/raid1/www/Hosts/bankrupt/TCRLA

/raid1/www/Hosts/bankrupt/TCRLA_Public/011031.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 Wednesday, October 31, 2001, Vol. 2, Issue 213 Headlines A R G E N T I N A AEROLINEAS ARGENTINAS: Setbacks Delay Resumption Of Operations AEROLINEAS ARGENTINAS: Commences Intercontinental Flights Nov. 5 EPEC: Cordoba Suspends Privatization Indefinitely FREDDO: Predicts Rebound In Operations, Market Share B R A Z I L CVRD: Copel Bid Stuns Analysts EMBRAER: ERJ170 Seen As Direct Competition To Boeing, Airbus SOLETUR: Bankruptcy Leaves Clients Hanging VESPER: Reaching Agreement With Suppliers To Avoid Bankruptcy C H I L E EDELNOR: Likely To Default On December Bond Payment EL INDIO: To Shut Down Permanently Mid-2002 MICHILLA MINE: Fires Workers, Suspends Projects On Weak Market E C U A D O R FILANBANCO: Clients Want Delay In Asset Liquidation M E X I C O ASARCO INC.: Suspending Zinc Operations in Tennessee BANCRECER: Banorte Awaits Finance Ministry OK To Integrate BANCRECER: IPAB To Recoup Less Than 10% Of Investments CINTRA: Registers Losses In First 9 Months Of 2001 CONFIA: Defrauded Bondholders Still Seeking Solution STANDARD AUTOMOTIVE: Announces Forbearance Under Credit Facility P E R U NUEVO MUNDO: BSCH Peru Returning Deposits To Clients V E N E Z U E L A SIDOR/AMAZONIA: Begins Debt Restructuring Talks With Creditors - - - - - - - - - - - - ================= A R G E N T I N A ================= AEROLINEAS ARGENTINAS: Setbacks Delay Resumption Of Operations -------------------------------------------------------------- Aerolineas Argentinas' new owner, the Spanish airline Air Comet, is struggling to lift the embargoes on its newly acquired unit. According to a report in El Mundo, Spanish lawyers have gone to several European and Latin American courts in order to negotiate with creditors who are demanding payment in return for their services or supplies. But the most serious problem the company faces now is the grounding of Aerolineas' 2 Boeing 747's in Brazil, as this could jeopardize the resumption of operations at Aerolineas. Air Comet must pay $1.5 million to Varig, the Brazilian airline, which is responsible for the planes' maintenance, if it wants the aircraft to fly again. However, this payment should be an obligation of SEPI, the Spanish state holding company and owner of Aerolineas until last month. Although SEPI has sold its 92.1 per cent stake in the Argentine airline, it has promised to pay wages owed to Aerolineas' employees and to provide the working capital required by the airline. AEROLINEAS ARGENTINAS: Commences Intercontinental Flights Nov. 5 ---------------------------------------------------------------- Argentine national carrier Aerolineas Argentinas is expected to carry out its first intercontinental flight on November 5, Expansion reported. Accordingly, the first flight will operate on the Buenos Aires-Madrid route. Up to this point, the airline had suspended 70 percent of flights on international routes due to financial difficulties, which forced it to suspend payments to creditors. Union representatives have disclosed that Air Comet, Aerolineas' new owner, has already made payments for backdated salaries, which had not been paid. Despite the gesture, unions were still unhappy with the decision to cut salaries by between 15 and 20 percent. EPEC: Cordoba Suspends Privatization Indefinitely ------------------------------------------------- Cordoba authorities decided to suspend for an indefinite period of time the privatization of the EPEC electric company, EFE reported Monday. According to an official statement issued Monday by the province's Public Works and Services Minister Carlos Caserio, the company's privatization process was suspended due to the recommendation of the foreign companies involved in the operation. Among these companies are, AES, from the United States; Tractebel, from Belgium; and Union Fenosa, from Spain. Reports have it that the companies' officials are apprehensive about the crisis in the Argentine economy, which has been in recession for 40 months, and the possibility that the country could suspend debt repayments. Epec's privatization was scheduled for this year but now, the process will remain suspended at least until 2003. FREDDO: Predicts Rebound In Operations, Market Share ---------------------------------------------------- Ice cream chain Freddo is aiming to regain its presence in the sector with a prediction to end this year with sales of US$24 million, La Nacion reported. The chain, which was acquired by the investment fund The Exxel Group in 1999, has been acquired by a trust fund headed by Banco Galicia. Banco Galicia acquired the chain by capitalizing its debt with the bank of more than US$30 million. The new shareholders of the company have named Jose Guarracino, one of the ex-owners of Freddo, as part of its management team. =========== B R A Z I L =========== CVRD: Copel Bid Stuns Analysts ------------------------------ Cia. Vale do Rio Doce's (CVRD) announcement to bid for Cia Paranaense de Energia (Copel) caught analysts off guard, O Globo revealed in a report. Market analysts think that the company's decision doesn't fall in line with its recent announcements of concentrating in mining and logistic sectors. However, CVRD believes that such investment is important as it spends US$300 million per