/raid1/www/Hosts/bankrupt/TCRLA_Public/011005.mbx        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, October 5, 2001, Vol. 2, Issue 195

                           Headlines


A R G E N T I N A

AEROLINEAS ARGENTINAS:Unions Dread Continued Spanish Ownership
IMPSAT: Ratings Under Moody's Review For Possible Downgrade
LAPA: Judge Forbids Use Of New Trademark


B O L I V I A

EL MUTUN: Decision Regarding Plant's Fate Looms


B R A Z I L

CELESC: Debt Renegotiation Reaching Conclusion
EMBRAER: PCD Inc. Announces Supply Agreement
LIGHT: Suspending 2002 Investments In Wake Of Energy Crisis
PETROFORTE: Court Gives Bankruptcy Suspension Green Light


M E X I C O

AEROMEXICO: Increases Ground Crew Salary By 8% Averting Strike
AEROMEXICO/MEXICANA: Granted Temporary Government Aid
AHMSA: Seeking Strategic Partnership With French Firm
BANRURAL: Government Fills White Knight Role
GRUPO BITAL: May Undergo New Audit

HYLSA S.A.: Moody's Downgrades Ratings
MEXICANA: Inks Deal With Scandinavian Airline
NOVO NETWORKS: Reports Fourth Quarter and Year-End Results

* Finance Ministry Revokes Failed Banks' Licenses

P E R U

PESQUERA COLONIAL: Creditors Meet To Approve New Plan
PESQUERA SAN ANTONIO: Offer Prompts Restructuring Plan Changes

     -  -  -  -  -  -  -  -

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

AEROLINEAS ARGENTINAS:Unions Dread Continued Spanish Ownership
--------------------------------------------------------------
The decision of Spanish holding company, Sepi, to sell its 91.9
percent stake in Aerolineas Argentinas to Air Comet spurred
negative reactions from the Argentine carrier's unions, El Mundo
reported Wednesday. The unions are apprehensive about the idea of
another Spanish company taking control of the airline, following
a disastrous management by Spanish counterpart Iberia and
industrial holding company, Sepi.

According to Alicia Castro, head of the cabin crew union, an
appeal against the decision will be lodged in the courts, as she
believes the Aeronautic Code states that the majority of a flag
carrier's share capital must lie in Argentine hands. Castro,
believes that as Viajes Marsans controls Spainair and Air Plus,
both of which are Spanish competitors to the Argentine carrier,
the company will favor the Spanish groups, as was the case with
Iberia, leading to demise of Aerolineas Argentinas.


IMPSAT: Ratings Under Moody's Review For Possible Downgrade
-----------------------------------------------------------
Moody's Investors Service announced Wednesday that it has placed
IMPSAT Fiber Networks, Inc.'s Caa3 senior unsecured rating and
its Caa2 guaranteed senior unsecured rating under review for
possible downgrade. Moody's took the action on concern that a
worsening economic environment is likely to place further
downward pressure on the constrained liquidity and fragile
business prospects of many emerging wireline telecom operators.

Moody's review will focus upon actual results for the quarter
ending September 30, 2001, assess the integrity of future
corporate projections based upon recent operating performance,
and review the sufficiency of the company's liquidity and funding
assumptions to attain a fully funded business plan. This review
process recognizes that, during recently troubled times
characterized by heightened financial uncertainty, visibility
presently remains generally poor across the sector.

New York
Michael Rowan
Managing Director
Corporate Finance Group
Moody's Investors Service
JOURNALISTS: (215) 967-6233
SUBSCRIBERS: (215) 967-6233

New York
John Page
Vice President - Senior Analyst
Corporate Finance Group
Moody's Investors Service
JOURNALISTS: (215) 967-6233
SUBSCRIBERS: (215) 967-6233


LAPA: Judge Forbids Use Of New Trademark
----------------------------------------
A ruling signed by Judge Roberto Torti September 27 banned
domestic airlines Lineas Aereas Privadas Argentinas (LAPA) from
using or promoting the name of "Argentina" and the initials
"Arg," EFE reported Wednesday. The ruling was based on a lawsuit
filed by Aerolineas Argentinas, arguing that the new name that
LAPA seeks to use violates its trademark rights.

LAPA has launched an aggressive media campaign to change its
trademark to "ARG." The new logo includes the first three letters
with the remaining letters of "Argentina" faded and barely
visible.

The judge's decision means that, although LAPA can appeal the
measure, it must discontinue using the new trademark and remove
it from all promotional outlets.



