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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 24, 2001, Vol. 2, Issue 143

                           Headlines


A R G E N T I N A

AEROLINEAS ARGENTINAS: SEPI Receives Seven Offers For Its Stake
AEROLINEAS ARGENTINAS: Eurnekian Says Turnaround Slow, Difficult
AEROLINEAS ARGENTINAS: AeroContinente Bids Despite Allegations
MULTICANAL: Cancels Tender Offer To Repurchase Bonds
YMAD: Clawing Its Way Back On Track After Near Financial Ruin


B R A Z I L

CVRD: In Talks With Phelps Dodge Over Sossego Copper Startup
SUL FABRIL: Bankruptcy Process Scrutinized For Potential Fraud


C H I L E

EDELNOR: Codelco Will Not Fund Electroandina's Acquisition
TELEX-CHILE: Creditors, Shareholders Approve Asset Sale


G U Y A N A

GA 2000: Govt. Seeks Tenders For Flag Carrier Status, Routes


M E X I C O

FERROCARRILES NACIONALES: Banobras To Take Charge Of Liquidation
GAN: Authorities Order Arrest Of Two Executives
GRUPO SIDEK: Best Day Affirms Interest In Hotels
GRUPO TMM: TFM To Buy Additional Equity From Mexican Government
GRUPO TMM: Issues Statement Regarding Recent Stock Activity
SAVIA: Bionova Comments On Shareholder Litigation Outcome
SAVIA: Bionova Comments To Amex On "Going Concern" Opinion


T R I N I D A D   &   T O B A G O

TIDCO: Tourism Minister Confirms Resignation Of CEO


V E N E Z U E L A

TELSCAPE: ATSI Acquires Houston-Based Teleport Assets, Customers


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A R G E N T I N A
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AEROLINEAS ARGENTINAS: SEPI Receives Seven Offers For Its Stake
---------------------------------------------------------------
Spanish state holding company SEPI disclosed it has received
seven offers to buy its majority stake in the near-bankrupt
Argentine airline Aerolineas Argentinas, AP Worldstream reported
Friday. However, specific details and the identities of the
groups involved were not revealed. A SEPI spokesman said that the
seven offers to buy the company's 91.9 percent stake in the
airline would be discussed at a shareholders meeting Monday but a
final decision would not be made until the offers were studied in
greater detail. According to SEPI, the future of Aerolineas will
be decided this month.


AEROLINEAS ARGENTINAS: Eurnekian Says Turnaround Slow, Difficult
----------------------------------------------------------------
Argentine businessman Eduardo Eurnekian, one of seven parties
reported to have an interest in buying the cash-strapped
Aerolineas Argentinas, suggested that it would take tough
sacrifices to fix the problems caused by a decade of "horrible
management" by the Spanish government, Reuters reported Friday.
According to Eurnekian, the buyer of Aerolineas would have to
engage in a "slow, tough recovery" to bring the troubled carrier
back from the brink of bankruptcy.

"If anyone believes that, 24 hours after we take control of it,
Aerolineas Argentinas will go back to flying to all the
destinations it had before, they are living in a total fantasy
world. It's not going to happen," Eurnekian said. "The recovery
of Aerolineas will have to be orderly, slow and disciplined. If
it's accepted in those terms, then that's fine. And if not, I'm
not interested," he added.

Eurnekian said he had agreed with SEPI not to divulge the amount
he had offered for Aerolineas. He also declined to specify if his
proposal to return the carrier to profitability involved firing
employees. Eurnekian wants to reach a deal with the company's
unions first before he agrees to buy Aerolineas.

"There will have to be a labor deal before I buy it, there's no
doubt about that. If the unions aren't in agreement, nobody's
going to buy something when from the very beginning there is a
problem of conflict," Eurnekian suggested.


AEROLINEAS ARGENTINAS: AeroContinente Bids Despite Allegations
--------------------------------------------------------------
AeroContinente, one of the groups which offered to buy SEPI's
majority stake in Aerolineas Argentinas, had its operations
suspended by the Chilean legal authorities, according to a report
Thursday in Reuters. The suspension of operations, which was
ordered by Judge Juan Urrutia, came amidst allegations that the
Peruvian airline was involved in laundering money from drug
trafficking.

"The crime of money laundering is a complicated one, but we have
enough proof," Urrutia said, citing evidence presented by Chilean
public prosecutors. The judge gave few details of the accusations
and said an investigation was continuing.

Aero Continente, one of Latin America's fastest growing airlines,
called the allegations "rubbish" and vowed to press on with its
$100 million bid announced last week to buy the nearly bankrupt
Aerolineas Argentinas.

