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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

            Thursday, July 19, 2001, Vol. 2, Issue 140

                           Headlines




A R G E N T I N A

AEROLINEAS ARGENTINAS: Court Grants Protection From Creditors
AEROLINEAS ARGENTINAS: SEPI May Delay Filing Official Bankruptcy


B R A Z I L

CVRD: Pension Funds Schedule Another Meeting For Late July
TRANSBRASIL: Financial Woes Could Harm Co-Share With Varig
TRANSBRASIL: GE Has 10 Days To Re-File Bankruptcy Petition


C H I L E

EDELNOR: Mirant Still Studying Electroandina's Offer
MERCANTIL.COM: Implements Deep Restructuring


M E X I C O

BANCRECER: No Conflict Perceived In IPAB's Interest
FNM: Liquidation Yields Successful Results
SAVIA: Selling Assets For To Cover Debt Payment Reserves


P A R A G U A Y

ANTELCO: Economy Ministry Approves US$21M "Labor Liability" Loan


V E N E Z U E L A

AVENSA: Suspends Miami Flights Indefinitely




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

AEROLINEAS ARGENTINAS: Court Grants Protection From Creditors
-------------------------------------------------------------
Argentina's troubled flagship airline, Aerolineas Argentinas,
learned Monday that Judge Beatriz Dinoto has granted its request
for court protection from creditors. The temporary order came
after the company complied with a series of legal requisites, EFE
News Service said in a report. Creditors have until Nov. 6 to
verify their debts with company.

Now, the court must appoint an auditor to conduct a thorough
analysis of the corporation's assets and liabilities.
Negotiations with creditors will be based on the evaluation.

Meanwhile, the airline is losing some $30 million monthly and is
more than $900 million in debt. Shareholders are scheduled to
meet July 23 in Buenos Aires to decide whether to ratify the
board of directors' decision to seek protection from creditors or
to liquidate the company or continue trying to find a buyer.

Judge Dinoto's order will not go into effect without the
shareholders' authorization. The shareholders of Aerolineas'
domestic-route subsidiary, Austral airline, will vote on the
matter July 24.


AEROLINEAS ARGENTINAS: SEPI May Delay Filing Official Bankruptcy
----------------------------------------------------------------
Sociedad Estatal de Participaciones Industriales SA (SEPI) may
postpone the filing of a bankruptcy statement for its Aerolineas
Argentinas unit in order to pave the way for its sale. Details of
its 11th- hour strategy come from the state holding company and
other sources close to the operation according to an AFX Europe
report Tuesday.

SEPI may attempt to delay the original official date of July 23
for the bankruptcy filing to facilitate continuing the sale
process now that Aerolineas has sparked the interest of various
companies. SEPI's decision to keep the company afloat, even if it
went into liquidation, would still prove costly in the meantime.  


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

CVRD: Pension Funds Schedule Another Meeting For Late July
----------------------------------------------------------
The pension funds Previ (Banco do Brasil), Petros (Petrobras),
Funcef (Caixa Economica Federal) and Funcesp (Cesp) have
scheduled a new meeting to be held in late July of this year,
Valor Economico reported Monday. The move came after the pension
funds failed to strike an agreement regarding the exercise of
their first refuse rights on the acquisition of the shares of
Companhia Vale do Rio Doce (CVRD) in Valepar, via Litel.
According to the report, Previ holds 70 percent of Litel,
followed by Funcep and Funcesp with 30 percent.


TRANSBRASIL: Financial Woes Could Harm Co-Share With Varig
----------------------------------------------------------
Air transportation company Transbrasil's financial woes could put
its co-share operation with Varig at risk, Gazeta Mercantil
reported Monday. Just recently, Transbrasil was forced to reduce
its fleet by 30 percent and specialists said it would likely be
forced to cut even more. Pegasus will take back its Boeing 767-
300 used in the Brazil - Lisboa (Portugal) route. Transbrasil
posted R$37 million in losses between January and June this year,
compared to R$32.7 million in the same period last year.
Moreover, GE Capital is pursuing an involuntary bankruptcy
proceeding due to debts of US$2 million in leasing contracts.