=============
B O L I V I A
=============

EL MUTUN: Decision Regarding Plant's Fate Looms
-----------------------------------------------
The decision regarding the Santa Cruz government's plan for a
steelmaking plant at Bolivia's El Mutun iron ore deposit will be
made October 12, according to the local authority's mines
director, Jose Padilla, in a Business News Americas report
published Tuesday.

"On that day it will be decided if our parallel proposal to the
tender is feasible or not," Padilla said.

Padilla's announcement came after an official from the Economic
Development Ministry's Mines Restructuring Unit (URM) said Santa
Cruz had dropped the idea of tendering a portion of the iron ore
deposit.

Brazilian steelmaker Sidersul has presented a proposal to Santa
Cruz to build a US$50mn plant at El Mutun to produce 300,000tpy
pig iron, for which it only needs 15% of the deposit's estimated
40Bt resource.

A committee made up of economic development minister Carlos
Kempff Bruno, foreign trade minister Claudio Mansilla Pena,
Comibol president Rafael Delgadillo and deputy mines minister
Epifanio Mamani is due to decide on the Santa Cruz-Sidersul plan.



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

CELESC: Debt Renegotiation Reaching Conclusion
----------------------------------------------
The Santa Catarina state power distributor Celesc (Centrais
Eletricas de Santa Catarina) is about to complete a deal to
renegotiate a US$61.2-million debt in Euro CP, due June 14,
Gazeta Mercantil reported Wednesday. The company plans to create
a new contract for the issue of new Euro CPs and a roll over. The
new issue will be raised in 48 portions of US$1.275 million.

The Euro CP represented 88 percent of Celesc's short-term debt
that amounted to R$160.7 million in the first half of this year.


EMBRAER: PCD Inc. Announces Supply Agreement
--------------------------------------------
PCD Inc. (Nasdaq: PCDI), a manufacturer of electronic connectors,
has signed a three year contract with Embraer of Brazil covering
the supply of PCD avionic relay sockets and junction modules for
use on the Embraer ERJ series of regional jets and other military
and commercial aircraft.  Mark Wilkinson, PCD's Avionic Business
Unit Director, estimated the value of the order at approximately
$ 1.5million per year.

"Regional jets represent the fastest growing segment of the
aircraft market, Embraer is a market leader, and PCD has been the
prime supplier of these products to Embraer for over fifteen
years," stated John L. Dwight Jr., Chairman and CEO.  "We are
pleased to not only continue the business relationship, but
to work with Embraer in bringing their next series of larger and
more advanced aircraft -- the ERJ170 and ERJ190 -- to market; and
to cooperate in meeting the challenges of future developments."

PCD Inc. (www.pcdinc.com) designs, manufactures and markets
electronic connectors for use in semiconductor burn in,
industrial equipment and avionics. Electronic connectors, which
enable an electrical current or signal to pass from one element
to another within an electronic system, range from the
minute individual connections within an integrated circuit ("IC")
to rugged, multiple lead connectors that couple various types of
electrical/electronic equipment. Electronic connectors are used
in virtually all electronic systems, including data
communications, telecommunications, computers and computer
peripherals, industrial controls, automotive, avionics and test
and measurement instrumentation.

The Company markets over 6,800 electronic connector products in
three product categories, each targeting a specific market.  
These product categories are semiconductor burn in sockets,
industrial interconnects and avionics junction modules and relay
sockets.

CONTACT:  John L. Dwight, Jr., Chief Executive Officer,
          +1-978-532-8800, or
          John J. Sheehan III, Chief Financial Officer,
          +1-978-532-8800,
          both of PCD Inc.


LIGHT: Suspending 2002 Investments In Wake Of Energy Crisis
-----------------------------------------------------------
The energy crisis in Brazil has led power producer, Light, to
suspend a $50-million-real (US$19 million) investment plan for
next year, Reuters reported Wednesday. The plan was to use the
money to expand substations, however, a government electricity-
rationing plan implemented in June to stave-off the energy crisis
has cut demand.

"The expansion investments are directly linked to demand and we
need to analyze how rationing will be next year to measure the
need to expand," said Light President Michel Gaillard.

Gaillard reiterated that the company's revenues would be 10
percent lower this year than initially expected due to the
rationing plan. According to him, Light is going through a
difficult period and could try to access financing from Brazil's
National Development Bank (BNDES).