Urrutia ordered raids, dubbed "Operation Icarus," on the Peruvian
carrier Wednesday night. Chilean police seized five of the
company's aircraft, shut 15 of its offices throughout the country
and arrested four employees.

Some $37 million in financial assets were frozen and 12 other
Aero Continente employees were forbidden to leave Chile, legal
officials said.


MULTICANAL: Cancels Tender Offer To Repurchase Bonds
----------------------------------------------------
Argentina's No. 2 cable company, Multicanal SA, on Thursday
cancelled a tender offer, which began on June 29, to repurchase a
$125-million bond due in February as the company struggles to
refinance debt, Bloomberg said in a report. The offer is
reportedly contingent on selling a 4 percent stake in DirecTV
Latin America.

The company, in a statement, said that the conditions for the
bond buyback wouldn't be met "in light of the developments
affecting Argentina's economic and financial condition." The
tender offer was supposed to last until July 31.

Multicanal, which is owned by the media company Grupo Clarin SA,
also has a $164-million debt coming due in August, said
Christopher Taylor, managing director of ING Barings emerging
markets telecommunications and media research. According to
Taylor, the company has a $150-million bond with banks and
another $14-million loan that it's negotiating to refinance now.

"Everything is going to come to a head in August," said Taylor.
The company is `adamant' the effort to raise money by selling
rights to the DirecTV stake will go forward, he added.

Multicanal has an option to sell the stake to DirecTV Latin
America for $196 million in November 2003, analysts said.


YMAD: Clawing Its Way Back On Track After Near Financial Ruin
-------------------------------------------------------------
Moises Yadon, the Catamarca provincial government representative
on the board of Minera Aguas del Dionisio (YMAD), says that the
Argentine precious metals miner is slowly recovering from the
financial crisis, which threatened to bankrupt it a year ago,
Business News Americas reported Friday.

"Following the change in management we have begun to balance the
books, incorporating suggestions made by federal regulators," he
said.

The company was able to take advantage of the federal
government's plan to consolidate pre-December 1999 debts.

"That meant we had to deal with 2000 debts only, and thus acquire
operating equilibrium, leaving debts of around US$2 million
corresponding to 2000, which we are negotiating with creditors,"
Yadon said.

The company also obtained assistance from the government to pay a
month of outstanding salaries, as well as technical and economic
support from Alumbrera copper-gold mine in the province. YMAD is
still not employing new staff and is successfully promoting early
retirement among existing staff, he added. Operational changes
include processing high-grade ore in its concentrator and heap
leaching low-grade material, after a period of leach-only
operations, he added.



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

CVRD: In Talks With Phelps Dodge Over Sossego Copper Startup
------------------------------------------------------------
Officials of Companhia Vale do Rio Doce affirmed that the company
is now in talks with joint-venture partner Phelps Dodge over the
establishment of the Sossego copper mine project in northern
Brazil's Para state, Business News Americas reported Friday.
According to CEO Roger Agnelli, CVRD wants to work on the project
immediately in order to take advantage of the Amazon's dry
season.

Agnelli says that CVRD is projecting costs of US$0.40-45/lb,
including transportation, for Sossego. According to a feasibility
study completed in May, it is expected to produce 150,000tpy
copper and 123,000ozpy gold from its two deposits, Morro de
Sossego and Sequeirinho. Production is targeted to start in 2003
or 2004.

In addition, Agnelli related that CVRD is "speeding up the
process" all round to enter the copper business, which it sees as
a major growth area as it is difficult for the company to expand
in its core business, iron ore mining and pellet production. Its
previously announced target is 630,000tpy copper production for
investment of US$2.5bn.

Though CVRD plans to sell its remaining paper, pulp and steel
assets, now regarded as non-core, it is talking with other
shareholders of Belo Horizonte-based flat-steel maker Usiminas to
see where CVRD fits in the context of a reorganization taking
place.


SUL FABRIL: Bankruptcy Process Scrutinized For Potential Fraud
--------------------------------------------------------------
The bankruptcy process of mens apparel producer Sul Fabril is now
being studied by the Brazilian Santa Catarina state justice,
South American Business Information reported Friday. Several
specialists suggest that the procedings may be tainted by fraud.
Sul Fabril had R$240 million in debts in 1999 and a net worth
totalling R$50 million.



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

EDELNOR: Codelco Will Not Fund Electroandina's Acquisition
----------------------------------------------------------
Following an offer by its subsidiary Electroandina to purchase
control of power company Edelnor, Codelco said it would not
finance the proposed transaction, South American Business
Information reported Friday. Codelco's interest is to divest
assets in its non-core businesses, which is the production and
sale of copper and molybdenum.