TRANSBRASIL: GE Has 10 Days To Re-File Bankruptcy Petition
----------------------------------------------------------
GE Capital needs to re-file its bankruptcy petition against
Brazilian airline Transbrasil within a ten-day deadline. The new
timetable was ordered by Sao Paulo civil court judge Cintia Adas,
Gazeta Mercantil reported Tuesday. The mandatory re-filing is due
to a judicial action that the airline has been pressing against
GE since February, contesting values relating to leasing
contracts for six aircraft returned by it last year. The action
is under consideration by another Sao Paulo civil court.

"Technically, GE could not have petitioned for the company to be
declared bankrupt because it is the defendant in another suit,
involving the same debt, " said Transbrasil attorney
Gianfrancesco Genoso. According to Genoso, if the petition for
bankruptcy is denied, Transbrasil will have the right to ask the
court for moral damages.



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

EDELNOR: Mirant Still Studying Electroandina's Offer
----------------------------------------------------
Mirant Chile has so far invested US$650 million in Empresa
Electrica del Norte Grande S.A. (Edelnor), the power company in
which it holds an 82.3-percent stake, South American Business
Information reported Tuesday. But Edelnor has not provided
satisfactory results, thus, driving Mirant to analyze a possible
sale. Electroandina, which is controlled by Codelco and
Tractebel, recently presented an offer for all of Edelnor's $340
million of outstanding bonds at a price of $0.325 on the dollar.
Mirant continues to analyze Electroandina's offer, but is also
negotiating with other companies.


MERCANTIL.COM: Implements Deep Restructuring
--------------------------------------------
After it was rumored to be closed down, the Latin American e-
business portal Mercantil.com (www.mercantil.com) started to
implement a deep restructuring, according to a report July 10 in
El Diario. Restructuring will lead to a sell-off of some if its
operations and assets.

Just like many other companies operating in the same sector of
Internet and technology, Mercantil.com is affected by market
conditions and difficulties in making new investments. According
to market sources, the portal has not been able to show whether
or not its concept is profitable.

In February, the portal secured a US$2.1-million investment round
from US-based VC fund Banc Boston Capital (US$1.5 million) and
Chilean investment group Sigdo Koppers (US$600,000). At the time,
CEO Jaime Vargas said the cash would go to three main areas:
financing regional operations this year, developing new products
and consolidation of existing services.

The Santiago-based online community for small-and mid-sized
enterprises recently closed one of its two offices in Chile and
reduced its workforce in the country by a third.


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M E X I C O
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BANCRECER: No Conflict Perceived In IPAB's Interest
---------------------------------------------------
Sector specialists affirmed that Bank Savings Protection
Institute's (IPAB's) interest in both government-intervened
Bancrecer and Grupo Financiero Scotiabank Inverlat doesn't
represent a conflict of interest. As such, the relationship would
not pose as a problem to Grupo Financiero Banorte SA's and
Inverlat's participation in the forthcoming auction of Bancrecer,
Mexico City daily Reforma said Tuesday. IPAB reportedly has a 36-
percent interest in Inverlat, 55 percent of which is controlled
by Scotiabank.

IPAB needs to do away with its holdings before 2004; the
remaining 9 percent must be sold to eligible small investors. The
agency continues to hold 5.91 percent of Banorte, the country's
fourth-largest bank, after exchanging 19 percent of shares in
Banpais for its interest in Banorte.

Inverlat, and Banorte both filed requests to continue their
participation in the arduous bidding process for Bancrecer.

According to IPAB, Scotiabank must deposit US$15 million in 10
business days to cement its interest in Mexico City-based
Bancrecer. Scotiabank would not comment on Bancrecer specifically
or whether it would follow through with the required deposit and
an actual bid. Scotiabank can still walk away from the bidding
process at any time.

"We will not speculate or comment on possible acquisitions but we
are interested in growing out Mexican market share through both
organic growth of Scotiabank Inverlat and through possible
acquisitions," said Pamela Agnew, a spokeswoman. "We will look at
all opportunities in the marketplace. We're committed to Mexico
and we recognize it is a high-growth, high-potential market."

