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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, July 13, 2001, Vol. 2, Issue 136

                           Headlines



A R G E N T I N A

AEROLINEAS ARGENTINAS: AeroContinente Offers $100M To SEPI
AEROLINEAS ARGENTINAS: A Step Closer To Shutting Down Operations
AEROLINEAS ARGENTINAS: Marsans Chairman Urges Change In Stance
EL SITIO: Wolf Haldenstein, et al Commences Class Action Suit


B R A Z I L

CESP: Sao Paulo Govt. To Restart Privatization After Crisis
CVRD: Seeks To Diversify To Non-Ferrous Materials
INDUSTRIAS KLABIN: On The Lookout For A Partner In New Project


C H I L E

TELEFONICA CTC: Loses Battle To Ease Rate Structure


G U Y A N A

GA 2000: Stranded Passengers Have To Buy Another Way Home


M E X I C O

BANCRECER: Sabadell Won't Bid In Forthcoming Auction
GRUPO TELEVISA: EsMas.com Acquires Submarino.com-Mexico
GRUPO TELEVISA: CFC Powerless To Disallow UHF License Issue


T R I N I D A D   &   T O B A G O

CARONI LTD: Committee Recommends Closure



     - - - - - - - - - -


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A R G E N T I N A
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AEROLINEAS ARGENTINAS: AeroContinente Offers $100M To SEPI
----------------------------------------------------------
Peru's leading airline AeroContinente sent two letters to Spanish
state holding company SEPI offering to pay $100 million for
Spain's stake in the troubled airline Aerolineas Argentinas SA,
Bloomberg reported Wednesday.

According to Carlos Morales, AeroContinente's executive director,
the Peruvian airline would make the payment over 10 years without
interest, and would supply the airplanes needed to maintain
Aerolineas Argentinas' domestic and international flights.

"The labor problem is the first thing that needs to be taken into
account and we would work with the unions," said Morales.
AeroContinente wouldn't fire any of Aerolineas Argentinas' 7,000
employees, he added.

Closely held AeroContinente is vying to become a major regional
carrier. It expects to have 73 percent of the Peruvian market and
as much as 35 percent of the Chilean market by year's end.


AEROLINEAS ARGENTINAS: A Step Closer To Shutting Down Operations
----------------------------------------------------------------
Following SEPI's decision to put Aerolineas Argentinas under
court protection from its creditors, the ailing flagship carrier
is now a step closer to shutting down operations entirely,
Airline Business news revealed Wednesday. SEPI decided to seek
legal precautions for Aerolineas against its creditors after the
Argentine Government gave the troubled carrier an ultimatum
either to resume flying suspended overseas routes or see them go
to rivals. The move was attributed to SEPI's unwillingness to
continue paying operating costs without protection against
bankruptcy, warning that it could mean "the end of the terminal
phase" for the airline.

Court protection gives SEPI one last chance to renegotiate the
airline's debts. The move also means the suspension of labor
agreements under local laws, which could spark more union
protests. Aerolineas have already disrupted airport operations
and caused some foreign carriers to suspend flights.


AEROLINEAS ARGENTINAS: Marsans Chairman Urges Change In Stance
--------------------------------------------------------------
Gonzalo Pascual, chairman of Spanish tour operator Viajes Marsans
and airline Spanair, urged state industrial holding company SEPI
and Aerolineas Argentinas to make a radical change in their
stances before his group could show firm interest in acquiring
the Argentine carrier, El Mundo Spain said Wednesday in a report.
According to Pascual, Marsans had not expressed an interest in
the deal, rather Air Plus Argentina, its affiliate, had raised
the possibility of coming to the negotiating table for the
acquisition of the Aerolineas. Air Plus Argentina is the
country's leading private international air transport company.


EL SITIO: Wolf Haldenstein, et al Commences Class Action Suit
-------------------------------------------------------------
Wolf Haldenstein Adler Freeman & Herz LLP has filed a class
action lawsuit in the United States District Court for the
Southern District of New York, on behalf of purchasers of El
Sitio, Inc. ("El Sitio" or the "Company'') (Nasdaq: LCTO) between
December 9, 1999 and December 6, 2000, inclusive, against
defendants El Sitio, certain of its officers and directors, and
its underwriters.

The complaint alleges that defendants violated the federal
securities laws by issuing and selling El Sitio common stock
pursuant to the December 9, 1999 IPO without disclosing to
investors that some of the underwriters in the offering,
including the lead underwriters, had solicited and received
excessive and undisclosed commissions from certain investors.

