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                   L A T I N   A M E R I C A

            Wednesday, July 25, 2001, Vol. 2, Issue 144

                           Headlines



A R G E N T I N A

AEROLINEAS ARGENTINAS: Board Delaying Liquidation To Study Bids
LAPA: To Launch New Image In September This Year


B R A Z I L

BANCO ECONOMICO: Central Bank To Auction Copene Stake Wednesday
VARIG: Looks At Another Year Of Loss


C O L O M B I A

HORNASA: Moving Forward On Alliance Talks With Acerias


E C U A D O R

FILANBANCO: Ecuadorian Private Banks Agree To Assume Deposits


G U Y A N A

GA 2000: Requests Extension On Operations Ultimatum


M E X I C O

BANCRECER: Accepts Dresdner's $93M Offer For 47.5% Afore Stake
CINTRA: PRI To Create Committee To Monitor Privatization
COPAMEX: In Talks Over Packaging Division Sale
VITRO: FEMSA Complains Of Stiff Competition To Bolsa


P A R A G U A Y

BANCOPLUS: Central Bank Opts For Out-Of-Court Liquidation


V E N E Z U E L A

AVENSA: Recommences Flights To Miami After A 6-Day Stoppage


     - - - - - - - - - - -


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

AEROLINEAS ARGENTINAS: Board Delaying Liquidation To Study Bids
---------------------------------------------------------------
The board of Aerolineas Argentinas is extending the deadline for
a final decision on the future of the Argentine flag carrier, El
Mundo reported Sunday. SEPI, the Spanish state industrial holding
company which holds most of the equity, had initially planned to
define Aerolineas' future at its shareholders' meeting on Monday.
However, management wants to examine the seven offers, which have
been made for the company before deciding whether to file for
bankruptcy or sell.

SEPI earlier announced it has received a total of seven offers
for the airline, though only three have been made public. The
state holding company will hold talks with the candidates that
have made firm offers in the next few days. Under any scenario,
SEPI has made it clear that it will neither assume the airline's
accumulated debt of Pta190bn nor contribute more money to
conclude the transfer of ownership.


LAPA: To Launch New Image In September This Year
------------------------------------------------
Argentine airline LAPA (Lineas Aereas Privadas Argentinas) is
making over its image including a name change to ARG (Argentina
Lineas Aereas). The revamp will include new color graphics for
its aircraft and new uniforms for its crew, South American
Business Information reported Monday. A group of designers from
consulting agency Stein, under the supervision of the airline's
30-percent owner Eduardo Eurnekian, President Emilio Noseda, and
CEO Victor Pedace, have approved the company's new image. The
results will be launched in September this year. The group led by
Eduardo Eurnekian, in partnership with several local investors
and the insurance group AIG, has been restructuring the company's
management since it acquired 100 percent of the airline's shares.



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

BANCO ECONOMICO: Central Bank To Auction Copene Stake Wednesday
---------------------------------------------------------------
Brazil's central bank on Wednesday puts up for sale its stake in
South America's No. 1 basic petrochemicals plant, Petroquimica do
Nordeste SA Copene, for at least 785 million reais ($326
million), Bloomberg reported Monday. The forthcoming sale is the
third time in eight months the central bank has tried to sell its
Copene stake, inherited in 1995 in a takeover of failed Banco
Economico SA.

However, analysts foresee some legal challenges which could
possibly delay the auction. Odebrecht jointly owns Conepar with
the central bank. Conepar is the holding company for the
government's Copene shares. Under the auction rules, Odebrecht
loses its preferential rights to buy the central bank's shares.
As such, Odebrecht is opposed to the rules, analysts said.

Analysts went on to say Ultra is also opposed to the auction
format, which would force it to extend an offer for all of
Odebrecht's and Mariani's Copene shares should it win. Analysts
predicted that the total offer could amount to 1.59 billion reais
for Ultra.

"If this auction actually happens Wednesday I'd be a little
surprised," said Carlos Eduardo Bianco Albano, an analyst with
Uniao de Bancos Brasileiros SA in Sao Paulo. "Legal injunctions
brought by either company could put this off or cancel it."


VARIG: Looks At Another Year Of Loss
------------------------------------
Brazil's Varig, the region's largest and one of its oldest
airlines, is likely to lose money again this year in the light of
the country's economic slowdown, the Financial Times reported
Monday. Such a result would bring the total number of profitable
years out of the last ten to a dissapointing: one.

