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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, July 3, 2001, Vol. 2, Issue 129

                           Headlines



A R G E N T I N A

AEROLINEAS ARGENTINAS: Has Until July 23 To Find Solvent Buyer
AEROLINEAS ARGENTINAS: UFITCO Sues Board For Economic Subversion


B O L I V I A

COTEL: German Firm To Take Over Admin. Control by Mid-July


C O L O M B I A

TABLEMAC: Expects A Deal With Creditors Within A Month


M E X I C O

AEROMEXICO: Two U.S. Airlines Formally Express Interest
AHMSA: Lays Off Workers To Reduce Wage Costs
BANCRECER: Two Spanish Financial Services Groups Visit Data-Room
FERRONALES NACIONALES: Ministry To Appoint Liquidator Soon
GRUPO PULSAR: Close To Striking Deal With Creditors
STEWART ENTERPRISES: Announces Completion Of Refinancing Plan


P A R A G U A Y

CORPOSANA: Could Collapse By Month-End If Budget Not Raised


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A R G E N T I N A
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AEROLINEAS ARGENTINAS: Has Until July 23 To Find Solvent Buyer
--------------------------------------------------------------
If no buyer emerges by July 23, Sociedad Estatal de
Participaciones Industriales (SEPI) will liquidate its Aerolineas
Argentinas unit, according to the government and union sources,
AFX Press reported Friday. Sources close to the negotiations with
finance ministers say the deadline was set by Aerolineas
executives. Meanwhile, SEPI reportedly denied that such deadline
has been set. The report also said that the government is
considering asking the judge who would handle the possible
bankruptcy case not to liquidate the Aerolineas Argentinas
trademark so that another company would be able to operate under
its name.


AEROLINEAS ARGENTINAS: UFITCO Sues Board For Economic Subversion
-----------------------------------------------------------------
The Argentinean government's Fiscal Unit for Investigation of Tax
Crimes and Contraband (UFITCO) filed economic subversion charges
in a federal court against the members of Sociedad Espanola de
Participaciones Industriales (SEPI) unit Aerolineas Argentinas
SA, AFX-AP reported Friday. The charges are against the members
of all boards since the airline was privatized and sold to
Iberia, Lineas Aereas de Espana SA in 1990. UFITCO claims that in
the first balance sheet after the airline was privatized, the
credits taken by Iberia to purchase the airline were reported as
liabilities, with Aerolineas Argentinas aircraft as a guarantee.
UFITCO said that Iberia did not capitalize $500 million in 1994,
for which the Argentine state had resigned its golden share.

The suit also raises questions about the 70 million pesos posted
on Aerolineas Argentinas accounts as organization charges lacking
documentary support, and maintenance tasks carried out abroad
which could have been done in the airline's workshops in
Argentina. Aerolineas Argentinas has also allegedly not met its
commitment under the concession contract to buy new aircraft, and
instead sold off most of the fleet, subsequently leasing them
back. An IOU for $500 million in favor of Spain's Interinvest
also lacks backing, said UFITCO.

The filing also queries IT services provided by SEPI affiliate
Indra, because Aerolineas Argentinas transferred its know-how and
140 employees.

There is no statute of limitations for economic subversion. If
the accused board members are found guilty, they face two to nine
years in prison.

Economic subversion in Argentina statutes is a charge applicable
to those who "unduly and fraudulently sell off or reduce the
value of machinery, equipment and capital goods, or unjustifiably
commit equity". The statute also covers conduct that "affects
normal supplies of services for common use", or that "leads to
the closing, liquidation or bankruptcy of an establishment."



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B O L I V I A
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COTEL: German Firm To Take Over Admin. Control by Mid-July
----------------------------------------------------------
The administrative control of La Paz-based fixed line operator
Cotel will be taken over in mid July by Detecon, a German
telecoms consulting firm. News of the change comes from
government-appointed Cotel director Rene Bustillo in a Business
News Americas report published Friday. Detecon signed a five-year
contract in May to administrate Cotel in exchange for a
US$138,000 monthly management fee. The eight-member management
team will consist of: Jurgen Kurz, CEO; Kurt Onken, CFO; Wolfgang
Schucht, CTO; Tobias Schmitt, Marketing & Sales VP; as well as
three local executives.