Specifically, the complaint alleges that in exchange for the
excessive commissions, defendants allocated El Sitio shares to
customers at the IPO price. To receive the allocations (i.e., the
ability to purchase shares) at the IPO price, the underwriters'
brokerage customers had to agree to purchase additional shares in
the aftermarket at progressively higher prices. The requirement
that customers make additional purchases at progressively higher
prices as the price of El Sitio stock rocketed upward (a practice
known on Wall Street as "laddering") was intended to (and did)
drive El Sitio's share price up to artificially high levels. This
artificial price inflation enabled both the underwriters and
their customers to reap enormous profits by buying stock at the
IPO price and then selling it later for a profit at inflated
aftermarket prices.

El Sitio, Inc. is an Internet network providing country-specific
and regional content for Spanish and Portuguese-speaking
audiences in Latin America and the United States. For the three
months ended 3/31/01, net revenues fell 20% to $4.5 million. Net
loss applicable to Common rose 6% to $21.5 million. Results
reflect softness in advertising demand due to regional economic
conditions, partially offset by lower marketing and corporate
expenses.


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B R A Z I L
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CESP: Sao Paulo Govt. To Restart Privatization After Crisis
-----------------------------------------------------------
Privatization efforst for the generator Cesp Parana will be
renewed again only when the present electricity crisis is under
control, according to a source from Brazil's Sao Paulo state
government revealed in a Business News Americas report released
Wednesday.

"The Cesp sale was suspended before rationing was introduced
because of the situation in the electricity sector, and will only
be restarted when the crisis is over," the source said.

"We can say there is nothing official and nothing new with
regards the privatization of Cesp, not even an official decision
to put off the sale until next year or reaffirm it will go ahead
this semester, as this depends on the crisis being overcome,
which in turn depends on the weather," the source said.

"But as it is very unlikely the rains normalize the water level
in the reservoirs this semester ... it's fairly safe to say the
Cesp auction will be put off until next year," the source added.


CVRD: Seeks To Diversify To Non-Ferrous Materials
-------------------------------------------------
Brazilian iron mining major CVRD is looking to diversify to non-
ferrous minerals, a business it believes has potential for
growth, South American Business Information reported Wednesday.
Non-ferrous activities generated US$132 million in turnover for
CVRD last year, excluding operations in gold and aluminum, only
2.5 percent of its overall US$5.3-billion turnover, 46 percent of
which from iron minerals. CVRD is seeking opportunities in copper
and has 11 projects underway. Five of its current projects are in
an advanced stage, namely, Sossego, Cristalino, Alemao, Salobo,
and Alvo, all of them in Carajas, Para state. Other opportunities
are sought in nickel, as it located reserves of 200 million m
tons of ores in Vermelho, Para state, with 1 percent nickel
concentration; zinc is also considered as it identified 5 million
m tons reserves in Minas Gerais state.


INDUSTRIAS KLABIN: On The Lookout For A Partner In New Project
--------------------------------------------------------------
The paper and cellulose production at Industrias Klabin de Papel
e Celulose SA, Latin America's largest pulp and paper company,
plans to expand and diversify business, South American Business
Information reported Wednesday. Part its plan is to create a new
business unit in processed wood products, such as doors and door
parts, for which it needs a partner either in the US or Europe.

Klabin recently attempted to negotiate a partnership with Boise
Cascade but talks fell through. The processed wood project
requires investments amounting to US$50 million to generate
between US$100 million to US$120 million in revenues. The company
has secured wood raw materials from the forestry unit at Telemaco
Borba, at Parana state with 1million m3 of idle capacity.

Klabin registered losses of R$79.5 million in the first quarter
of this year, hindered by the devaluation of the Brazilian Real
currency. It expects to post another round of losses, between
R$50 million to R$70 million, in the second quarter as the
devaluation continues.



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C H I L E
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TELEFONICA CTC: Loses Battle To Ease Rate Structure
---------------------------------------------------
Telefonica CTC Chile's attempts to persuade the government to
liberalize calling rates recently fell apart. The Chilean
antitrust commission ruled that the country lacks sufficient
telecommunications competition to let the telephone company set
its own fees for local calls and access to its network, Bloomberg
reported Wednesday.

The company "asked to liberalize the rate structure, and that
didn't happen," said Ramon Briones, a lawyer for Telefonica CTC,
a division of Telefonica SA of Spain.

The ruling is a setback for Telefonica CTC, which blames
government-imposed rate reductions for losses in six of the past
seven quarters. Chile put in place a five-year plan to reduce the
company's rates in May 1999.

Telefonica CTC Chile will probably have to wait until 2004, when
the current rate regime ends, for the government to allow the
company to set its own prices, said Maria Teresa Ibanez, an
analyst at the brokerage arm of Banco Santiago SA.

By that time, Empresa Nacional de Telecomunicaciones SA and other
rivals will have eroded the market share of Telefonica CTC. Even
so, the commission may consider giving Telefonica CTC more power
to offer bulk rates to customers that make many phone calls,
Ibanez said.



