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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

            Wednesday, September 26, 2001, Vol. 2, Issue 188

                           Headlines

A R G E N T I N A

AEROLINEAS ARGENTINAS: Industry Crisis To Delay Sale Further
EL SITIO: Forms Claxson With Ibero-American Media Merger


B R A Z I L

INEPAR: To Concentrate On Electric Power Sector
TRANSBRASIL/VARIG: Meeting With Union, Addresses Current Climate


D O M I N I C A N   R E P U B L I C

DOMINICANA AIRLINES: Aeropostal To Finalize Agreement In A Month


M E X I C O

AEROMEXICO/MEXICANA: Agents' Commissions Reduced
AHMSA: Bank Negotiated Asset Sell-Off Almost Over
BANCRECER: Acquired By Banorte Bank For $175M
CINTRA: Postponing Auction Until Next Year In Wake Of Attacks
GRUPO SANTOS: Files Suit To Stop Expropriation Of Refineries
SANLUIS CORPORACION: Analysts Site Heavy Debt Ratio As Risk


V E N E Z U E L A

CORIMON: FY 1Q Losses Decline On Rising Sales, Cost-Reductions
SIVENSA: Pushing For Preventive Measures Against Possible Dumping



     - - - - - - - - - - -


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

AEROLINEAS ARGENTINAS: Industry Crisis To Delay Sale Further
------------------------------------------------------------
The general crisis that has struck airlines worldwide is likely
to delay the sale of Argentinean airline Aerolineas Argentinas,
according to a report Monday in El Mundo. Spanish state holding
company SEPI was expected to conclude the sale this week. The
airline's majority owner with almost 92 percent stake continues
to consider four offers:

- the consortium formed by the airline Air Plus and Viajes
Marsans;

- the businessman Juan Carlos Pellegrini;

- the consortium Clicknet (which includes Perscamona and Asset
Management);

- a US investment fund.

The bids presented by Air Plus/Marsans and Pellegrini are
considered to be favorites.

However, some analysts believe that the present scenario could
result in the bidders asking for the price of the airline to be
downwardly revised. The main issue in the sale is how much SEPI
is prepared to inject in the company to restructure its debts.

The airline reportedly has liabilities of $950 million against
assets of $350 million. Local newspapers suggest that the airline
will go bankrupt unless SEPI injects further $600 million.


EL SITIO: Forms Claxson With Ibero-American Media Merger
---------------------------------------------------------
Claxson Interactive Group Inc. (Nasdaq: XSON) announced Monday
that El Sitio, Inc. and Ibero-American Media Partners II Ltd.
have completed their merger to form Claxson, an integrated
provider of branded entertainment content to Spanish and
Portuguese speakers around the world. Claxson's Class A common
shares began trading Monday on The Nasdaq National Market under
the symbol "XSON".

Claxson is a new media company that combines pay television,
broadcast television and radio, and Internet assets to provide
branded content, entertainment, information and communications
via multiple platforms targeted to every major market in Ibero
America. Claxson also reaches over 30 other countries in Europe
and Asia through Playboy TV International (PTVI), a joint venture
with Playboy Enterprises, Inc. (NYSE: PLA) that creates, launches
and distributes adult entertainment channels in 13 languages
under the globally recognized Playboy brand as well as other
leading brands.

Claxson's Class A common share ownership is as follows: members
of the Cisneros Group of Companies own 44.8%, funds affiliated
with Hicks, Muse, Tate & Furst Incorporated (HMTF) own 35.2% and
El Sitio's other former shareholders own 20.0%. Under the terms
of the agreement, each El Sitio common share has been exchanged
for one Claxson Class A common share. Claxson will have
approximately 18.5 million Class A common shares outstanding.

Claxson will be an integrated provider of branded entertainment
content for audiences in Ibero America and other parts of the
world. Claxson's growth strategy is to increase subscription
revenue through expanded distribution of its pay TV channels, to
grow advertising revenue by offering multi-platform and
interactive marketing solutions, and to establish a first-mover
advantage in media convergence in its markets.

"We believe Claxson is a well-positioned content company for the
converging media marketplace in Ibero America," stated Roberto
Vivo, Chairman and CEO of Claxson. "Claxson begins with a strong
presence in pay TV, reaching the full demographic spectrum and a
critical mass of Latin American viewers. Additionally, we are
offering the region's leading advertisers access to multiple
media platforms collectively reaching the entire region. Claxson
is beginning to see the broadband future take hold in the region
and is already building a competitive edge by combining the
interactive media vision and creativity that are the core of El
Sitio with Claxson's technical and marketing know-how. Claxson
has a solid operating model with meaningful growth potential and
synergy opportunities. A number of our media properties are
already cash-flow positive and the company begins operations in
sound financial footing and with a short-term path to positive
cash flow."