Electroandina recently offered to pay 32.5 percent of the face
value, plus unpaid interest, on $340 million worth of loan
participation certificates issued by Edelnor in two separate
series, in 1996 and 1998.

The deal is contingent on Mirant tendering its 82 percent stake
in the company, for $1.

Analysts speculated that ElectroAndina would have to improve its
offer to debt-holders to seal the acquisition.

"Completion of the transaction as proposed remains uncertain,"
said Jason Todd, Latin American director at Fitch, the rating
agency.

However, he added: "Clearly, the proposed purchase holds the
potential to be positive for ElectroAndina."

In a related story, Endesa Chile and Enersis denied a possible
interest in Edelnor. Mirant, formerly known as Southern Electric,
is negotiating Edelnor's sale with other companies, which are
expected to submit offers more attractive than Electroandina's.


TELEX-CHILE: Creditors, Shareholders Approve Asset Sale
-------------------------------------------------------
Nearly 99.5 percent of the creditors and shareholders of Chilean
telecom holding company Telex have approved a procedure
memorandum for the sale of the company's strategic assets,
according to a report Thursday in Business News Americas. Sources
involved in the process revealed that the only creditors yet to
sign off on the deal are banks Dresdner Banque Nationale de Paris
and Sudameris. However, once they are on board, the company will
call a shareholders meeting in August to tackle the remaining
points surrounding the planned divestiture, which must be
undertaken by 2002.

Chilesat, Telex's long distance and network subsidiary, defaulted
on a US$8.9-million credit facility on April 5, and the board
decided to recommend the subsidiary's sale after creditors
refused to grant a 12-month grace period extension.



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G U Y A N A
===========

GA 2000: Govt. Seeks Tenders For Flag Carrier Status, Routes
------------------------------------------------------------
In a move to draw investment into the aviation sector, the
government will invite tenders for flag carrier status and route
rights in anticipation of GA 2000's likely downfall, Cabinet
Secretary Dr. Roger Luncheon revealed in a report in The Stabroek
News released Wednesday. According to Luncheon, the intention
"here of course is to maintain an adequate presence in the
international aviation services provided to Guyanese so that the
benefits of competition would be brought to bear on price and
other services being rendered."

President Jagdeo categorically said earlier that he would not use
taxpayers money, that could be employed to provide social
services, to bail out GA 2000. Also, he said that it was likely
that the displaced GA 2000 workers would find employment with the
airlines that replaced GA 2000.

GA 2000 suspended it operations in May and since then has been
unable to seal any strategic operational alliance with a US or
Caribbean-based airline that would allow it to resume flying. It
also announced that it was unable to refund any fares despite
announcing in June that it had "US$1 million in cash deposits
combined in a special trust in Toronto, with First Data Marketing
Services, a US credit card management service and with the
Airline Reporting Committee covering travel agencies,
specifically for the purpose of protecting passengers."



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

FERROCARRILES NACIONALES: Banobras To Take Charge Of Liquidation
----------------------------------------------------------------
The Transport and Communications Ministry (SCT) is currently in
talks with the National Works and Services Bank (Banobras) over
the possibility of the banki taking charge of liquidating about
5.33 billion pesos of the outstanding liabilities of
Ferrocarriles Nacionales de Mexico (Ferronales), COMTEX reported
Friday. The defunct state-owned rail transport company, which
ceased to operate June 4, can be fully put to rest once these
liabilities are dealt with.

The majority of the debt, about 3.08 billion pesos, is for labor
claims that are currently in progress and that Ferronales seems
likely to loose. The second largest debt is 330 million pesos for
environmental cleaning of soil contaminated by diesel spillages
in former terminals and workshops. The remaining 250 million
pesos is owed to the Mexican Social Security Institution (IMSS),
and is also currently under negotiation as well.


GAN: Authorities Order Arrest Of Two Executives
-----------------------------------------------
Mexican authorities ordered the arrests of two prominent steel
industry executives on Thursday night, according to Reuters.
President Xavier Autrey and CFO Jorge Ancira, both officers of
Grupo Acerero del Norte (GAN), were reportedly being sought on
fraud charges. GAN is the holding company for AHMSA, one of
Mexico's biggest steel companies.

A federal court earlier issued warrants for their arrests and
police had searched their homes in the northern city of Monclova.
The searches were "to comply with warrants issued by a district
judge," according to Hector Carreon of the Attorney General's
Office in the northern state of Coahulia.

Carreon said the warrants arose from an $11 million lawsuit by
Banco del Bajio against a GAN subsidiary called Agronitrogenados
over fraudulent business information.


