/raid1/www/Hosts/bankrupt/TCRLA_Public/010619.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 19, 2001, Vol. 2, Issue 119

                           Headlines

A R G E N T I N A

AEROLINEAS ARGENTINAS: Spain Refuses To Inject More Money
AEROLINEAS ARGENTINAS: Union Pressure May Harm Spain Relations
CEPA: Slaughterhouses At Risk Of Closure


B R A Z I L

360NETWORKS: Will Not Make Scheduled Bond Interest Payment
BANERJ: CB Returns Bank To Rio de Janeiro State
CELESC: Fails To Make Payment On $61.2M Debt
TRANSBRASIL: Manages To Renegotiate Debt With Aerus


C H I L E

BOLIDEN LIMITED: Company Profile


C O L O M B I A

PAZ DEL RIO: Registers US$21.6M In Losses Last Year


H O N D U R A S

BANCO HONDURENO: Liquidity Trouble Means Government Intervention


M E X I C O

BANCRECER: Banorte, Scotiabank Inverlat Seek Asset-Offer Info
GRUPO TMM: Grupo Mexico To Sell Stake On The Mexican Bourse
GRUPO VITRO: Analysts Deem Asian Expansion Plans Irresponsible
POLAROID CORP.: Mexican Subsidiary To Escape Parent Co. Job Cuts
POLAROID CORP.: Announces Restructuring To Reduce Debt


V E N E Z U E L A

AVENSA: Florida Court Rejects BP Air's Action Against Airline
LOQUESA.COM: To Implement Another Restructuring Plan


     - - - - - - - - - - -


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A R G E N T I N A
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AEROLINEAS ARGENTINAS: Spain Refuses To Inject More Money
---------------------------------------------------------
Spain, which controls nearly 92 percent of Aerolineas Argentinas
through its state holding company SEPI, on Friday announced,
unless trade unions accepted its rescue plan for the airline, it
would no longer inject new money into the struggling business,
ft.com reported Friday. At the backdrop of mounting conflicts
between Buenos Aires and Madrid, Spain said it had no further
concessions to offer Argentina's airline unions, which recently
indicated a desire to return to the negotiating table.

According to SEPI Chairman Pedro Ferreras, the airline would
suspend payments on its $900-million debt unless the trade unions
accepted SEPI's rescue plan, which involves big pay cuts. He
stated that next Thursday the company would file for protection
against creditors, a move which would allow the airline to
continue flying, but is the first step toward its liquidation.

"We are at the end of the line," Mr. Ferreras said. "There is no
more money on offer. The Spanish government did everything it
could and more... If there is a remote chance to save Aerolineas
now, it lies with the Argentine government."

"There is no doubt that the privatization of Aerolineas was
disastrous. What we are trying to do is to prevent that from
tainting all of the privatized companies," said Roberto Starke,
for Adalberto Giavarini, Argentina's foreign minister, who has
been in regular contact with his Spanish counterpart since the
crisis blew up several weeks ago.

The Argentine government had given SEPI until Friday to solve the
airline's financial crisis, and had threatened to auction off the
carrier's routes. However, after a $617-million capital injection
last October, SEPI said it would not throw good money after bad.
The Argentine government is still working to find possible buyers
for Aerol¡neas. Possible buyers include Lan Chile and
Continental.


AEROLINEAS ARGENTINAS: Union Pressure May Harm Spain Relations
--------------------------------------------------------------
On Thursday, the Spanish government warned that mounting
pressures from Argentine leaders and unions to keep ailing
Aerolineas Argentinas on life support at any cost threaten to
harm bilateral relations, according to a report in South American
Business News.

"What would be worrysome is if ...a business incident... ended up
clouding relations between the two countries," said Spanish
Foreign Minister Josep Pique. The Spanish foreign minister
shunned Argentine union demands that his government take more
steps to head off the airline's impending bankruptcy. Pique said
it was unrealistic to expect SEPI to keep the money-losing
airline afloat without cutbacks. The Argentine government sold
the bulk of Aerolineas Argentinas to Spanish state holding
company, SEPI, in 1990 and now has just a 5.4 percent stake.

"Those who think that you can keep a company going indefinitely
in the same way as 10 years ago without adapting to new realities
and that if that means losing money, so be it, and simply ask
stake holders to keep plowing in money indefinitely, well that's
not the world of today," he added.