year on energy or 4.5 percent of the Brazilian consumption. Copel is scheduled to be privatized Oct 31. The minimum price of the company was raised to 5.068 billion reals from 4.3 billion after the government of the state of Parana bought back 90 percent of the common shares held by minority shareholders. The government will auction 98.49 percent of common shares, which corresponds to 52.2 percent of the company's total capital. CONTACT: Roberto Castello Branco: castello@cvrd.com.br +55-21-3814-4540 Andreia Reis: andreis@cvrd.com.br +55-21-3814-4643 Barbara Geluda: geluda@cvrd.com.br +55-21-3814-4557 Daniela Tinoco: daniela@cvrd.com.br +55-21-3814-4946 EMBRAER: ERJ170 Seen As Direct Competition To Boeing, Airbus ------------------------------------------------------------ As it continues to battle with the global aviation crisis, Brazilian jet maker Embraer rolled out Monday its new 70- passsenger plane, Reuters said in a report. Embraer, which last month announced a series of cutbacks resulting from a global crisis in the aviation industry, unveiled the sleek ERJ 170 jet before clients and VIPs at its Sao Jose dos Campos plant. At $21 million a piece, the ERJ 170 will compete head-on with Boeing's 717 and Airbus' A 318 jets, which are popular with the regional air travel market. Embraer said it already had 220 options and 110 firm orders for the jet, which was launched commercially 28 months ago. To see company's latest financial statements: http://www.bankrupt.com/misc/Embraer.pdf CONTACT: Anna Cecilia Bettencourt +55 12 345 1106 acecilia@embraer.com.br Milene Petrelluzzi +55 12 345 3054 milene.petrelluzzi@embraer.com.br SOLETUR: Bankruptcy Leaves Clients Hanging ------------------------------------------ Many consumers were left without answers following Soletur travel agency's filing for voluntary bankruptcy, according to a report Monday in the Gazeta Mercantil Online. As a result, the Sao Paulo branch of the consumer protection agency (Fundacao Procon-SP) published an official notice outlining the rights of anyone who had contracted the company's services. The notice stresses that "all appropriate measures will be taken to minimize the consumers' loses." In the note, Procon also disclosed that the values paid partially or wholly by consumers who had not traveled will be the object of analyses and evaluation together with the courts in Rio de Janeiro so that a solution can be found that is fast and less onerous for the consumers. Soletur declared bankruptcy and shuttered its doors last week due to a long-standing financial crisis worsened by the effects of the September 11 terrorist attacks. VESPER: Reaching Agreement With Suppliers To Avoid Bankruptcy ------------------------------------------------------------- Brazilian phone company Vesper is expected to reach an agreement with its suppliers Ericsson, Harris, Lucent and Nortel, wherein these suppliers would waive 80 percent of Vesper's US$1.2 billion in order to stave-off its bankruptcy, Valor Economico reported. Additionally, 20 percent of Vesper' s debt, or US$240 million will be acquired by Qualcomm, which has 16.2 percent stake in Vesper. The details of the deal will be announced by Vesper's CEO Luiz Kaufmann during a meeting to take place at Florianopolis, Santa Catarina state. ========= C H I L E ========= EDELNOR: Likely To Default On December Bond Payment --------------------------------------------------- U.S. energy firm Mirant so far hasn't given any assurance that next December 15 it will pay US$4.5 million to the bondholders of Empresa Electrica del Norte Grande (Edelnor), South American Business Information said in a report. Because of this, Edelnor may well soon default. There is another US$9 million coming due in March 2002. Mirant has said it does not plan to commit any new capital to Edelnor. The company added that since no immediate buyer was identified and no new capital injection was planned for the unit. EL INDIO: To Shut Down Permanently Mid-2002 ------------------------------------------- Toronto-based Barrick Gold is closing down permanently its Chilean El Indio gold mine around the middle of 2002, Barrick spokesperson revealed in a Business News Americas report. According to Vince Borg, Barrick's corporate communications VP, no more exploration would be conducted and production would come to a halt by that time. The closure of the mine had been first announced in September 1997, to take effect by 1999. However, Barrick extended its life as costs were cut and more reserves found. El Indio's 230 or so workers would be laid off gradually by the time the mine closes, Borg said. Another 175 workers had been made redundant in February this year. MICHILLA MINE: Fires Workers, Suspends Projects On Weak Market -------------------------------------------------------------- Due to poor market conditions, Chile's Antofagasta Plc is laying off 100 workers at its Michilla mine and suspending new projects elsewhere at least until 2005, Reuters reported Monday. "The group is trying to be much more austere and in the case of Michilla where we have high operating costs, we are doing something exceptional," said Antofagasta's CEO Jean Paul Luksic. Next April or May, the company will decide whether to shut down the mine altogether or keep it running, he said. ============= E C U A D O R ============= FILANBANCO: Clients Want Delay