Claxson's media assets are grouped into four strategic business
lines:

    *  Pay Television includes 13 diverse branded entertainment
channels reaching 10.1 million households and 46.5 million
aggregate subscribers on cable and direct-to-home platforms
throughout key markets in Latin America.  Seven channels have a
pan-regional reach and two are offered to Hispanics in the US.
Claxson also offers 20 digital music channels through its AEI
Music Latin America joint venture.  Claxson's pay television
operations are augmented by its share holdings in PTVI from which
it hopes to launch the future expansion of its media interests
beyond Ibero America.

    *  Broadcast Television and Radio includes Radio Chile, the
largest radio network in Chile with eight stations, a 40%
audience share and 98.9% reach, offering a wide range of
programming including news, romance, classic rock and top hits;
and Chilevision, a nationwide broadcast television network in
Chile.

    *  Internet includes the El Sitio network of Web sites, a
well-recognized new media brand in Latin America with
approximately three million unique users per month.  El Sitio's
creativity and technical knowledge will serve as the foundation
of Claxson's media convergence efforts and unique interactive
marketing solutions.  The Internet division will also house the
ARTISTdirect Latin America network and all the vertical sites for
Claxson's brands, bringing together pay television and radio
communities.

    *  Broadband includes Claxson's digital content initiatives,
including the El Sitio Digital Channel, the region's first
interactive digital content package that offers games, community,
audio, and video, targeted to the teenage and young adult
audiences.

Senior management of Claxson is led by Mr. Vivo as Chairman and
CEO. Reporting to him are: Ralph Haiek as Chief Operating Officer
-- Pay TV division; Jaime Vega as Chief Operating Officer --
Broadcast division; Leandro Anon as Chief Operating Officer --
Internet division; and Roberto Cibrian as Executive Vice
President -- Broadband division. Horacio Milberg is the Chief
Financial Officer and Damaris Valero is the Chief Marketing
Officer. Jose Antonio Ituarte will serve as Chief Staff Officer,
with primary responsibility for coordinating the achievement of
operational synergies among the business lines.

Claxson will have a 12-member Board of Directors chaired by Mr.
Vivo. The four Directors designated by the Cisneros Group of
Companies are Vice Chairman Carlos Bardasano, Carlos E. Cisneros,
Hilary Kramer and James D. Robinson III. The three Directors
designated by HMTF are Vice Chairman Eric C. Neuman, Charles W.
Tate and John A. Gavin. The director designated by El Sitio's
founding shareholders is Ricardo Verdaguer. The three independent
Directors are Frank Feather, Jose Antonio Rios and Fred Vierra.

Mr. Vivo added, "I am thankful for the support of our principal
shareholders, the Cisneros Group of Companies and HMTF. They,
along with myself and the management team of El Sitio, have long
believed in the formation of this multi-media powerhouse and have
recognized the opportunity such a combination provides. I am
confident that with their support and the experienced management
team we have assembled, Claxson will move forward and establish
itself as a leader in branded entertainment content throughout
the Spanish and Portuguese-speaking world."

Financial advisers to parties to the Claxson transaction include:
Violy, Byorum & Partners as adviser to the Cisneros Group of
Companies; Bear, Stearns & Co. Inc. as adviser to HMTF; and
Credit Suisse First Boston as adviser to El Sitio.

CONTACT:  Press & Media, Alfredo Richard of Claxson Interactive
          Group Inc., +1-305-894-3588; or Jennifer Gery,
          gery@braincomm.com, of Brainerd Communicators Inc.,
          for Claxson Interactive Group Inc., +1-212-986-6667;
          or Investors, Jeff Majtyka, majtyka@braincomm.com,
          or Lenny Santiago, santiago@braincomm.com, or
          +1-212-986-6667, both of Brainerd Communicators Inc.,
          for Claxson Interactive Group Inc.