CEPA: Slaughterhouses At Risk Of Closure
----------------------------------------
Sources at National Agriculture and Food Health and Quality
Service (SENASA) revealed that Agribusiness conglomerate
Garovaglio & Zorraquin SA (G&Z)'s beef-packer unit Cia
Elaboradora de Productos Alimenticios SA (CEPA) may see its
slaughterhouses shut down soon, AFX-Asia reported Thursday. CEPA
filed for protection in November of last year.

The threat of a closure is due to arrears in inspection fees it
owed to SENASA. According to company sources, overdue bills for
veterinary inspections are not covered by proceedings under
bankruptcy law initiated by CEPA, nor by the competitiveness plan
for beef exporters launched by Economy Minister Domingo Cavallo.
If SENASA inspectors are withdrawn from CEPA's slaughterhouse at
Venado Tuerto, in Santa Fe province, and Pontevedra, outside
Buenos Aires, it would then be unable to sell any meat on
domestic or export markets.

Just recently, CEPA President Federico Zorraquin said that as
soon the firm solves the situation with creditors it would
continue its plan of looking for a partner next year. The company
will try to locate a partner in Brazil as it continues talks with
the four main cold storage plants in the country.



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B R A Z I L
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360NETWORKS: Will Not Make Scheduled Bond Interest Payment
----------------------------------------------------------
360networks (NASDAQ: TSIX and TSE: TSX) announced it will not
make a US $10.9 million interest payment due today on its 12.5%
Senior Notes. Under the terms of the debt, 360networks has
another 30 days to make the payment in order to avoid default
consequences under the Notes.

The company is not making this payment to preserve cash as it
reviews its options. Last month, 360networks announced it was in
discussions with current shareholders and others to resolve its
funding issue. As these discussions have not been successfully
concluded, the company is now concentrating its efforts on other
alternatives, including restructuring.

360networks has retained Lazard Freres to assist the company in
this process.

About 360networks

360networks (NASDAQ: TSIX and TSE: TSX) offers network services
to telecommunications and data-centric organizations. 360networks
is developing one of the largest and most technologically
advanced fiber optic mesh networks in the world. By early 2002,
the planned network will span approximately 140,000 kilometers
(86,000 miles) and link approximately 100 major cities in North
America, Europe, South America and Asia with terrestrial routes,
undersea cable systems and network capacity.


BANERJ: CB Returns Bank To Rio de Janeiro State
-----------------------------------------------
Part of commercial bank Banco do Estado do Rio de Janeiro
(Banerj), which is going through an out-of-court liquidation,
will be returned by the Brazilian Central Bank to the state of
Rio de Janeiro, South American Business Information said Friday.
The Rio de Janeiro state will receive the bankrupt estate, with
debts of R$2.8 billion and credits of R$1.2 billion. The bank
also continues to face 22,000 suits. The state has R$4.4 billion
in debts left by Banerj. The bank was liquidated in 1996 when
part of it was sold off to Itau for R$602 million.


CELESC: Fails To Make Payment On $61.2M Debt
--------------------------------------------
Brazilian power utility Centrais Eletricas de Santa Catarina SA
(Celesc) failed to make a payment on $61.2-million debt which was
due June 14, 2001 according to a report in Bloomberg. Celesc "is
not presently in a position to make any payment due on the notes
on their maturity on June 14, 2001," the company said in a
statement.

Aldo Roberto Schuhmacher of Celesc's market relations department
revealed that the company didn't have enough cash to roll over
the 12-month euro commercial paper and is asking investors to
give it 90 days to sell assets, including holdings in a water
company and a hydroelectric power plant. The sale of the
positions is expected to generate about 140 million reais ($57.9
million).

Talks with banks, including Banco Santander Central Hispano SA,
to enable Celesc to roll over the debt didn't lead to an
agreement in time for the payment.

When asked whether Celesc was in default although he said the
company would "prefer" not to describe it like that, but "It is,"
said Schuhmacher. "We're asking for 90 days to allow the company
to sell some of its assets."

Gustavo Gattass, an analyst at UBS Warburg in New York, disclosed
that Celesc's cash flow problems stem partly from its failure
last year to win the full 24 percent rate increase to which
regulators said it was entitled. Elesc received an increase of
only 20.5 percent, he said. The utility's problems also are
partly self-inflicted, he added. The state government of Santa
Catarina hasn't paid Celesc since 1997 and owes it 577 million
reais, said Gattass. Interest payments on the debt alone should
be earning Celesc revenue of 35 million reais a year, he said.
Yet, Celesc last year agreed to give the state a two-year grace
period to pay its debts.

