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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

            Friday, June 29, 2001, Vol. 2, Issue 127

                           Headlines


A R G E N T I N A

AEROLINEAS ARGENTINAS: Contradicts Reports, Schedules 21 Flights
EDITORIAL SARMIENTO: Calls In Receivers, Cronica TV Excluded
EL SITIO: Shareholders Get Smaller Piece of Claxson Equity


B R A Z I L

METROPHONE: To Cease Operations


C H I L E

TELEFONICA CTC: Faces Another Obstacle Over Tariff Decree


M E X I C O

AHMSA: To Reduce Workforce To Make Up For Slumping Profits
ATLANTICO: Bital Likely To Complete Acquisition By 3Q01
BUFETE: Bolanos Buys Bankrupt Company For Just $110
GRUPO AZUCARERO: Pays Debt To Jalisco Cane Growers "In-Kind"
GRUPO DESC: Schedules Corporate Restructure By Summer's End
GRUPO SIMEC: To Redeem All 10 1/2% Third Priority Notes
GRUPO TELEVISA: No Truth To Televicentro Divestment Reports
HYLSAMEX: Posven Debt Recourse Concerns Investors, Analysts
MINERA AUTLAN: Close To A Debt-Restructuring Deal With Creditors
SAVIA: Investors Offload Common Stock On Vector Probe Rumor


V E N E Z U E L A

TIENDAS ROCKY: Renegotiates 70% Of Debts With Banks, Suppliers
VENEPAL: Government Urges Restart Of Coated Paper Production


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

AEROLINEAS ARGENTINAS: Contradicts Reports, Schedules 21 Flights
----------------------------------------------------------------
Contrary to recent reports that the Argentine airline planned to
suspend all flights for safety reasons, Aerolineas Argentinas
actually scheduled 21 flights Tuesday, Expansion said in a report
Wednesday. Jose Maria Cuevas, chairman of the federation of
Spanish industry (CEOE), yesterday blamed Argentina economy
minister Domingo Cavallo for the situation. According to Cuevas,
Aerolineas' troubles began a long time ago when Cavallo granted a
stake in the carrier to US counterpart American Airlines in order
for the American to manage its accounts.

Aerolineas Argentinas is majority controlled by Spanish state
industrial holding company SEPI and currently in temporary
receivership.

EDITORIAL SARMIENTO: Calls In Receivers, Cronica TV Excluded
------------------------------------------------------------
Editorial Sarmiento, which owes salaries to some of its
employees, called in the receivers, South American Business
Information reported Wednesday. Editorial owns the newspaper
Cronica, whose main financial problems are attributed to a drop
in advertising sales. Last year, advertising sales dropped by
15.5 percent in the newspapers of Buenos Aires. The newspaper
managed to sell over a million copies on special dates, although
it sells less than 100,000 newspapers at currently.

Cronica TV, the popular Argentinean television channel, is left
of the process.


EL SITIO: Shareholders Get Smaller Piece of Claxson Equity
----------------------------------------------------------
Instead of the expected 34 percent stake in Claxson Interactive
Group - the new company formed by the merger between loss-making
Argentina-based Internet media company El Sitio Inc. and private
Ibero American Media Partners (IAMP), El Sitio shareholders will
have only a 20 percent piece of the equity, Reuters reported
Wednesday.

"The amended transaction terms resulted from extensive
discussions among the parties regarding whether the conditions
precedent to the merger transaction were capable of being
satisfied," El Sitio and IAMP said in a joint statement.

Approximately 45 percent of Claxson will be held by members of
the Cisneros Group of Companies and the remaining roughly 35
percent will be held by private equity firm Hicks, Muse, Tate &
Furst, the statement said.

In May, El Sitio posted a first quarter net loss of $21.5
million.



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

METROPHONE: To Cease Operations
-------------------------------
Brazilian telecommunications company Metrophone has informed
Anatel and its subscribers that it will discontinue its services
after being in operation for four years, South American Business
Information reported Wednesday. The company had invested US$200
million, however, it had accumulated debts of R$394.6 million and
negative equity of R$293 million.

Metrophone attributed the decision to two factors: the fact that
the evolution of technology in this area occurred in a way which
did not favor the company's choice of equipment; and the delay of
Anatel in defining regulations for the sector, which held up the
company's development.

Industry analysts point to Metrophone's choice of Ericsson
technology. In 1999, the Swedish company ceased production of the
terminals used in this system, leaving Metrophone with no way to
increase its customer base.

Metrophone is negotiating with other companies, including Nextel,
to hand over its customer base. The 120 employees of the company
will be reduced to 30 in what the president of Metrophone calls a
restructuring.



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

TELEFONICA CTC: Faces Another Obstacle Over Tariff Decree
---------------------------------------------------------
Telefonica CTC Chile now faces another hurdle in the eventual
flexibility of the tariff decree, South American Business
Information reported Wednesday. Congressmen have asked the
National Economic Inspector to make public the information sent
by Subsecretaria de Telecomunicaciones (Subtel) related to
Telefonica CTC's tariff decree, as a means to make the process
undertaken by the Resolution Commission more transparent.

