes principal and interest. The company owns and
operates a toll road in Panama City, Panama. Traffic growth has
been insufficient to meet the financial obligations of the
project and the debt service reserve fund has been fully
exhausted. Standard & Poor's does not expect Grupo Pycsa, the
project sponsor, to make a capital infusion to avoid a default.
Additionally, Grupo Pycsa has been negotiating with bondholders
to restructure the debt. Any restructuring that leads to a
deferral or reduction in interest and/or principal payments would
cause a default under Standard & Poor's criteria, which requires
companies to adhere to the original amortization schedule. If the
project misses its June bond payment, the rating may be lowered
to 'D'.



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

GRAFFITI: Sees Recovery Ahead
-----------------------------
Recovery at Venezuelan fashion store chain Graffiti looms ahead
as its parent company Distribuidora Al Galope is on the verge of
reaching an agreement that will see the reduction of its debts
from Bs$63 billion to Bs$13 billion, South American Business
Information reported Friday. According to the report, bank
creditors namely Provincial, Unibanca, Nuevo Mundo, Confederado
and Occidental de Descuento agreed to restructure debts for five
years. Other banks namely Venezuela, Caracas, Corpbanca, Banesco
and Caribe agreed to accept properties offered by the group in
lieu of cash payments. Moreover, another group of banks should be
off Graffiti's back within the month.

Al Galope has spent recent sales revenue on releasing new product
from the customs houses where it has been held due to a lack of
liquidity. Around 80 percent of the group's debt is with banks
but there are also 200 other creditors on the company's payables
list.



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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