"No one wants to lend them any money at the moment," said
Gattass. "The problem is that they've shot their credibility in
the foot."

Celesc's unwillingness to make cost reductions following the
shortfall in last year's rate increase also made it less likely
the company would have enough cash to meet its debt payments,
said Gattass, who rates Celesc a "Hold."


TRANSBRASIL: Manages To Renegotiate Debt With Aerus
---------------------------------------------------
Brazilian air transportation company Transbrasil, last week
managed to renegotiate the debt that it has with Aerus, the
pension fund of Brazil's commercial airlines, Gazeta Mercantil
said in a report. The negotiation provides for the payment of an
R$11.6-million debt in a maximum period of 36 months, posting as
a guarantee 15 percent of the stock that the company holds in the
Amadeus reservation system. These shares were valued at US$16
million by Transbrasil executive vice-president Flavio Carvalho.

In a short statement about the matter, Carvalho said, "We managed
to honor our obligations."



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C H I L E
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BOLIDEN LIMITED: Company Profile
--------------------------------
Name:        Boliden Limited
             3300 Bloor West, West Tower, Suite 1500
             Toronto, Ontario M8x2x2, Canada

Telephone:   416-364-2727

Website:     http://www.boliden.se

Type of Business:    The group's principal activities are mining
                     which produces zinc, copper, lead, gold and
                     silver; smeltering includes copper, lead,
                     precious metals and sulphuric acid; and
                     fabrication which produces copper tubing and
                     brass products. Smeltering accounted for 51%
                     of 200 revenues; mining, 29%; fabrication,
                     19% and corporate and others, 1%.

SIC:       Miscellaneous Metal producers

Employees: 5,500

Net Loss: US$21.5 million (three months ended March 31, 2001)

Trigger Event:     The company lost significant value after a
                   toxic spill at its Spanish zinc mine 3 years
                   ago that caused the country's worst
                   environmental disaster. Boliden's situation
                   has been very much a burden of huge debts. The
                   company owes approximately US$ 840-million,
                   and reported mounting losses in its latest
                   financial statement.

Public Securities: common shares - 790,963,000 (as of March 31,
                   2001)
                   
                   preferred shares - 79,115,000 (as of March 31,
                   2001)

PRESIDENT & CEO:   Thomas Cederburg

EVP & CFO:         Anders Haker

Auditors:    KPMG LLP
             Suite 3300
             Commerce Court West
             199 Bay Street
             Toronto Ontario M5L 1B2
             Telephone 1 (416) 777-8500
             Telefax 1 (416) 777-8818

Legal Counsel: McMillan Binch
               Royal Bank Plaza, Suite 3800, South Tower
               Toronto, Canada M5J 2J7
               (416) 865-7000
               http://www.mcbinch.com

Last TCRLA Headline DATE: Wednesday, June 13,2001,Vol.2, Issue
                          115



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C O L O M B I A
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PAZ DEL RIO: Registers US$21.6M In Losses Last Year
---------------------------------------------------
Colombian steel company Paz del Rio, which has been operating
under Law 550 bankruptcy protection since last year, posted a
loss of US$21.6 million in 2000, 16 times more than what was
posted in 1999, Business News Americas reported Wednesday.
Operational losses during the period totaled US$25.7 million,
down from US$31.9 million in 1999, at today's exchange rate.
Sales last year were 239,237t by volume and US$63.8 million by
value, a 28 percent increase over 1999. The company is presently
seeking partnership with a foreign investor to help emerge from
the financial troubles it has suffered over the last year.



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H O N D U R A S
===============

BANCO HONDURENO: Liquidity Trouble Means Government Intervention
----------------------------------------------------------------
Local bank Banco Hondureno de Credito y Servicios (Banhcreser),
which has some 40,000 clients, has been placed under intervention
by the Honduras' government because of liquidity problems,
Business News Americas reported Friday. Gustavo Alfaro, a
government spokesperson, appealed to the public to maintain its
confidence in the banking system, saying that Banchcreser
deposits would be backed by the government. The government plans
to auction the bank's resources within 48 hours, and, as of June
18, depositors can begin to withdraw their money or place it in
another bank.