PETROFORTE: Court Gives Bankruptcy Suspension Green Light
---------------------------------------------------------
Petroforte, a leading Brazilian fuels distributing company,
obtained approval from the court to suspend its bankruptcy
process, Gazeta Mercantil reported Wednesday.

According to Petroforte, the supplier Nova Uniao S.A Acucar e
Alcool, which requested the company's bankruptcy claiming debts
of R$5 million from Petroforte, is the one who really owes money
to Petroforte. Petroforte argued that the supplier took an
advance for the acquisition of alcohol to the tune of R$10
million.

Petroforte was founded in 1994 and supplies almost 230 gas
stations spread over the states of Sao Paulo, Goiais, Mato Grosso
and Mato Grosso do Sul.



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

AEROMEXICO: Increases Ground Crew Salary By 8% Averting Strike
--------------------------------------------------------------
The management of Aeromexico agreed to a ground crew salary
increase of 8 percent in order to avert a strike that has
threatened to disrupt its flights, EFE reported Wednesday. The
decision comes a week after Aeromexico's pilots accepted a
settlement offer that boosted their salaries by 7.82 percent and
was augmented by a 0.7 percent rise in benefits.

Aeromexico's management gave in to the ground crew's demands,
despite the dramatic decrease in the number of its passengers
resulting from the terrorist attacks in the United States.

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


AEROMEXICO/MEXICANA: Granted Temporary Government Aid
-----------------------------------------------------
Flagship carriers Aeromexico and Mexicana de Aviacion and a
handful of smaller airlines received temporary aid from the
Mexican government. The government offered them a 10-percent
discount on jet fuel Wednesday as part of a package to help them
stay afloat, according to a Reuters' report.

"We're going to give temporary aid for as long as the contingency
lasts, and we're going to review it each month," Communications
and Transport Minister Pedro Cerisola said in a Tuesday plan
outline.  

Additional Mexican airline aid measures include a 10-percent
discount in fees charged by a government agency that oversees
Mexico's airspace. Fees charged to airlines at government-run
airports will be frozen, the Communications and Transport
Ministry said. The fees are normally raised each month.

Officials were talking with private airport operators, including
Grupo Aeroportuario del Sureste (Asur) and Grupo Aeroportuario
del Pacifico y Centro Norte, to see if they will also freeze
fees.


AHMSA: Seeking Strategic Partnership With French Firm
-----------------------------------------------------
Steelmaker Altos Hornos de Mexico (Ahmsa) is working toward the
formation of a strategic partnership with France's Usinor to
supply the U.S. and Mexican markets, EFE reported Wednesday.

AHMSA Director General Alonso Ancira is scheduled to meet with
executives from Usinor in order to discuss future joint ventures.
The deal, which would create the world's largest steel producer,
awaits approval by the European Commission, which is scheduled to
meet November 23.

Ahmsa reportedly has debts of $1.86 billion, and is currently
carrying out a debt-restructuring process by swapping its
outstanding loans for equity. Despite the restructuring effort,
Ahmsa is expected to default on its debt in the first quarter of
2002.

According to local business press reports, Usinor may acquire
some of Ahmsa's assets to expand its operations in the United
States.


BANRURAL: Government Fills White Knight Role
--------------------------------------------
Mexican financial regulator the National Banking and Securities
Commission (CNBV) confirmed that the federal government is going
to provide resources to assist in the financial recovery of the
National Rural Credit Bank (Banrural), Mexico City daily El
Universal reported Wednesday.

Although the government didn't specify an amount of money it will
provide, the CNBV believes it could be several times Banrural's
book value, said CNBV Vice President, Guillermo Zamarripa.

In a recent TCR-LA report, Hector Padilla, a senior official of
the National Farmers' Confederation, revealed that Banrural was
teetering on the edge of technical bankruptcy due to a 490-
million-peso loss in the first half of this year, as well as an
85-percent decline in its reserves.


GRUPO BITAL: May Undergo New Audit
----------------------------------
Bital could be subjected to an investigation if a proposal made
by the Mexican bank bailout agency IPAB and the federal Audit
Authority is approved, Mexico City daily El Universal reported
Monday.

Accordingly, IPAB and the federal Audit Authority proposed that
the nation's banks undergo new audits of their reportable
credits, but with a guarantee not to impose economic sanctions on
the banks based on the findings. Rather, those found responsible
for illegal loans will be subject to criminal charges.