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

INEPAR: To Concentrate On Electric Power Sector
-----------------------------------------------
Inepar S.A. Industria e Construcao, which operates in the
telecommunications, electric power and equipment production, is
preparing an extensive restructuring plan, according to a report
in Jornal do Commercio. The company is to concentrate in the
electric power sector and continue the construction plans of
thermal electric power plant Sepetiba totalling R$2 billion. The
new unit will generate 1,320 MW but is being criticized by NGO's
as it requires 3.5 million m tons of coal/year and 2.8 million
liters of water. The project is partnered by the Italian company
Enelpower and Eletrobras. Inepar's debts reportedly stand at
R$350 million.


TRANSBRASIL/VARIG: Meeting With Union, Addresses Current Climate
----------------------------------------------------------------
Representatives of flagship carrier Varig, TAM, Vasp, and
Transbrasil were due to participate in a meeting organized by the
National Airline Union (Snea), Reuters reported Monday.
Discussions will center on how to handle the tough business
climate compounded by devastating aerial attacks in the United
States.

The Brazilian government has yet to announce any aid to local
airlines who were already asking for help before the U.S. attacks
to deal with a big jump in costs due to a sharp depreciation in
the local currency, the real.

In late August, the Brazilian government's new National Council
of Civil Aviation met with carriers and agreed to consider tax
cuts for the sector, debt renegotiation, and changes to allow
greater foreign ownership. But before final decisions could be
made, the industry was hit by terrorist attacks against the
United States, subsequently diminishing U.S. routes and lowering
demand for air travel.

Reports have it that planes could be grounded unless the
government assumed insurance risks after insurers changed cover
agreements in the wake of the U.S. attacks.



===================================
D O M I N I C A N   R E P U B L I C
===================================

DOMINICANA AIRLINES: Aeropostal To Finalize Agreement In A Month
----------------------------------------------------------------
Venezuela's largest airline Aeropostal, which was selected last
week as the winner of an auction to privatize Dominicana
airlines, may take a 50-percent stake in the Dominican Republic's
defunct flagship carrier, Bloomberg said Monday. The Venezuelan
airline reportedly has a month to come to a final agreement with
the Dominican government to restart Dominicana, which hasn't
operated for 15 years.

"We will start service within two months if we reach a final
agreement," according to Aeropostal President Nelson Ramiz. "Our
initial investment will be $10 million if we go ahead." The
Dominican government will retain a 50-percent stake.

The Venezuelan carrier is betting that Dominicana will prove
profitable, especially on routes to the U.S. where hundreds of
thousands of Dominicans work. The Dominican Republic is also one
of the largest tourist destinations in the Caribbean.

"We want to clear up a few legal details with the government,
including guarantees that we will be the flag carrier of the
country, and have first rights for international routes," said
Ramiz.



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

AEROMEXICO/MEXICANA: Agents' Commissions Reduced
------------------------------------------------
Hispanic Express Inc. (OTCBB:HXPR) announced Monday that Mexicana
de Aviacion ("Mexicana Airlines") and Aerovias de Mexico
("Aeromexico Airlines") controlled by Cintra S.A. de C.V.
("Cintra"), Mexico's leading transportation company, had
significantly reduced commissions it pays to travel agents on
routes from Los Angeles to Mexico City and Guadalayara, and from
Tijuana to other destinations within Mexico.

In commenting on Cintra's decision, Gary Cypres, chairman of the
board of Hispanic Express Inc., stated that he "was surprised by
the timing and size of the cuts given the problems travel agents
already faced stemming from the terrorist attack," and added that
"these actions would unfortunately place additional economic
burdens on our company and that of other companies engaged as
travel agents."

Hispanic Express Inc. is a specialized consumer finance and
multi-unit travel service company that primarily serves the
travel needs of the Hispanic population in California.

CONTACT:  Hispanic Express Inc.
          Gary M. Cypres, 323/720-8600

     AEROMEXICO
          Mayte Sera Weitzman of AeroMexico, +1-713-744-8446,
          or mweitzman@aeromexico.com

          MEXICANA DE AVIACION
    Jenny Jenks, Marketing Director, International
          Division of Mexicana Airlines, +1-210-491-9764, or
          ennyjenks@mexicana.com


AHMSA: Bank Negotiated Asset Sell-Off Almost Over
-------------------------------------------------
Debt-ridden Mexican iron and steel company Altos Hornos de Mexico
SA (Ahmsa) is now in the process of selling of non-core assets to
raise some US$180 million to pay off debts, Francisco Orduna,
Ahmsa's press relations manager, revealed in a Business News
Americas report published Monday. The process follows last week's
ratification of an agreement with its creditor banks, which
involved the swapping of US$560 million for a 40-percent stake in
the company, and the sale of assets to pay off another US$180
million in debt. The company owes some US$1.85 billion.