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M E X I C O
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BANCRECER: Banorte, Scotiabank Inverlat Seek Asset-Offer Info
-------------------------------------------------------------
Both Mexico's Grupo Financiero Banorte and Canadian-owned Grupo
Financiero Scotiabank Inverlat have formally requested from
Deutsche Bank information regarding the assets offered in the
forthcoming sale of government-intervened bank Bancrecer,
Reforma/Infolatina reported Friday. Scotiabank Inverlat's
interest in Bancrecer came as a surprise to some observers
considering that the group has merged with - but not yet fully
acquired - government-intervened Grupo Financiero Inverlat, in
which the federal government still owns a substantial minority
stake.

Deutsche Bank is handling the sale of Bancrecer for Mexican bank
bailout agency IPAB. No U.S.-based banks are expected to bid for
Bancrecer due to the effects of a slowdown in economic activity
in the United States.


GRUPO TMM: Grupo Mexico To Sell Stake On The Mexican Bourse
-----------------------------------------------------------
Mexican copper giant Grupo Mexico announced it would sell its
stake in Mexican shipping company Transportacion Maritima
Mexicana (TMM) on the Mexican stock exchange and would substitute
the TMM investment for "more attractive" investments in other
companies, Reuters said in a report Friday. In a statement, Grupo
Mexico explained it was selling the stake because TMM had moved
into the railroad sector and now represented a conflict of
interest for the company, given it has its own railroad unit,
Ferrocarril Mexicano S.A. de C.V. The company did not say how
large its stake was in TMM.


GRUPO VITRO: Analysts Deem Asian Expansion Plans Irresponsible
--------------------------------------------------------------
Several analysts reacted strongly to the recent announcement made
by cash-strapped Mexican glass group Vitro that it is examining
the possibility of buying into China, Financial Times reported
Friday. According to the analysts covering the company Asian
expansion plans are irresponsible.

Jorge Beristain, conglomerates analyst at Deutsche Bank in New
York, said Vitro should concentrate on cutting its overhead
costs, which are running at $30 million a year, rather than
investing abroad. The industry average for expenses - which
include accounting, legal and investor relations costs - is
between $3 million to $4 million.

"This is no time to be going on a spending spree. Vitro needs to
reduce its debt, which dwarfs the company's market capitalization
of $290 million.

"The depressed stock price is the market's way of calling for the
company to fulfil its promises and sell off underperforming
assets," Mr. Beristain said.

Vitro, one of the world's top three producers of glass
containers, recently said it was investigating the possibility of
setting up a joint venture or making acquisitions in China and
hoped to make a decision in the next three to six months. Vitro
announced it was evaluating targets in the Shanghai province. The
company sites favorable corporate tax breaks in the region as an
incentive for the move. The announcement came as Vicente Fox,
Mexican president, returned from a tour of China, Japan and
Korea, in which he was accompanied by Federico Sadam, Vitro chief
executive.


POLAROID CORP.: Mexican Subsidiary To Escape Parent Co. Job Cuts
----------------------------------------------------------------
Polaroid Corporation's Mexican subsidiary expects to get away
from the job cuts announced by its U.S. parent company, according
to unidentified Polaroid Mexico sources cited by a report Friday
in Infolatina. Sources at Polaroid Mexico said the company's
local operations had a strategic character, as a marshalling
point for Latin American distribution and as an exporter to
Canada and Japan. Polaroid's Mexican plant, which is under the
direct control of company management based in Miami, is its
third-largest anywhere in the world, behind plants in the
Netherlands and the United Kingdom. Polaroid's Mexican workforce
currently numbers 940, comprising 820 employees at a factory in
the central state of Queretaro, and 120 employees at corporate
offices in Mexico City.

The latest restructuring plans of Cambridge, Massachusetts-based
Polaroid, not particularly surprising given Polaroid's woes, were
enough to offset a second-quarter warning from the company, which
has been hard-pressed in its instant camera business to cope with
the growth of one-hour film developing shops and digital cameras.

Polaroid said that it now anticipates an operating loss in the
three months ending June 30, before one-time items, at about the
same level as its first-quarter operating loss of $38 million or
85 cents a share, which excluded an $80 million restructuring
charge. Analysts, on average, had been looking for a loss of 7
cents a share.


POLAROID CORP.: Announces Restructuring To Reduce Debt
------------------------------------------------------
Polaroid Corporation (NYSE: PRD) today announced a major global
restructuring plan designed to reduce debt and return the company
to profitability. Approximately 2,000 positions, or 25 percent of
the global workforce of 8,000, will be phased out over the next
18 months.