Telefonica CTC is lobbying for the liberalization of the tariffs
saying that it has had annual losses of US$200 million since the
decree was issued in 1999. The company says it has been forced to
lay off some 1,600 employees as a cost reduction measure.
However, congressional representatives are apprehensive about
making a change. They feel that Telefonica CTC is putting
improper pressure on the Government to grant freedom from
tariffs.

Secretary Cruz recently said that the market has undergone major
changes, which would make it feasible to think of deregulating
the dominant company. The final document on the issue will be
presented next week, taking into consideration consultations made
to telecommunications companies, the Ministry of Economy, and
Subtel.



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

AHMSA: To Reduce Workforce To Make Up For Slumping Profits
----------------------------------------------------------
Struggling to deal with sagging prices and demand for steel,
Altos Hornos de Mexico SA (Ahmsa) announced plans to reduce its
workforce by 1,962 people, Bloomberg reported Wednesday. The
company, in a statement released, said that the job cuts will
come from union workers, management and employees who accepted
early retirement. Ahmsa did not say how much money it will save
through the job cuts. The cost reductions are intended to make up
for slumping profits because of a 30 percent drop in prices from
last year and lower demand. If falling steel prices and demand
don't improve in six months, the layoffs may become permanent,
the company said. Ahmsa employed about 16,500 people as of the
third quarter of 2000.


ATLANTICO: Bital Likely To Complete Acquisition By 3Q01
-------------------------------------------------------
Mexican bank Bital is optimistic that, after the final audit on
its administration of Banco del Atlantico, it will be able to
complete its acquisition. The deal should be completed in the
third quarter of this year, according to a report in South
American Business Information Wednesday edition. However, before
the transaction can be finalized, Bital must first restart its
capitalization program, which has been dormant due to the delay
in the acquisition of Altantico. Mexico's banking institute IPAB
will cover the remaining 13 billion pesos Atlantico requires for
its future liquidity. IPAB insists on these audits prior to
finalizing the acquisision. A similar situation occurred prior to
Bancomer's purchase of Promex and Scotiabank's purchase of
Inverlat. The audit is expected to last up to two months. As
such, Bital is looking to swap contracts in September.


BUFETE: Bolanos Buys Bankrupt Company For Just $110
---------------------------------------------------
Sergio Bolanos, chairman of Grupo Serbo, on Tuesday became owner
and chairman of debt-laden Mexican engineering and construction
Bufete Industrial, when he paid a nominal sum of 1,000 pesos
(US$110), Bloomberg revealed Wednesday.

He's bought 53.2 percent of the company, including 32.1 percent
from founder Jose Mendoza and the 21.1 percent owned by
Halliburton Co. Bolanos gets control of a company that defaulted
on a $100 million bond in 1999 and has outstanding debts of about
$450 million, which he will try to restructure.

"Once we have paid off the debts with what we offer the
creditors," says Bolanos, "the company will be up and running."

Creditors, including banks and more than 500 suppliers, will have
to agree to Bolanos' offer to extract the company from bankruptcy
proceedings. Bondholders, however, will not be involved in this
round of negotiations, according to Eduardo Legorreta, Bolanos'
financial adviser.


GRUPO AZUCARERO: Pays Debt To Jalisco Cane Growers "In-Kind"
------------------------------------------------------------
Leading Mexican sugar company Grupo Azucarero Mexico (GAM) on
Tuesday liquidated a series of debts with cane growers belonging
to the National Farmers Confederation (CNC) by paying them 35,000
metric tons of sugar, GAM CFO Juan Cortina Gallardo said in a
Reforma/Infolatina report Wednesday edition. The move came after
Jalisco cane growers threatened to stop supplying GAM's Tala mill
and take over production facilities in protest at the company's
failure to make timely payments for cane from the 2000-2001
harvest.

According to Cortina, the payments to cane growers, in the
western state of Jalisco, had always been guaranteed by sugar.
"Since the beginning of the harvest we've been supplying them
with certificates of deposit of sugar, by which the payments are
guaranteed," Cortina disclosed.


GRUPO DESC: Schedules Corporate Restructure By Summer's End
-----------------------------------------------------------
Mexican industrial conglomerate Desc expects to complete its
evaluation work (headed by company senior executive Luis Tellez,
a former Mexican Energy minister) on a planned corporate
restructure toward the end of the summer, Reforma/Infolatina
revealed in a report Wednesday. According to informed observers,
Desc is likely to divest several of its divisions but will retain
its core businesses. The group this year has already divested
some of its commercial property interests, including land in the
southeastern resort city of Cancun and its stake in the Four
Seasons Punta Mita hotel.