GRUPO SIDEK: Best Day Affirms Interest In Hotels
------------------------------------------------
After learning through the media that Sidek-Situr group has put a
package of eight hotels back on the market, Best Day Real Hotels
Directo General Fernando Garcia Zalvidea said it is interested in
participating in the operation of these properties, COMTEX
reported Friday. However, according to Zalvidea, his company's
interest in operating these hotels hinges on the investors who
will ultimately acquire the hotels.

Sidek-Situr will again put a package of eight hotels up for sale,
the same hotels that Steadfast Properties and Developments Inc.
tried to purchase through its subsidiary AMX Resort Holdings at
the beginning of this year, after a court ruling rejected claims
by AMX.


GRUPO TMM: TFM To Buy Additional Equity From Mexican Government
---------------------------------------------------------------
Grupo Transportacion Maritima Mexicana, S.A. de C.V. (NYSE: TMM
and TMM/A) owner of the controlling interest in Mexico's busiest
railway, TFM, announced Wednesday that it would purchase
additional equity from the Mexican Government. TMM, the largest
Latin American multi-modal transportation and logistics company
and the board of TFM, composed of TMM and Kansas City Southern
(NYSE: KSU) representatives, are proceeding with the strategy to
acquire the Mexican government's 24.6% ownership of Grupo TFM for
approximately $170 million. The deal is facilitated by the recent
positions taken by Moody's and Standard and Poor's regarding
TFM's credit rating.

On Tuesday, Standard & Poor's affirmed its double-'B'-minus
corporate credit and senior unsecured debt ratings on TFM and
removed the ratings from CreditWatch, where they were placed on
June 15, 2001. Standard and Poor's said in its press release
yesterday, "The ratings incorporate TFM's position as the leading
provider of rail transportation service in Mexico and its success
in revenue growth, cost reductions, and improvement of operating
efficiency since 1997 ... Revenue growth has been driven by the
company's ability to increase traffic volumes in all of its
product segments. TFM has been particularly successful in the
automotive segment ... reflecting buoyant industry sales in North
America. Favorable prospects for the Mexican economy partially
offset additional risks posed by the slowdown in the U.S. economy
... Revenue growth and improved profitability have resulted in
healthier cash flow protection measures, despite a significant
debt burden."

Jose Serrano, chairman of TMM, said, "As mentioned in our first
quarter conference call, we did not expect that this transaction
would not be dilutive to our shareholders or downgrade the credit
of TFM. We anticipate the acquisition of this additional equity
in TFM will be highly accretive to both TMM's and KSU's
shareholders and will provide both partners with the additive
value of ten-percent additional cashflow for each partner. We
strongly believe TFM is a powerful franchise and plays a critical
role in the emerging Mexican economy and in the rapidly growing
trade between the United States and Mexico."


GRUPO TMM: Issues Statement Regarding Recent Stock Activity
-----------------------------------------------------------
Grupo Transportacion Maritima Mexicana, S.A. DE C.V. responded on
Friday to recent trading activity in the company's stock.

Javier Segovia, president of TMM, stated that there has been no
selling on the part of either Grupo Servia or management. TMM's
financial outlook and prospects remain strong, and this
aberration in price in no way reflects any news or information
regarding the company's performance. We believe our share price
remains undervalued, said Segovia.

The company also reminded investors that it will discuss its
second quarter results during a Webcast to be held on Tuesday,
July 24 at 11:00 a.m. Eastern Daylight Time.


SAVIA: Bionova Comments On Shareholder Litigation Outcome
---------------------------------------------------------
Bionova Holding Corporation (Amex: BVA) announced Friday that the
California Superior Court denied without prejudice Grace
Brothers, Ltd.'s motion for summary adjudication in connection
with the shareholder litigation case filed by Grace Brothers,
Ltd. against Bionova Holding Corporation and DNA Plant Technology
Corporation ("DNAP") concerning DNAP preferred stock. The court
also denied Grace Brothers, Ltd.'s request for an injunction
enjoining Bionova Holding's transfer of its fresh produce
business, and the court took no action on Grace Brothers, Ltd.'s
application for attachment of DNAP's assets. Grace Brothers, Ltd.
has refiled its motion for summary adjudication and a new hearing
date has been set for August 10. If Grace Brothers, Ltd. is
ultimately successful and is awarded a judgment in the millions
of dollars, this would have a material adverse effect on Bionova
Holding. Bionova Holding and DNAP continue to deny any wrongdoing
or liability in this matter and will continue to contest this
case vigorously.