The restructuring program should realize total annual cost
savings of between $175 million and $200 million by the end of
2003, and the company will take a series of restructuring charges
in 2001 and 2002 to reduce its cost base. These charges are
expected to total between $150 million and $175 million. In
addition to significant reductions in personnel, the
restructuring will involve a reduction and reconfiguration of
Polaroid's global operations.

"This is an extremely difficult decision, but an absolutely
necessary one if Polaroid is to compete in the digital future. We
must focus on our new Opal and Onyx instant digital printing
technologies and manage our core instant business to generate
cash and reduce debt," said Gary T. DiCamillo, chairman and chief
executive officer.

This is the second restructuring announced by Polaroid this year
and will impact virtually all of the company's global operations,
including about 1,000 employees in the United States - most of
them in Massachusetts. In February, the company announced a
restructuring to reduce its workforce by approximately 950 jobs.
That plan combined with the one announced today will reduce the
total number of Polaroid employees worldwide to approximately
5,500 by the end of 2002.

DiCamillo acknowledged that the Polaroid core instant business is
experiencing steeper declines than projected due to the soft
economy and the competing growth of digital imaging. He said the
restructuring plan is consistent with Polaroid's new two-part
business model to: (1) manage the company's core instant products
for cash and profitability; and (2) develop an instant digital
printing business with significant opportunity for double- digit
growth.

Polaroid introduced this new business model on May 31 at a
meeting with investors in New York, where Ian Shiers, executive
vice president -- worldwide sales and marketing, previewed steps
the company would take to compete in the digital future.

"Our infrastructure clearly is too big, and the changes in our
business require a significant reduction of our cost base in line
with our conservative revenue expectations for the next two to
three years," he said in New York. Today's announcement supports
that premise and puts Polaroid in a solid position to meet the
short-term financial targets that Shiers outlined:

    -- Gross margins in the low 40's as a percentage of sales
    -- Overhead around 30 percent of sales
    -- Double-digit operating margins
    -- Improved cash flow through strong EBITDA and a focused
       reduction of working capital and capital expenditures.

Second Quarter

Polaroid continues to focus on cash generation as its top 2001
priority. Cash flow for the quarter is ahead of plan due to asset
sales and reductions in working capital and capital expenditures.
Operating results for the second quarter, however, are likely to
be in the area of the operating loss reported in the first
quarter, excluding potential one-time charges and real estate
gains.



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

AVENSA: Florida Court Rejects BP Air's Action Against Airline
-------------------------------------------------------------
Believing that Venezuelan airlines Avensa and its subsidiary
Servivensa are heading for insolvency, fuel supplier BP Air of
Miami started legal action for over US$1 million in unpaid bills
against the two airlines, South American Business Information
reported Friday. However, Avensa says that the action, as well as
BP's request to have Venezuelan planes landing at Miami
International Airport placed under an embargo and their rented
planes to be returned until fuel bills are met, were rejected by
a Florida court.

Avensa believes that BP Air initiated legal action because it was
angry about the airline's decision to change fuel suppliers in
Florida rather than because it needs the money owed desperately.
Complicating the issue is BP Air and Avensa's disagreement over
exactly what is owed. Avensa has been struggling financially in
the last two years, but is now on the point of launching regular
flights to Buenos Aires and Chile.


LOQUESA.COM: To Implement Another Restructuring Plan
-----------------------------------------------------
Youth Internet site Loquesea.com is to implement another
restructuring plan which could see the dismissal of half of its
total workforce (in New York, Miami, Spain, Brazil and
Venezuela), South American Business Information said Friday. The
plan also includes closing the doors of its offices in Colombia
and Barcelona, Spain.

Just three months ago, Loquesea.com implemented a restructuring
plan laying off 70 employees at its Venezuelan subsidiary. The
portal has spent over US$500,000 in Venezuelan liquidations
which, in an ironic way, shows the company's desire to ride out
the storm and attempt to prosper in 2002. The portal still
receives 3.5 million visits per month and has 1.5 million e-mail
subscribers.

Loquesea.com, which operates in 19 countries, last year carried
out two rounds of capitalization, the first raising US$3 million,
the second led by Merrill Lynch. The company was then looking to
form alliances with other operations to create specialized joint
sites. At the end of 2000, the site was valued at US$40 million.




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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