Ahmsa will sell a limestone mine in northern Mexico's Nuevo Leon
state, industrial gas plants in Monclova, Coahuila, and several
land packages in northern Mexico, Orduna said. According to the
executive, the transactions are well advanced and "practically
sold." However, he didn't disclose the names of the buyers due to
confidentiality agreements.


BANCRECER: Acquired By Banorte Bank For $175M
----------------------------------------------
Mexico's Grupo Financiero Banorte SA disclosed Monday it had
bought failed bank Bancrecer for 1.650 billion pesos (about $175
million), or 0.66 times book value, according to Reuters. The
purchase price was far below analysts' expectations of between
$300 million and $700 million for Bancrecer, which has around 750
branches. Banorte said Bancrecer's book value was 2.5 billion
pesos.

Banorte was the only bidder in an auction for Bancrecer held by
Mexico's Bank Savings Insurance Institute (IPAB). The government
had seized Bancrecer in 1999 in the aftermath of the 1994 peso
devaluation.

"Important synergies will arise that will increase the earnings
of both banks," said Othon Montemayor, Banorte's chief economic
officer. "We're taking a risk with the purchase that ratifies our
commitment to investment in Mexico."

The purchase will increase Banorte's assets by as much as 71
percent and help the nationally-owned company compete in Mexico's
consolidating banking industry against foreign rivals.

"It's not the end-game for Banorte," said Gustavo Teran, a bank
analyst with BBVA Securities in New York. "This doesn't bring
them to the level of the top three, but every bit helps."


CINTRA: Postponing Auction Until Next Year In Wake Of Attacks
-------------------------------------------------------------
Against the backdrop of a threatening world economic crisis,
specifically in the airline industry, Mexico's federal government
will wait until next year to proceed with the sale of Cintra, the
holding company for Mexicana and Aeromexico. The decision was
announced in a report Monday in Mexico City daily Reforma by Raul
Cervantes Anrade, head of the Chamber of Deputies Transport
Commission. Representatives from the Finance ministry and IPAB
agreed with the decision.

"It's necessary to look for better market conditions, now that
the airline scenario has changed with the terrorist attacks. We
can't go to the market to undersell national companies," the
official said

Although there are Mexican parties interested in purchasing the
airlines, it is necessary to evaluate the impact of the U.S.
airline crisis and its effect on the Mexican industry, he added.


E-M-SOLUTIONS: Sanmina Negotiates Separately for Mexican Assets
---------------------------------------------------------------
The U.S. Bankruptcy Court for the Northern District of California
in Oakland, at a hearing on September 20, approved Sanmina
Corporation (Nasdaq: SANM) as the highest and best bidder to
purchase a substantial majority of E-M-Solutions' domestic assets
and stock in its foreign subsidiaries. Assets included are
located in the United States, Mexico and Northern Ireland. Both
parties are in the process of completing a definitive asset-
purchase agreement.

The transaction is subject to clearance under the federal Hart-
Scott-Rodino Antitrust Improvements Act and is expected to close
in early October. The purchase price will be up to $110.65
million, subject to a post-closing audit of E-M-Solutions'
balance sheet. Not included in the transaction are E-M-Solutions'
facilities in Gretna, Virginia, Longmont, Colorado and Monterrey,
Mexico. Separate negotiations are under way for the sale of these
facilities.

At the close of the auction, Mikel Dodd, president and chief
executive officer of E-M-Solutions, said, "The competitive
bidding process and subsequent court confirmation has ensured
that creditors receive the greatest possible recovery. The
Sanmina purchase will bring continuity and stability to our
operations. Their exceptional balance sheet provides long-term
stability for our customers and suppliers moving forward. We will
begin working immediately with Sanmina to achieve an orderly
transition of business."

E-M-Solutions began marketing its assets months ago, a process
that continued following its August 2, 2001 filing for Chapter 11
protection under the U.S. Bankruptcy Code. At the time of the
filing, E-M-Solutions had agreed to be acquired by Teradyne for
approximately $85 million, but Sanmina offered the highest and
best bid during the court-supervised auction process.

