/raid1/www/Hosts/bankrupt/TCRLA_Public/020118.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, January 18, 2002, Vol. 3, Issue 13
Headlines
A R G E N T I N A
BANCO RIO: Buys Shares In The Market To Pay For Remaining Stake
HSBC BANK: Parent May Write Down $1B of Bad Argentine Loans
IMPSAT: Misses Bond Interest Payment, Vendor Financing Deal Ends
SCH/BBVA: S&P Predicts Withdrawal From Argentina
B R A Z I L
BELL CANADA: Gets C$440M From Recent Rights Offering
CELESC: Stock Up On Expectation Government May Assume State Debt
ENRON CORP.: Brazilian Elektro Unit Ditches $82M Bond Sale
VARIG: Shareholders To Decide On VEM Share Capital Increase
C H I L E
TELEX-CHILE: Southern Cross Seeks To Raise Stake By Up To 90%
C O L O M B I A
MINERCOL: To Begin Restructuring Process
M E X I C O
AHMSA: Bank Creditors Blast CFE Deal
AHMSA: Announces Restructuring Plan Will Be In SEC's Hands Soon
BANCRECER: Banorte Begins Integration By Sacking 490 Employees
CINTRA: Continental Airlines Maintains Acquisition Interest
ENRON CORP: May Begin Selling Three Energy Assets This Week
P E R U
AEROCONTINENTE: DEA Says Owner Involved In Drug Trafficking
AEROCONTINENTE: To Commence European Flight By February
- - - - - - - - - -
=================
A R G E N T I N A
=================
BANCO RIO: Buys Shares In The Market To Pay For Remaining Stake
---------------------------------------------------------------
Spain's Banco Santander Central Hispano SA (SCH) is buying its
own shares on the stock market in order to pay for the remaining
18.54 percent stake in Banco Rio de la Plata, which it doesn't
already own.
According to a report by Expansion, SCH has chosen this method,
rather than a 0.7 percent equity capital increase, in order to
reduce costs. SCH is faced with the imminent expiry of a "non
negotiable" option signed last June with Merrill Lynch for the
acquisition of 100 percent of Banco Rio.
According to SCH sources, the transaction, which involves the
swap of 30.24 million SCH shares, or 0.65 percent of its capital,
for the additional shares in its Argentine unit, is not a means
of help for Argentina in its current situation. Rather, it is a
response to an agreement made in 1997.
SCH has until 21 January to transfer the shares to Merrill Lynch
& Co Inc. Meanwhile, Merrill Lynch denied market rumors that it
carried out a major placement of shares in Banco Santander
Central Hispano SA.
Dealers said Wednesday the US broker had placed 27.2 million SCH
shares at 9.03 eur per share as part of SCH's purchase of the
remaining 18.54 percent of Banco Rio de la Plata for about 275
million euros ($245 million) from Merrill Lynch.
CONTACTS: SANTANDER (SCH)
Emilio Botin-sanz De Sautuola Y Garcia De Los Rios -
Chairman, OR
Angel Corcostegui Guraya - First Deputy Chairman, OR
Jaime Botin-sanz De Sautuola Y Garcia De Los Rios -
Second Deputy Chairman, OR
Matias Rodriguez Inciarte - Deputy Chairman, OR
Angel Corcostegui Guraya - Deputy Chairman & Chief
Executive
SCH Address:
Paseo De Pereda, Numeros 9 AL 12
Santander, Spain
Phone +34 94 2206100
http://www.santandercentralhispano.es/
BANCO RIO
Ana Patricia B. S. de Sautuola y O'Shea, Chairman
Jose L. E. Cristofani, Executive Vice Chairman and CEO
Pablo Caride, Corporate Finance
Bartolome Mitre 480
1036 Buenos Aires, Argentina
Phone: +54-(0)14-341-1081-1580
Fax: +54-(0)14-341-1074-1084
BANCO RIO LEGAL ADVISOR:
Shearman & Sterling
599 Lexington Avenue
New York, NY 10022-6069, USA
Tel: (+1 212) 848-4000
Fax: (+1 212) 848-7179
Firm Managing Partner: Robert C. Treuhold
HSBC BANK: Parent May Write Down $1B of Bad Argentine Loans
-----------------------------------------------------------
Analysts said HSBC Holdings Plc, Europe's largest bank by market
value, is likely to write down as much as $1 billion for bad
loans last year from Argentina, according to a report by the
National Post.