Bidders must provide a detailed proposal along with their offers
for Bancrecer by mid-September, but that deadline is flexible,
regulators said. The IPAB is expected to announce the winning bid
in October.

Bancrecer, once the country's sixth-largest bank, never regained
its footing after the peso crisis in 1994. The bank was seized by
IPAB in November, 1999.


FNM: Liquidation Yields Successful Results
------------------------------------------
Ramiro Sosa, former director of the now defunct National Railroad
Company (FNM), revealed that Mexico's six railroad
concessionaires have invested a combined US$500 million in the
last five years, and this investment could double over the next
five, Business News Americas reported Monday.

"The liquidation of FNM has a successful implication: the
completion of a privatization process that allowed to rescue the
industry from very low productivity and quality levels to what
now is totally the contrary; a competitive, efficient, and safe
service," Sosa said.

Most of the investments went to the establishment of terminals
for distributing cargo via train and truck, he added.

Transportacion Ferroviaria Mexicana (TFM), which won a concession
in 1997 to operate the northeast railroads has invested US$49.7
million. TFM's holding company, TMM, is due to buy up the
government's remaining shares in the northeast railroads for
US$249mn in 3Q01.

Meanwhile, Southern railroad operator Ferrocarril Chiapas-Mayab
has also invested US$50 million from a World Bank credit and will
invest an additional US$10 million from 2001-2002.

Central Mexico's Ferrocarril del Valle de Mexico (Ferrovalle), on
the other hand, will invest US$1.6 million in infrastructure,
US$1 million in telecommunications over the next two years and
US$2.1-2.7 million in a new terminal in Pantaco from 2001-2002.


SAVIA: Selling Assets For To Cover Debt Payment Reserves
--------------------------------------------------------
Monterrey-based Savia plans to generate reserves of US$41 million
to pay off debts, cover other costs and finance ongoing
operations, Mexican financial daily El Economista revealed
Monday. The company will be selling off certain assets in order
to raise the money. At the end of July 2001, Savia will owe (in
direct debt) roughly US$86 million. The debt is guaranteed by
preferential capital in subsidiary Seminis and matures at the end
of October 2002 (with a one-off interest payment due at the end
of July 2002). The company's plan is to cancel US$35 million in
2001.



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

ANTELCO: Economy Ministry Approves US$21M "Labor Liability" Loan
----------------------------------------------------------------
Reform minister Juan Ernesto Villamayor related that Paraguay's
Economy Ministry has approved a US$21-million loan to help state-
run telco Antelco pay off its "labor liability," Business News
Americas reported Tuesday. Following the intervention of the
National Reform Agency (SNRE), several positive financial
developments have evolved at Antelco. However, despite the
forward progress, its labor liability of US$52 million must be
eradicated before the company goes into the hands of a private
investor.

The SNRE offered 1,300 Antelco workers voluntary redundancy
packages of 1.5 basic salaries each for a total payment of
US$11.2 million. Antelco is expected to cover that amount plus
US$20 million in labor liabilities, while the government will put
up the remaining US$21 million. However, details on exactly how
the financing would work were not available from the Economy
Ministry staff.



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

AVENSA: Suspends Miami Flights Indefinitely
-------------------------------------------
An Aerovias Venezolanas SA (Avensa) saleswoman in Miami revealed
that the airline suspended seven daily round-trip flights between
Venezuela and Miami while it negotiates an agreement with Miami
International Airport over a $1.3-million overdue airport fees it
has accumulated, Bloomberg reported Tuesday. The indefinite
suspension has raised fears that the carrier's planes could be
repossessed.

"I am very much afraid that this could be the end of another
historic airline," said Robert Booth, chairman of Miami-based
consultant Aviation Management Services.

Avensa, which is partially owned by the Venezuelan government and
H.L. Boulton Cia., may face bankruptcy this year if it fails to
settle a total of $35 million in debt. Two recent attempts to woo
investors have failed, and a Venezuelan government commission
last year ruled against a cash-bailout of the company.

Avensa may have halted its flights to Miami on concern a creditor
might repossess one of the Boeing DC-10 planes its uses to
service the route. The company is also being sued in a Miami
court for payment of an outstanding jet fuel bill with BP Plc.




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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