Judging by its on-time departures, in-flight service and safety
record, Varig's operations are mostly in order. However, its
finances apparently are not. Financial trouble is mainly rooted
in debt of almost $1.3 billion. Last year, expenditures turned a
positive EBITDA of R$328 million (US$166.5m) into a net loss of
R$178 million. In the first quarter of this year, the net loss
rose to R$196 million.

Unable to pay US$300m of debt coming due this year, Varig needs
to refinance $200 million, says Manuel Guedes, head of investor
relations. Next year, he insists, the situation will improve as
debt amortization falls to only R$255 million.

"We want to lengthen the profile of our debt. We have the ability
to pay, but not in the short-term," he says.

Accroding to company sources, Varig's financial troubles are in
part attributable to economic volatility and unfavorable
government policies. Interest rates, fuel costs, and taxes are
considerably higher than those of its international competitors,
and airfares have been government-fixed.



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

HORNASA: Moving Forward On Alliance Talks With Acerias
-----------------------------------------------------
Ricardo Prada, manager of Colombian steel company Hornos
Nacionales S.A. (Hornasa), says his company is forging ahead on
talks with Sogamoso neighbor Acerias Paz del Rio with a view to
forming a marketing alliance, Business News Americas related
Monday.

"We are analyzing the possibility of expanding our markets and we
have some contacts with Ecuador and Venezuela," said Prada.

Hornasa, which has emerged from a crisis that brought it close to
bankruptcy, hopes to maintain its production levels while
studying opportunities in the export market. The most likely
export option is Venezuela but certain transport agreements are
needed, he said. Situated in the center of the country,
production from Hornasa's plant requires additional
transportation costs of at least US$50/t.



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E C U A D O R
=============

FILANBANCO: Ecuadorian Private Banks Agree To Assume Deposits
-------------------------------------------------------------
Ecuador's largest private banks agreed to assume all current
accounts, savings accounts and fixed term deposits of up to
$10,000 held with the now-defunct Filanbanco SA, the nation's
largest bank, in return for recoverable loans worth $216 million,
according to a report Monday in Bloomberg.

"The target of the solution was for the lowest cost to the state.
Obviously they will have some additional costs but it would have
been far more expensive to simply close the bank," said Vanessa
Britto a banking analyst with the Quito based economic
consultancy Multiplica.

Ecuador closed Filanbanco, which had had 23 percent of the
country's total banking assets, last Tuesday after its operation
became unsustainable due to growing losses and overdue loans. The
bank, which was founded in 1908, was taken over by the state in
1998 to avert its collapse. Even with government intervention,
the bank posted losses of $104.8 million last year.



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

GA 2000: Requests Extension On Operations Ultimatum
---------------------------------------------------
Guyana airline GA 2000 has asked for an extension on this
weekend's ultimatum set by the Guyana Government to come up with
an acceptable arrangement, The Guyana Chronicle reported Monday.
The company suspended operations in May after it ran into serious
financial problems and hopes to negotiate a deal to resume
operations soon. Sources earlier said that the request was under
consideration but the Government remained firm in getting a
definite early response from the airline about whether it would
shortly be able to begin flying again.

The Government is ready to open the Guyana route rights to
bidding by other companies if the airline fails to come up with a
definite plan to resume operations soon, the report said.



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

BANCRECER: Accepts Dresdner's $93M Offer For 47.5% Afore Stake
--------------------------------------------------------------
Failed Mexican bank Bancrecer said on Monday it had accepted
Dresdner Pension Fund Holdings, LLC's offer of 849.4 million
pesos ($93 million) to buy 47.5 percent of its private pension
fund Afore Bancrecer, Reuters revealed in a report. The proposed
amount, according to Bancrecer, is equivalent to 3 times its book
value.

Dresdner and local partner Allianz Mexico, a unit of German
insurer Allianz AG (ALVG), currently own 49 percent of the
Mexican pension fund manager and had preferential rights to
acquire the 47.5 percent stake. Dresdner and Allianz have also
said they will exercise an option to buy 3.5 percent of the
pension fund manager, taking their joint interest in Afore
Bancrecer to 100 percent.

Sale proceeds will be used to strengthen the balance sheet of
Bancrecer bank, which is currently in the process of being
auctioned off by the government.