According to Richard Staite, an analyst at SG Securities in
London: "If you combine the bond portfolio, the conversion of
customer loans to pesos and the inevitable rise of non-performing
loans, a billion is what we are looking at."
"There could be more losses, depending on how the economy
develops," he added.
Argentina has urged banks and other companies to share the cost
of its currency devaluation and $141-billion debt default. The
government, in an attempt to boost exports and end a recession,
has ordered banks to convert dollar-denominated loans of as much
as $100,000 into pesos, reducing the value of those assets.
HSBC had $4.9 billion of Argentine exposure as of June 30. Non-
performing loans were worth $590 million, for which it set aside
$338 million. The bank has 2.8 percent of its assets in Latin
America and makes about 3 percent of its profit there.
"We're being very pessimistic," said James Leal, an analyst who
advises fund managers at Gerrard Ltd.
Leal said HSBC may write down $500 million to $600 million for
the second half of last year.
"HSBC can absorb it. It's not a bad-debt charge that's about to
wipe out HSBC," Leal said.
IMPSAT: Misses Bond Interest Payment, Vendor Financing Deal Ends
----------------------------------------------------------------
In an official press release, IMPSAT Fiber Networks, Inc.
("IMPSAT" or the "Company") (NASDAQ:IMPT), a leading provider of
integrated broadband data, Internet and voice telecommunications
services in Latin America, announced Tuesday that the applicable
30-day grace period for payment of interest on its $225 million
12-3/8% Senior Notes due 2008 ("the Notes due 2008") has expired
and the Company will not make the interest payment.
The Company also will not make a $7.6 million interest payment
due today on its $125 million 12-1/8% Senior Guaranteed Notes due
2003 (the "Notes due 2003"). Under the terms of the Notes due
2003, IMPSAT has another 30 days to make the payment in order to
avoid default consequences.
The Company also stated that previously-announced waivers
originally granted in October 2001 by the Company's principal
equipment suppliers (the "Vendor Financing Creditors"), had
expired on January 11, 2002. As of December 31, 2001, the
Company's aggregate outstanding balance under its financing
agreements with these Vendor Financing Creditors totals $261.1
million plus accrued and unpaid interest.
As previously announced, the Company has been engaged in
negotiations with representatives of the holders of its senior
notes (the Notes due 2008, Notes due 2003, and $300 million 13-
3/4% Senior Notes due 2005) and with the Vendor Financing
Creditors regarding the terms of a consensual restructuring of
its financial obligations and balance sheet, and has retained
Houlihan Lokey Howard & Zukin Capital to assist it in connection
with these negotiations. The Company stated that significant
progress has been made in these negotiations.
IMPSAT Fiber Networks, Inc. is a leading provider of fully
integrated broadband data, Internet and voice telecommunications
services in Latin America. IMPSAT has recently launched an
extensive pan-Latin American high capacity broadband network in
Brazil, Argentina, Chile, Peru and Colombia using advanced
technologies, including IP/ATM switching, DWDM, and non-zero
dispersion fiber optics. The Company has also deployed fourteen
facilities to provide hosting services. IMPSAT currently provides
services to over 3,000 national and multinational companies,
government entities and wholesale services to carriers, ISPs and
other service providers throughout the region. The Company has
local operations in Argentina, Colombia, Venezuela, Ecuador,
Mexico, Brazil, the United States, Chile and Peru. Visit us at
www.impsat.com.