Meanwhile, the Telecoms Ministry is expected to decide next week
what steps it will take following a discovery that the election
of the members to Cotel's board in May was riddled with
irregularities. A government audit has recommended that a new
election be held, Bustillo said.



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C O L O M B I A
===============

TABLEMAC: Expects A Deal With Creditors Within A Month
------------------------------------------------------
Colombian wood products group Tablemac is getting closer to a
debt-restructuring agreement with creditors and hopes to have a
definitive agreement in less than a month. But first, the company
must carry out a final and strict revision of the its financial
projections, according to a report Thursday in South American
Business Information. Tablemac has been operating under
Columbia's economic intervention law 550 for two months now. The
company has debts of 40 billion pesos with 60 creditors, 70
percent of which stem from the financial sector including groups
such as Corfinsura and Corfivalle. The wood products group had
aimed to grow through exports, however, better margins are
available at home as long as the construction sector holds up or
improves. The Tablemac deal should be ready for voting on August
11, 2001.



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

AEROMEXICO: Two U.S. Airlines Formally Express Interest
-------------------------------------------------------
The privatization of leading airline Aeromexico, which is
expected to kick off again in September, has seen the names of
several Mexican magnates mentioned as possible buyers. Included
on the short list is Grupo Casa Saba's Isaac Saba,
Reforma/Infolatina reported Friday. However, none of the suitors
have offered any clear signal yet as to their intentions with
respect to the carrier. Meanwhile, two U.S.-based airline
companies - American Airlines and Delta Airlines Inc. - have
formally expressed interest in acquiring Aeromexico. The Mexican
carrier is currently under holding company Cintra's control.


AHMSA: Lays Off Workers To Reduce Wage Costs
--------------------------------------------
Struggling to slash its overhead over the next six months, Altos
Hornos de Mexico SA (Ahmsa) dismissed 620 non-contracted workers,
and retrenched a further 120 contracted workers, according to a
report Friday in Business News Americas. A further 350 workers
accepted voluntary redundancy packages, the company disclosed. In
order to further cut wage costs, the Mexican iron and steel
company has temporarily laid off another 872 employees for a six-
month period, during which time they will continue to receive 40
percent of their normal salary. If Ahmsa's economic outlook has
not improved in six months' time, the employees will be
permanently released, informed company spokesperson Francisco
Orduna. The 872 workers were not initially fired because, should
work pick up again, they would be needed at short notice.
However, "the layoffs will not affect current production in any
way," Orduna added.

Ahmsa, which is controlled by the GAN group, has been struggling
financially for some time now, receiving a protection from
payments order from a Mexico City judge in May 1999 covering
debts totaling some US$1.85 billion.


BANCRECER: Two Spanish Financial Services Groups Visit Data-Room
----------------------------------------------------------------
Spanish financial services groups Banco Santander Central Hispano
and Sabadel have reportedly availed themselves of access to the
data-room of Mexico's government-intervened Bancrecer bank,
according to a Reforma/Infolatina report released Friday. The
dataroom at Bancrecer was first opened Monday last week for
qualified, interested parties. Additionally, Canadian-owned Grupo
Financiero Scotiabank Inverlat and Grupo Financiero Banorte have
also reviewed Bancrecer's books in the data-room. Bancrecer bank,
which is being sold off by the Mexican bank bailout agency IPAB,
is currently valued at an estimated $400 million.


FERRONALES NACIONALES: Ministry To Appoint Liquidator Soon
----------------------------------------------------------
The Mexican Communications and Transport ministry is expected to
appoint a liquidator shortly who will dispose of the assets of
Ferrocarriles Nacionales de Mexico (Ferronales), El
Economista/Infolatina reported Friday. The defunct state-owned
rail transport company ceased to operate June 4 not long after
the country's railroads were privatized in the late 1990s.
Ferronales' management will hand over administration of the
company's assets to a liquidator as soon as one is named by the
ministry.