About E-M-Solutions

E-M-Solutions (Electro Mechanical Solutions) is an
internationally recognized, electronic enclosure manufacturer
that provides value-added system assembly, integration services
and world-class supply chain management solutions to Fortune 500
original equipment manufacturing (OEM) companies. A privately
held corporation, the company had sales of $435 million in 2000
and currently employs about 2,300 people worldwide. E-M-Solutions
is based in Fremont, California and has seven manufacturing and
design facilities worldwide. For more information, visit www.e-m-
solutions.com.

CONTACT:  Manlynh N. Rummler, +1-510-744-5827, for E-M-Solutions


GRUPO SANTOS: Files Suit To Stop Expropriation Of Refineries
------------------------------------------------------------
In an effort to hinder the expropriation of its six sugar
refineries by the federal government, Grupo Santos presented six
suits to federal judges, Alberto Santos Boesch, company director,
said in a report Monday in Mexico City daily El Universal. The
company's lawyers filed the lawsuits in the cities where the
company has its refineries.

Santos disclosed that the company would fight to regain its lost
refineries. According to the director, no government authority
has met with the company to explain what criteria were used to
determine the expropriation of the six refineries. "We are going
to fight up to the final consequences, because we consider what
they have done to us to be unjust," Santos reasoned. "We
recognize that we have a debt (of 300 million dollars), but the
authorities also should recognize that they have to account to us
for a billion pesos," he added.


SANLUIS CORPORACION: Analysts Site Heavy Debt Ratio As Risk
-----------------------------------------------------------
Analysts said Sanluis Corporaci˘n is Mexico's most indebted
conglomerate, making it vulnerable to financial risk, according
to a report Monday in Ft.com. With a debt of $550 million, its
ratio of net debt to equity is 2.6.

The Mexican car parts manufacturer aims to refinance its debt
obligations after it chose not to pay $8.9 million in interest
due this week on a $200 million Eurobond expiring in 2008. In
addition, the company will try to restructure $93 million in
short-term Euro commercial paper, said Hector Amador, manager of
investor relations.

Scarce financing for emerging market debt has all but dried up
since the terrorist attacks in the US, said Mr. Amador, forcing
the company to choose between using its cash flow to service debt
or keep its operations running.

The situation was aggravated when US carmaker Ford announced on
Friday that it would be cutting production by 10 percent over the
next three months because of expectations of a continued US
economic downturn. Ford represents a little over 20 percent of
Sanluis's sales, said Mr. Amador.

"[The US] tragedy has changed the panorama completely. It has
become impossible to obtain refinancing," he said. "This is not
something we wanted to do but given the circumstances it is the
least painful way to assure the continued health of our
operations."




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

CORIMON: FY 1Q Losses Decline On Rising Sales, Cost-Reductions
--------------------------------------------------------------
Corimon CA, one of two Venezuelan companies traded on the New
York Stock Exchange, announced its fiscal first-quarter loss
narrowed as sales rose, and a cost- cutting program raised
margins, Bloomberg reported Monday. The company informed loss for
the quarter ended June 30 was 1.91 billion bolivars ($2.6
million), or 0.26 bolivars a share, against a loss of 3.57
billion bolivars, or 0.48 bolivars a share in the comparable
period of the previous year. Corimon, which nearly went bankrupt
in 1996, said the results were adjusted for inflation.

The company claimed it is being helped by a recovery in the
country's construction industry, which grew 10 percent in the
first half of the year. Sales rose 1.6 percent to 14.6 billion
bolivars. Margins also rose due to a cost-cutting program, which
reduced the cost of sales by 6 percent.


SIVENSA: Pushing For Preventive Measures Against Possible Dumping
-----------------------------------------------------------------
Venezuelan steel company Sivensa is pushing for measures to
protect the domestic industry from possible dumping, which is
likely to occur if a trade war breaks out as a result of the
Section 201 probe in the US, Sivensa spokesperson Isabel Camejo
said in a Business News Americas report published Monday.

"It is only a preventative measure, contacts are being made to
foresee what could happen in the event of quotas on the entry of
steel products to the US," she said. The US International Trade
Commission is due to rule on October 22 whether imports are
hurting domestic steelmakers.

Should Washington impose quotas, the Latin American market would
be flooded with products that would not be able to enter the US,
she said, adding: "Mexico reacted with a customs measure and
Brazil has also acted and spoken publicly of measures its
industry will take and Venezuela is doing what it has to do."




S U B S C R I P T I O N   I N F O R M A T I O N

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Psamathe P. Alfeche, Editors.

Copyright 2001.  All rights reserved.  ISSN 1529-2746.

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