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G U Y A N A
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GA 2000: Stranded Passengers Have To Buy Another Way Home
---------------------------------------------------------
Local carrier GA 2000, which suspended flights last month, has
some bad news for its passengers. The company says it is so cash-
strapped, that travelers who have booked return flights with the
airline will have to find the money to travel back home on other
airlines, according to a report in the Guyana Chronicle published
Wednesday.

GA 2000 late last month admitted in a statement it lacks
sufficient financial resources at its disposal to respond to
claims from passengers seeking to recover travel cost incurred
resulting from the suspension of the airline's operations.
According to the troubled local airline, it had approached the
Government for assistance for those passengers.

"The airline has approached the government, as a major
shareholder of the company, with a proposal for the government to
provide relief to these passengers in the circumstances of the
company's position", the statement added.

However, an official at the Office of the President said Tuesday
there seems to be some doubt whether a proposal was made. As a
result, nothing concerning this proposal was under consideration.



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

BANCRECER: Sabadell Won't Bid In Forthcoming Auction
----------------------------------------------------
Not only has Netherlands-owned ING bowed out as one of the formal
bidders for government-intervened Mexican bank Bancrecer, but now
the Spanish banking institution Sabadell is out too, Mexico City
daily Reforma revealed Wednesday. Sabadell was reported to have
an interest in boosting its presence in Mexico by acquiring
Bancrecer, which has a nationwide network of 800 branches and an
estimated book value of $400 million. However, unidentified
sources at Sabadell, Spain's fourth-largest bank, denied these
reports saying the institution doesn't have plans to bid for
Bancrecer.

Sabadell for several years has owned a 10-percent stake in Banco
Bajio, a small Mexican banking institution with 40 branches in
the country's central region.

Apparetnly, the only bidders for Bancrecer will be Grupo
Financiero Banorte, which owns Mexico's fifth-largest bank, and
Canadian-owned Grupo Financiero Scotiabank Inverlat.


GRUPO TELEVISA: EsMas.com Acquires Submarino.com-Mexico
-------------------------------------------------------
Grupo Televisa, S.A. (NYSE: TV) (BMV: TLEVISA CPO) announced
Wednesday that EsMas.com, the Mexican based content Internet
portal owned by the Company, has purchased Submarino.com-Mexico,
the leading Mexican E-shopping site.

Submarino.com-Mexico has one of Mexico's most extensive online
shopping catalogues that features a wide selection of CDs, DVDs,
books, toys and other electronic goods. Since November of 2000,
Submarino.com-Mexico has been operating in the EsMas.com vertical
shopping channel, where operations extend to the sale of
exclusive Televisa products, such as merchandise related to the
Company's renowned soap operas and special events. During the
seven-month alliance, Submarino.com-Mexico has emerged as a
leader in the Mexican E- commerce market.

Submarino.com-Mexico's strong E-commerce presence complements
EsMas.com's business strategy and reinforces its commitment to
providing the best online experience possible. Under Esmas.com,
Submarino.com-Mexico will continue to operate the same lines of
business with the same strategic partners and that have
positioned it as Mexico's E-commerce leader.

The funds to purchase Submarino.com-Mexico will be provided
directly from earnings generated since the outset of the portal.
Televisa will not be supplying additional funds to EsMas.com for
this purchase.

Launched just over a year ago, EsMas.com is now one of Mexico's
top four Spanish language internet portals and boasts more than
600,000 registered users and a daily average of 250,000 unique
visitors.


GRUPO TELEVISA: CFC Powerless To Disallow UHF License Issue
-----------------------------------------------------------
Despite its belief that Grupo Televisa's expansion in the Mexican
media industry needs to be curtailed, Mexican antitrust agency,
the Federal Competition Commission (CFC), was powerless to
disallow the country's Communications and Transport ministry from
issuing UHF television licenses to the media giant, Mexico City
daily Reforma revealed Wednesday. The ministry, late last year,
issued licenses to Cablevision, in which Televisa owns a 51-
percent stake, to operate UHF channels 46 and 52. According to
CFC sources, the ministry's decision to issue the licenses was
made before the agency could issue a ruling on the matter.



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T R I N I D A D   &   T O B A G O
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CARONI LTD: Committee Recommends Closure
----------------------------------------
The Trinidad and Tobago government should send home the employees
of the bankrupt state-owned sugar company Caroni (1975) Limited
by October and must shut down operations. The recommendation to
cease wind up the company comes from a cabinet-appointed
committee, Caribbean News Agency revealed in an article
Wednesday. The closure is expected to cause a dislocation to some
6,000 cane farmers, who supply sugar cane to Caroni and another
3,000 who perform various other related jobs. The committee made
its recommendation to Enterprise Development Minister Mervyn
Assam.



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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