If economic immunity were agreed to, "In case of the detection of
illegal credits, those would not be returned to the banks," said
IPAB head, Julio Cesar Mendez. Canadian auditor, Michael Mackey,
found several "irregular" loans in a prior investigation of banks
that received financial assistance from the federal government,
but he did not have the authority to investigate the loans
thoroughly.

Other banks subject to investigation are Banorte, Banamex, now
owned by Citigroup, and Bancomer.


HYLSA S.A.: Moody's Downgrades Ratings
--------------------------------------
New York-based ratings agency Moody's Investors Service lowered
its ratings for Hylsa S.A. de C.V. The ratings being downgraded
are the following:

  - US$300 million of 9.25 percent senior unsecured notes due
    2007 to Caa3 from B3,

  - Senior implied rating to Caa2 from B2,

  - Senior unsecured issuer rating to Caa3 from B3.

The downgrades were prompted by Hylsa's deteriorating credit
measures in the midst of a worsening North American economy and
its diminished options for refinancing its outstanding and
maturing debt, much of which has already been subjected to
temporary amendments and waivers to cure covenant violations. In
Moody's opinion, Hylsa does not have sufficient liquidity to fund
near-term anticipated losses and debt restructuring is quite
likely. Because of its high leverage, the losses associated with
debt refinancing are expected to be high, hence Moody's three-
notch downgrade.

New York
Daniel Gates
Senior Vice President
Corporate Finance Group
Moody's Investors Service
JOURNALISTS: (215) 967-6233
SUBSCRIBERS: (215) 967-6233

New York
Steven Oman
VP - Senior Credit Officer
Corporate Finance Group
Moody's Investors Service
JOURNALISTS: (215) 967-6233
SUBSCRIBERS: (215) 967-6233


MEXICANA: Inks Deal With Scandinavian Airline
---------------------------------------------
Mexicana de Aviacion struck a new code-sharing deal with
Scandinavian Airlines (SAS), Excelsior related Tuesday. According
to the new plan, the two airlines will offer clients flights
connecting Stockholm, Copenhagen, Gothenburg, Oslo and Mexico
City, Monterrey, Leon and Guadalajara via Chicago O'Hare or
Newark. The deal benefits passengers who now only have to show
documents once, while frequent flyers will also earn airmiles
from both companies. Both Mexicana and SAS are members of the
world's largest international airlines group, Star Alliance.

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


NOVO NETWORKS: Reports Fourth Quarter and Year-End Results
----------------------------------------------------------
Novo Networks, Inc. (Nasdaq:NVNW) announced Monday financial
results for the fourth quarter and fiscal year-ended June 30,
2001.

Revenues for the three-month period ended June 30, 2001 decreased
20.1% to $13.1 million from $16.4 million in the year-ago
quarter. The decline in revenues is attributable to both lower
rates and voice traffic volumes over the Company's communications
network. The Company reported a net loss applicable to common
stockholders of $18.1 million, or $0.35 per share, compared to a
net loss of $14.4 million, or $0.28 per share, in the fourth
quarter of fiscal 2000. The net loss includes an impairment loss
of $8.6 million relating to the write down to fair market value
of certain telecommunications assets. The net loss also includes
other non-cash items including depreciation and amortization of
approximately $1.0 million and equity in loss of affiliates of
approximately $1.7 million. The weighted average number of shares
outstanding for the fourth quarters of fiscal 2001 and 2000 were
52,222,671 and 51,322,909, respectively, and reflect the issuance
of shares pursuant to acquisitions and financings completed
during the fiscal year.

Revenues for the fiscal year ended June 30, 2001 increased 30.0%
to $72.0 million from $55.4 million in fiscal 2000. Novo Networks
reported a net loss of $183.9 million, or $3.52 per share,
compared to a net loss of $44.3 million, or $1.14 per share, in
fiscal 2000. The net loss reflects an impairment loss of $120.5
million, restructuring charges of approximately $3.9 million and
other non-cash items, including depreciation and amortization of
approximately $20.5 million, equity in loss of affiliates of
approximately $9.0 million and imputed preferred dividends of
$2.3 million. The weighted average number of shares outstanding
for fiscal 2001 and fiscal 2000 were 52,222,671 and 38,739,230,
respectively.