In Asset Liquidation --------------------------------------------------- The Ecuadorian banks agency was supposed to sell-off the assets of Ecuadorian bank Filanbanco until next November 4, El Universo reported. However, clients of the defunct bank are asking to delay the process because the federal government has not held a clear position about possible illegal procedures detected during the start of the negotiations with private banks. Filanbanco's clients fear that these problems will prevent bidders from taking part in the auction. =========== M E X I C O =========== ASARCO INC.: Suspending Zinc Operations in Tennessee ----------------------------------------------------- Asarco Inc., a subsidiary of Grupo Mexico S.A. de C.V., Monday announced plans to indefinitely suspend zinc mining and processing operations at its Tennessee Mines Division by mid- November as a result of low zinc prices, which have fallen by 30 percent over the last year. Asarco informed employees and union officials of the decision, following an extensive review of various options for the division. The suspension of zinc production, which will be phased in during the next several weeks, will result in a reduction of approximately 360 positions at the company's three zinc operations in Jefferson County in eastern Tennessee. In late September, the company notified employees that it was considering taking action to curtail or suspend operations. Asarco will assist eligible employees in securing all available federal and state unemployment and training benefits. A small crew will remain at the facilities in care and maintenance roles and to continue processing agricultural lime from existing zinc production byproducts. According to Genaro Larrea, president of Asarco, the company carefully considered a range of scenarios for the Tennessee zinc operations. "The slowdown in the industrial manufacturing sector, and in steel in particular, has resulted in higher worldwide zinc inventories and lower prices," Larrea said. "At these prices, the Tennessee facilities simply are not economically viable." At the close of trading on Tuesday (Oct. 23), the cash price of zinc on the London Metals Exchange (LME) was 34 cents per pound, compared to 48 cents per pound on the same date in 2000. As recently as 1997, LME zinc prices were in the range of 70 to 75 cents per pound. In 2000, Asarco's Tennessee Mines Division produced 56,800 metric tons of zinc contained in concentrates sold to zinc refineries in the North American market. Zinc is used to galvanize iron to prevent it from rusting. It is also employed in alloys and batteries, and as a zinc oxide to stabilize rubber and plastics. According to Larrea, Asarco employees in Tennessee have made significant progress in improving operating efficiency and reducing costs. "Unfortunately, these efforts have been masked by the deteriorating market conditions," he said. Larrea added that the company would continue to monitor the zinc market and would consider resuming Tennessee Mines Division operations should long-term market conditions improve. Asarco, which recently moved its headquarters to Phoenix from New York City, is a major producer of copper, zinc, gold, silver, nickel and various specialty metals. The 102-year-old company is a subsidiary of Americas Mining Corp. (AMC), established last year as Grupo Mexico's mining division. AMC is among the world's largest integrated mining and refining companies and the third largest producer of copper. It includes Grupo Mexico's interests in Asarco Inc. (100 percent), Minera Mexico (98.8 percent) and Southern Peru Copper Corp. (54.2 percent). Minera Mexico, based in Mexico City, is the largest mining company in Mexico and among the world's lowest cost producers of copper, zinc and silver. Southern Peru Copper Corp., based in Lima, also is among the world's lowest cost copper producers. CONTACT: Asarco Inc., Phoenix Clay Allen, 602/977-6515 BANCRECER: Banorte Awaits Finance Ministry OK To Integrate ---------------------------------------------------------- Grupo Financiero Banorte will not be able to begin the process of integrating Bancrecer's operations until December 5 pending authorization from the Finance ministry said Banorte CEO Othon Ruiz in a Mexico City daily Reforma report. However, Banorte has already begun work on a plan to integrate Bancerer when it receives authorization. The most important factors in the coming integration will be the leveraging of synergies and the reduction of costs for both institutions, Ruiz said. The integration will eventually lead to layoffs, but according to Ruiz, the company would make efforts to relocate employees to high-growth areas. BANCRECER: IPAB To Recoup Less Than 10% Of Investments ------------------------------------------------------ Out of 102.2 billion pesos invested in the reorganization of Bancrecer, the Bank Savings Protection Institute (IPAB) expects to recover close to 7.612 billion pesos, according to IPAB head Julio Cesar Mendez in a Mexico City daily Reforma report. "Of the (investment) in Bancrecer, we expect 7.612 billion pesos, of which 1.65 billion pesos will refer exclusively to (Banorte's purchase)," said Mendez. The amount also includes funds from the sale of the Afore Bancrecer Dresdner pension fund, for three times book value, to Dresdner Bank Mexico, as well as close to 5 billion