CINTRA: PRI To Create Committee To Monitor Privatization
--------------------------------------------------------
Plans by the National Action Party (PAN) administration of
President Vicente Fox to break up and sell off the assets of
government-owned airline holding company Cintra must be closely-
monitored. So says Congressman Raul Cervantes, of Mexico's
opposition Institutional Revolutionary Party (PRI) in a Mexico
City daily Reforma report released Monday.

The PRI is planning to create a special supervisory committee to
take on such a task. Cervantes, secretary of the Chamber of
Deputies' Communications and Transport Committee, explained that
the committee would seek to ensure that Cintra assets are not
sold off "inefficiently" or too quickly, with the government
forced to bear subsequent costs. Cervantes said the aim of the
committee would be to ensure that the errors of past "inadequate
privatization programs" are not repeated in the case of Cintra.


COPAMEX: In Talks Over Packaging Division Sale
----------------------------------------------
Mexican No. 2 paper maker Copamex is widely believed to be in
talks over the sale of its packaging division to the country's
leading producer of paper and personal-care products, Kimberly
Clark Mexico, according to a report Monday in COMTEX. Copamex's
industrial paper and packaging division accounts for around one-
fourth of company sales.

In April, the paper maker reportedly canceled a planned $200-
million bond issue, the proceeds of which would have been used to
refinance existing company liabilities. In May, it announced the
sale of its writing- and printing-paper division, which accounted
for roughly one third of total sales.


SL INDUSTRIES: Restructuring To Cut 175 Jobs In Mexico
------------------------------------------------------
In a company press release, SL Industries, Inc. announced
Thursday that its Board of Directors recently approved a series
of business restructuring actions in its power electronics group
as a result of the prolonged downturn in the telecommunications
industry.

These actions include adjusting manufacturing capacity and
reducing personnel. The first of these actions involves a
personnel reduction of 175 employees at the Company's Condor D.C.
Power Supplies, most of them at two manufacturing plants in
Mexico.

The reduction is in addition to the reduction of approximately
400 employees announced in April. Pre-tax charges of $700,000
associated with severance costs for this most recent reduction
will be recorded in the third quarter ending September 30. The
Company expects to realize annualized pre-tax savings of
approximately $6,000,000 as a result of the personnel reductions
effected this year. Initial savings from the latest reductions
will begin during the third quarter ending September 30.


VITRO: FEMSA Complains Of Stiff Competition To Bolsa
----------------------------------------------------
Mexican industrial conglomerate Fomento Economico Mexicano
(FEMSA) sees Monterrey-based Vitro, the country's leading glass
maker, as a tough competitor, Mexico City daily Reforma said
Monday in a report. In a statement to the Mexican Stock Exchange
(BMV), FEMSA warned that glass-bottle sales at its subsidiary
FEMSA Empaques could be negatively impacted due to the
competition.

"The main domestic competitor for FEMSA Empaques in the sale of
glass bottles is Vitro, which historically has been the dominant
producer of glass in Mexico. As such, it could exercise pressure
on its competitors," the statement said.

Vitro, on other hand, is also suffering under a strong peso and
high energy costs. It is planning to lay-off workers as part of a
company-wide effort to cut costs.



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

BANCOPLUS: Central Bank Opts For Out-Of-Court Liquidation
---------------------------------------------------------
A banking regulator spokesperson disclosed that the board of
Paraguay's Central Bank has decided that intervened bank
Bancoplus will enter into an out-of-court liquidation process to
be handled by the banking regulator, Business News Americas said
Monday in a report. The Central Bank board would rather have
Bancoplus enter into an out-of-court rather than a judicial
liquidation. According to a financial analysis undertaken by the
regulator's intervention team, going the judicial route could
have taken more than two years.

Bancoplus accounted for just 1.2 percent of total loans in the
financial system and its 6,000 clients could be reimbursed
through the government's deposit guarantee, from the proceeds of
an asset sale, or both.



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

AVENSA: Recommences Flights To Miami After A 6-Day Stoppage
-----------------------------------------------------------
Venezuelan airline Avensa recommenced flights from Caracas to
Miami last Wednesday after a six-day hold-up in the Venezuelan
airline's services. The delay in services was caused by its debts
with the local airport, South American Business Information
reported Monday. Avensa will now start an advertising campaign to
get 'bums on seats' rather than have potential passengers
concerned over the bad press - a promotional tariff for the Miami
flights of US$345 will come into play. Talks between Avensa and
Aeropostal, a fellow Venezuelan airline, over a possible
commercial alliance will start up again soon too.

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.




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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