Subsequent to June 30, 2001, the Company began the process of
diversifying its operations to include both telecommunications
and financial services. In conjunction with this effort, the
Company's principal operating subsidiaries -- Novo Networks
Operating Corp., AxisTel Communications, Inc. and e.Volve
Technology Group, Inc. -- each commenced voluntary cases under
chapter 11 of the United States Bankruptcy Code in order to
stabilize ongoing operations and protect their assets pending
implementation of a chapter 11 plan of reorganization. The
principal operating subsidiaries continue to work on a plan of
reorganization, to be filed in the near future, focusing on
e.Volve's existing voice service offerings to Mexico.

On July 11, 2001 the Company was notified by the Nasdaq Stock
Market that its securities failed to meet the $1.00 minimum bid
price requirement for continued listing under the Nasdaq Stock
Market rules. Novo announced on August 28, 2001 that its Board of
Directors and a majority of the holders of outstanding voting
stock approved a 1-for-7 reverse stock split of the Company's
common stock. The reverse split, which affected stockholders of
record as of September 4, 2001, will become effective, if
implemented, following the resumption of trading in the Company's
common stock, which was suspended in response to the
Subsidiaries' bankruptcy filings and Nasdaq's ongoing review. The
reverse stock split will reduce the number of shares of common
stock issued and outstanding on a fully diluted basis from
approximately 54.0 million to approximately 7.5 million. On
September 27, 2001 Nasdaq subsequently implemented an across-the-
board moratorium on enforcing the minimum bid and public float
requirements for listed companies until January 2, 2002.

The Nasdaq Stock Market has also requested additional information
from the Company regarding bankruptcy filings of the Company's
operating subsidiaries, as well as the Company's proposed
business plan going forward. The Company has responded to
Nasdaq's request and is engaged in ongoing discussions with
Nasdaq regarding the continued listing of the Company's stock.

To see company's financial statements:
http://www.bankrupt.com/misc/Novo_Networks.pdf

CONTACT:  Novo Networks, Inc.
          Chad E. Coben, 214/777-4100
          ccoben@novonetworks.net
          or
          Jaffoni & Collins Incorporated
          Stewart Lewack, Joseph Jaffoni, 212/835-8500
          nvnw@jcir.com


* Finance Ministry Revokes Failed Banks' Licenses
-------------------------------------------------
The licenses of failed banks Banca Union, Obrero, Oriente and
Cremi were revoked by the Finance ministry, Mexican financial
daily El Economista reported Tuesday.

According to the Finance ministry, these banks were ordered to
liquidate, without the need for shareholder agreement, due to
their inadequate compliance with the functions and regulations of
the banking and credit system. The bank bailout agency IPAB will
be carrying out the process of liquidating the banks' assets and
outstanding debts.


=======
P E R U
=======

PESQUERA COLONIAL: Creditors Meet To Approve New Plan
-----------------------------------------------------
Creditors of Pesquera Colonial met October 1 in order to approve
a plan to restructure the fishing company's approximate debt of
US$20 million, according to a report in Gestion.

The plan involves refinancing the debt over a 12-year term.
Pesquera Colonial has US$6.6 million debts with Banco Wiese
Sudameris, US$3.56 million with Banco Nuevo Mundo and US$1.39
million with BBV Banco Continental.

The company increased its production capacity in Chimbote from 25
to 70 tons per hour last May.


PESQUERA SAN ANTONIO: Offer Prompts Restructuring Plan Changes
--------------------------------------------------------------
In late September, Creditors of Pesquera San Antonio were
scheduled to evaluate the August bid submitted by the fishing
consortium formed by Pesquera Diamante and Copeinca (Corporacion
Pesquera Inca), according to a South American Business
Information report.

Accordingly, the company will see modifications in its
restructuring plan due to the consortium's offer. The consortium
reportedly offered US$39.8 million, of which US$26.7 million will
be in cash. The starting payment will be US$3.7 million. The
remainder will be paid over an 8-year term. The consortium will
also pay US$13.1 million for eight ships and invest between US$3
million and US$5 million in Pesquera San Antonio over the next
two years in order to restore normal operations.




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 and Edem
Psamathe P. Alfeche, Editors.

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

This material is copyrighted and any commercial use, resale or
publication in any form (including e-mail forwarding, electronic
re-mailing and photocopying) is strictly prohibited without prior
written permission of the publishers.

Information contained herein is obtained from sources believed to
be reliable, but is not guaranteed.

The TCR Latin America subscription rate is $575 per half-year,
delivered via e-mail.  Additional e-mail subscriptions for
members of the same firm for the term of the initial subscription
or balance thereof are $25 each.  For subscription information,
contact Christopher Beard at 240/629-3300.


* * * End of Transmission * * *