pesos that IPAB expects to recover from the bank's loan portfolio of 35 billion pesos. CINTRA: Registers Losses In First 9 Months Of 2001 -------------------------------------------------- Airline holding company Cintra posted net losses of 742 million pesos during the first nine months of this year, compared to profits of 694 million pesos recorded in the same period last year, Mexico City daily Reforma reported Monday. The losses were mainly the result of an 8.5-percent drop in revenues, which stood at 21.933 billion pesos. The decline in revenues resulted from last month's terrorist attacks in the US, a domestic price war, and the slowdown in the U.S. and Mexican economies, which led to lower passenger traffic. Cintra owns Aeromexico and Mexicana, Mexico's two largest airlines. CONFIA: Defrauded Bondholders Still Seeking Solution ----------------------------------------------------- More than two years has passed since a group of 650 defrauded bondholders of Confia demanded the return of their money, but up to now, a final solution still has not been reached, Mexico City daily El Universal reported Monday. Mexico's bank bailout agency IPAB said it is still in negotiations with the disgruntled investors, but according to the agency, their losses are not covered by deposit insurance. Still, IPAB is communicating with the group, "and from there we will determine their rights to the assets of the intermediary," said an IPAB source. IPAB predecessor Fobaproa sold Confia to Citibank "without the responsibility of the bondholders," said the source. In 1999, the bondholders group accused Grupo Financiero Abaco- Confia of fraud of 500 million pesos, allegedly committed by employees. STANDARD AUTOMOTIVE: Announces Forbearance Under Credit Facility ---------------------------------------------------------------- Standard Automotive Corporation announced Saturday that the Company and its bank lenders under the Company's Term Loan and Revolving Credit Facility ("Credit Facility") have entered into a forbearance agreement expiring on January 31, 2002. Pursuant to the forbearance agreement, the bank lenders have agreed to refrain from exercising their rights and remedies under the Credit Facility until such date with respect to the defaults by the Company thereunder. The bank lenders maintain the ability to exercise their rights and remedies under the Credit Facility to the extent the Company defaults under such forbearance agreement or at any time following the termination of such forbearance agreement. Standard Automotive Corporation is a diversified company with production facilities located throughout the United States, Canada, and Mexico. Standard manufactures precision products for the aerospace, nuclear, industrial and defense markets; it designs and builds remotely operated systems used in contaminated waste cleanup; it designs and manufacturers trailer chassis used in transporting maritime and railroad shipping containers; and it builds a broad line of specialized dump truck bodies, dump trailers, and related products. Through its Providence Group, Standard provides engineering professional services to both government and commercial industry. CONTACT: TEL: 212/286-1300 Investor Relations: Matt Burris TEL: 908/874-7778 Standard Automotive Corporation ======= P E R U ======= NUEVO MUNDO: BSCH Peru Returning Deposits To Clients ---------------------------------------------------- Peruvian bank BSCH Peru has started to return deposits to clients of intervened bank Banco Nuevo Mundo after winning the contract to handle the reimbursement process, Business News Americas revealed in a report. Accordingly, Peru will first reimburse deposits - up to US$60,000 per client - to the 10,000 clients that do not have debts with Nuevo Mundo. Reports last week indicated that some US$50 million would be returned to Nuevo Mundo's clients. Nuevo Mundo was intervened in December last year after former President Alberto Fujimori's surprise run for shelter in Japan triggered a deposit run on some smaller banks. The government failed to sell the bank to the private sector and Nuevo Mundo will be liquidated after deposits are returned. ================= V E N E Z U E L A ================= SIDOR/AMAZONIA: Begins Debt Restructuring Talks With Creditors -------------------------------------------------------------- Venezuelan steelmaker Sidor and Amazonia, the international consortium that holds 70 percent of the former, will seek to restructure their debts, Argentine steelmaker Siderar revealed in a Business News Americas report. Siderar is part of Amazonia with a 19.8-percent ownership. "Sidor and Amazonia will start negotiations with creditors and entities controlled by the government of Venezuela aimed at restructuring financial obligations," the Siderar statement said. The statement blamed the move on the "global steel crisis, weakened financial markets, the appreciation of Venezuela's bolivar currency, and other adverse conditions." It did not say how much debt was involved in total. Sidor is currently halting production for a week per month despite record production levels. The remaining 30 percent of Sidor is owned by Venezuelan public company CVG whilse Mexico's Tamsa and Hylsamex, Brazil's Usiminas and Venezuela's Sivensa make up the Consorcio Amazonia. 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 * * *