As previously announced, Bionova Holding agreed in December 2000
to sell its fresh produce business to Savia. Bionova Holding
plans to file a proxy statement with the Securities and Exchange
Commission within the next two months.

Bionova Holding Corporation is a leading biotechnology company
focused on genomics-based trait development for plant
agriculture. Bionova Holding's goal is to deliver crop protection
and human nutrition traits through high-efficiency gene
profiling, bioinformatics, and expertise in plant biology.
Bionova Holding and its affiliates have strategic alliances and
licensing agreements with some of the world's leading
agricultural companies, value-added producers and marketers, and
biotechnology research groups. Bionova Holding Corporation is
majority owned by Mexico's Savia, S.A. de C.V. (NYSE: VAI), whose
subsidiaries include Seminis Vegetables Seeds, Inc., the largest
developer, producer and marketer of vegetable seeds in the world.


SAVIA: Bionova Comments To Amex On "Going Concern" Opinion
----------------------------------------------------------
Bionova Holding on Friday responded to a letter from the American
Stock Exchange regarding its eligibility for continued listing on
the Exchange due to the "going concern" opinion issued by the
Company's auditors in conjunction with the financial statements
for the year ended December 31, 2000. The Exchange has accepted
Bionova Holding's response and has stated that it will review
Bionova Holding's eligibility for continued listing after the
company reports its second quarter results.




=================================
T R I N I D A D   &   T O B A G O
=================================

TIDCO: Tourism Minister Confirms Resignation Of CEO
---------------------------------------------------
Tourism Minister Jearlean John confirmed that Vishnu Ramlogan has
relinquished his post as CEO at the state-owned Trinidad and
Tobago Industrial and Tourism Company (TIDCO), Caribbean Business
News Agency reported Friday. Reasons for the resignation were not
disclosed. Ramlogan's resignation, which came amidst reports of a
critical and deteriorating financial situation at TIDCO, will
make matters more difficult for the government. TIDCO did not
have so many "excellent people" so as not to feel the loss,
according to Ms. John. However, she noted that TIDCO would soon
begin advertising to find a replacement.

Ramlogan is also chairman of the Board of Directors of the First
Citizen Bank.



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

TELSCAPE: ATSI Acquires Houston-Based Teleport Assets, Customers
----------------------------------------------------------------
ATSI Communications Inc. (AMEX:AI) on Thursday announced that it
has won the bid and been granted court approval to acquire
Telscape International Inc.'s Houston-based teleport assets,
including telecommunications equipment, accounts receivable and
the related corporate customer base, which extends into Costa
Rica, El Salvador, Nicaragua, Panama and Venezuela, for a total
purchase price of approximately $125,000 (consisting of cash,
services rendered on behalf of the Telscape estate, and the
assumption of a $4,000 liability).

The assets are being sold as part of a court-supervised sale in
the bankruptcy proceedings of Telscape. The Houston operation is
expected to contribute approximately $2 million in annual
revenues to the Company, doubling current revenue levels
generated from ATSI's Central American operations. ATSI expects
to close the transaction within 30 days.

ATSI anticipates a smooth integration process and near-term
positive impact to the company's financial results, with minimal
cost and overhead associated with folding Telscape's customer
base into ATSI's existing business. The customer base consists of
private line voice and data services that are core to ATSI's
business in Central America. Telscape's customer traffic will be
shifted onto ATSI's existing satellite spectrum, allowing ATSI to
eliminate certain network costs. ATSI expects this new business
to be accretive to its earnings results, and by transferring the
new customers to ATSI's existing network, the acquired
telecommunications equipment can be re-deployed to reduce planned
capital expenditures.

Arthur L. Smith, ATSI's Chairman and CEO, stated, "This
acquisition represents a dynamic, strategic fit for ATSI, and we
are taking aggressive steps that should allow us to realize an
immediate impact from the combined synergies. Additionally,
structuring the transaction as an asset sale allows us to
eliminate the associated liabilities that challenged Telscape. It
is unfortunate that many of our peer companies have failed during
the shake up of our sector. On the other hand, these failures
create opportunities. We will continue to explore opportunities
to secure assets that are core to our strategy, make financial
sense, and allow us to eliminate potential competitors. Our
future looks strong, and every member of the ATSI team
appreciates the support of our shareholders and their confidence
that ATSI will continue to emerge as a premier telecommunications
provider serving the Latin American and U.S. corridor."

Telscape International Inc. is a U.S.-based, integrated
communications provider. The Company supplies voice, video, data
and Internet services to the Hispanic community in the United
States and in Latin America. Telscape announced on Friday, April
27, 2001, that it filed for Chapter 11 bankruptcy protection.




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