Analysts see Desc's divestment program 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 SIMEC: To Redeem All 10 1/2% Third Priority Notes
-------------------------------------------------------
Grupo Simec, S.A. de C.V. (Amex: SIM) announced that its wholly
owned subsidiary, Compania Siderurgica de Guadalajara, S.A. de
C.V. ("CSG"), will redeem on July 13, 2001 all of its outstanding
10 1/2% Third Priority Notes due November 15, 2007, at a price of
100% of their principal amount (U.S. $37,838,023.44) plus accrued
interest to the date of redemption. On and after the redemption
date, interest on the notes will cease to accrue unless CSG
defaults in making the redemption payment available on the
redemption date.


GRUPO TELEVISA: No Truth To Televicentro Divestment Reports
-----------------------------------------------------------
An unidentified source at Mexican media giant Grupo Televisa
railed against rumors that the group is planning to divest video-
rental unit Televicentro to fund the company's expansion strategy
in the U.S. Hispanic television market, Reforma/Infolatina
revealed Wednesday in a report.

The company source denied the group ever considered such a
possibility and said that any move to sell Televicentro is just
the same as betraying the shareholders of Televisa. All financing
for Televisa's U.S. expansion strategy would come from or be
raised by the group's television unit itself, the source
contended.


HYLSAMEX: Posven Debt Recourse Concerns Investors, Analysts
-----------------------------------------------------------
Mexican steelmaker Hylsamex's liability to pay back US$13.3
million of debt which its Venezuelan unit Posven CA defaulted on
Tuesday last week has raised concerns among investors and
analysts. A source close to the negotiations related the story in
a Business News Americas Wednesday edition.

"It might make some people nervous. While US$13.3 million is not
a lot of money, they [Hylsamex] already have a pretty substantial
debt and will be stretched to cover this," he said.

At end of the first quarter of this year, the company's debts
were US$1.373 billion and it recorded a US$25-million net loss
for the quarter. Earlier this year, Hylsamex received approval
from creditors to temporarily default on other payments,
obtaining waivers until January 31 on certain financial ratios
included in various mid-term syndicated bank loans totaling some
US$400 million.


MINERA AUTLAN: Close To A Debt-Restructuring Deal With Creditors
----------------------------------------------------------------
Sources close to Mexican mining company Minera Autlan revealed
that the company is likely to strike a deal with creditors over
an agreement to restructure a $75 million debt in a matter of
days or weeks, Infolatina reported Wednesday. In January, Autlan,
the country's only producer of magnesium and iron alloy,
defaulted on a $7 million payment. The payment was for euro-paper
issued by Standard Bank of London on the company's behalf in
August last year. Autlan is widely believed to be looking for a
major financial partner to help it fulfill its debt obligations.
Among the group's major creditors are Mexico's BBVA Bancomer and
Netherlands-based ABN Amro. The Mexican mining and minerals group
has been buffeted by increases in the price of natural gas and
electricity, which account for one-third of its costs.


SAVIA: Investors Offload Common Stock On Vector Probe Rumor
-----------------------------------------------------------
Monterrey-based Mexican holding company Savia's common stock on
Tuesday shed 14.7 percent, to close at 5.80 pesos, a historic low
and down almost 90 percent from March 13's record high of 55.30
pesos, Reforma/Infolatina reported Wednesday. According to
analysts, investors dumped the company's stock due to widespread
rumors that Mexico's National Banking and Securities Commission
(CNBV) has conducted an investigation into allegations that
Mexico City brokerage Vector illegally channeled off-shore
investment holdings into the company. However, CNBV officials and
Vector spokespersons denied such rumors. According to CNBV senior
official Pablo Escalante, Savia's books were currently under
review by the agency as part of routine procedures prior to the
sale of a large stake in one of its subsidiaries, Seguros
Comercial America, to Netherlands-based ING.

Both Vector and Savia are subsidiaries of Mexican conglomerate
Grupo Pulsar.



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

TIENDAS ROCKY: Renegotiates 70% Of Debts With Banks, Suppliers
--------------------------------------------------------------
Tiendas Rocky of Venezuela managed to clear up 70 percent of its
Bs$28-billion debt with banks, principally Banco Plaza, and its
own suppliers by partly closing 70 stores to retain a chain of
40, South American Business Information reported Wednesday. The
shoe sales group has been hit by a reduction in the people's
purchasing power. Accordingly, shoes sales are down by 40 percent
across the board. Tiendas went into default 28 months ago in
order to avoid insolvency. Under its terms, the default can last
for 12 months plus a period of extension.


VENEPAL: Government Urges Restart Of Coated Paper Production
------------------------------------------------------------
The Venezuelan government asked the financially-strapped paper
maker to make clear whether or not it can produce the type of
paper used for magazines, labels and the like. Coated paper or
'papel recubierto' is used for the national graphics industry,
South American Business Information reported Wednesday. Venepal
has not produced the type of paper required since 1999 when its
financial problems began in. Subsequently, the national graphics
industry has already called for customs duty-free imports of the
product due to the absence of a national company producing it for
them. Venezuela's commercial regulations allow an exemption from
the 15 percent duty for products required by a national industry
and not supplied by that industry or another that is based in
Venezuela. If Venepal will not restart production, the production
and commerce ministry will take the appropriate action to remove
taxation on coated paper imports.




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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