GRUPO PULSAR: Close To Striking Deal With Creditors
---------------------------------------------------
Grupo Pulsar, which owns Mexican holding company Savia, is about
to strike a comprehensive debt-restructuring agreement with its
creditors, the company said Thursday, according to
Reforma/Infolatina.

"We don't have any problems, and I stress that we're going to pay
back everything. The only thing we need is for creditors to give
us a little time to restructure. As we did with Savia, we're
going to reach an agreement on Pulsar," said Mateo Mazal, a
senior executive Monterrey-based Savia.


STEWART ENTERPRISES: Announces Completion Of Refinancing Plan
-------------------------------------------------------------
Stewart Enterprises, Inc. (Nasdaq NMS: STEI) announced today that
it has completed its previously announced plan to refinance
substantially all of its long-term debt.

Under the plan, the Company has entered into a new $550 million
senior secured credit facility and has privately placed $300
million of 10-3/4% senior subordinated notes due 2008. The new
senior secured credit facility consists of a $175 million four-
year revolving credit facility, a $75 million 18-month asset sale
term loan and a $300 million five-year term loan B.

Proceeds from borrowings under the new credit facility and from
the issuance of the notes, along with cash on hand, have been
used to repay and terminate the Company's revolving credit
facility ($442 million outstanding as of June 29, 2001), redeem
all of its privately held senior notes ($64.8 million outstanding
as of June 29, 2001), complete its tender offer for $200 million
of its publicly held debt and pay related tender premiums,
prepayment penalties, fees and expenses.

The Company completed its tender offer by accepting for purchase
$99.9 million principal amount of its 6.70% notes due 2003,
representing all of the 6.70% notes tendered, and $100.1 million
principal amount of its 6.40% Remarketable or Redeemable
Securities (ROARS) due May 1, 2013 (Remarketing Date May 1,
2003), representing approximately 50.3% of the ROARS tendered.
The tender offer expired at 5:00 p.m. New York City time on June
28, 2001. Cash payments to the tendering noteholders will
commence promptly.

The Company will continue to have outstanding $100,000 principal
amount of 6.70% notes and approximately $99.9 million principal
amount of ROARS, all of which will be secured equally and ratably
with the new senior secured credit facility. The Company will
also continue to have outstanding approximately $25 million in
loans related to previously acquired businesses.

William E. Rowe, President and Chief Executive Officer, stated,
"We are pleased to have completed these transactions, allowing us
to extend our debt maturities and fully address our liquidity
issues. We can now focus all of our time on our solid operating
performance. We anticipate that the approximately $70 million in
pre-tax net proceeds from the pending sale of our operations in
Mexico, scheduled to close around July 31, 2001, will allow us to
substantially reduce the balance of our new asset sale term loan
in the near future. Our plan to sell the remainder of our foreign
operations should yield significant additional cash to reduce
debt. We believe that our new capital structure will provide us
with a firm foundation from which we will continue to improve and
expand our operations internally, strengthen our financial
performance and increase shareholder value."

Founded in 1910, Stewart Enterprises is the third largest
provider of products and services in the death care industry in
the United States, currently owning and operating 612 funeral
homes and 161 cemeteries in North America, South America, Europe
and the Pacific Rim.

Previously, the company indicated it was exploring numerous
options for resolving its financial difficulties. With the debt
restructuring now in place, the likelyhood of divesting its South
American properties appears diminished.


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P A R A G U A Y
===============

CORPOSANA: Could Collapse By Month-End If Budget Not Raised
-----------------------------------------------------------
Gabriel Gonzalez, Corposana's government-appointed auditor,
revealed that the Paraguayan state water company accumulated some
US$3.5 million in losses in the first quarter of this year.
Gonzales says its biggest problems is its US$500,000 monthly
financial deficit, Business News Americas reported Friday.
According to the auditor, Corposana's 1,700-strong workforce is
bloated and only 180,000 of its 250,000 serviced customers in
capital Asuncion are actually charged for services. Gonzalez,
earlier this month, predicted that Corposana could collapse by
month-end if its budget was not increased by some US$34 million
to cover salaries and purchases of chemical products, such as
chlorine, used in the water treatment process.




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
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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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