CONTACT: IMPSAT Fiber Networks, Inc.
Investor Relations:
Guillermo Jofre / Gonzalo Alende Serra
54.11.5170.3700
or
Houlihan Lokey Howard & Zukin Capital
John McKenna / Lily Chu
212/497-4100
or
Citigate Dewe Rogerson Inc.
John McInerney / Robin Weinberg
212/688-6840
SCH/BBVA: S&P Predicts Withdrawal From Argentina
------------------------------------------------
Standard & Poor's Corp. Spain and Portugal director Juan de la
Mota said that Banco Santander Central Hispano SA and Banco
Bilbao Vizcaya Argentaria SA could pull out from Argentina if the
economic crisis there deepens, reports AFX.
However, according to de la Mota, although banks will suffer
"substantial losses" at their operations in that country, they
both have the capacity to survive the situation and have already
made the necessary provisions.
S&P doesn't intend to lower its ratings for Spanish companies
with investments in Argentina, unless the situation there were to
deteriorate significantly or begin to have a knock-on effect on
countries such as Brazil or Mexico.
The ratings agency's analysts, de la Mota said, consider that
their ratings for Spanish companies already take into account the
most likely economic and social outcome in Argentina.
CONTACTS: SANTANDER (SCH)
Emilio Botin-sanz De Sautuola Y Garcia De Los Rios -
Chairman, OR
Angel Corcostegui Guraya - First Deputy Chairman, OR
Jaime Botin-sanz De Sautuola Y Garcia De Los Rios -
Second Deputy Chairman, OR
Matias Rodriguez Inciarte - Deputy Chairman, OR
Angel Corcostegui Guraya - Deputy Chairman & Chief
Executive
Their Address:
Paseo De Pereda, Numeros 9 AL 12
Santander, Spain
Phone +34 94 2206100
http://www.santandercentralhispano.es/
BANCO BILBAO VIZCAYA ARGENTARIA SA (BBVA)
Emilio De Ybarra Y Churruca, Chairman
Francisco Gonzalez Rodriguez, Chairman
Angel Cano, CFO
Their Address:
Gran Via, 1, 2a Planta
48001 Bilbao
Spain
Phone +34 94 487 55 55
Home Page http://www.bbva.es
===========
B R A Z I L
===========
BELL CANADA: Gets C$440M From Recent Rights Offering
----------------------------------------------------
Bell Canada International Inc. said it closed its rights offering
last week, raising C$440 million in gross proceeds, reports
Reuters.
The company, which operates wireless services primarily in South
America, revealed that public shareholders exercised over 42
percent of the rights offered to them.
BCE Inc., which owns 73.5 percent of Bell Canada International,
exercised all of the rights issued to it, as well as all
remaining rights not exercised by the public, Bell Canada
International said.
Consequently, Bell Canada International will receive, on February
15, 2002, the maximum gross proceeds of the offering.
The holders who exercised their rights have been issued units
consisting of principal warrants and anti-dilutive secondary
warrants, with common shares to be issued on February 15, 2002
upon the exercise of the principal warrants.
Proceeds of the rights offering, according to Bell Canada
International, will be used to pay the accrued interest owed to
holders of its convertible unsecured debentures due February 15,
2002, reduce credit facility debt, fund its guarantee of an April
2002 Telecom Americas obligation relating to the acquisition of
Tess S.A., a Brazilian cellular company, and for general
corporate and investment purposes.
CONTACT: Bell Canada International Inc.
Peter Burn (Media), Vice-President, Corporate
Affairs
TEL: (514) 392-2357
E-mail: Peter.burn@bci.ca
Bell Canada International Inc.
Brian Quick (Investors), Vice-President, Finance
TEL: (514) 392-2369
E-mail: brian.quick@bci.ca
CELESC: Stock Up On Expectation Government May Assume State Debt
----------------------------------------------------------------
Shares at the state-controlled utility rose on expectation that
the federal government will assume the debt that Santa Catarina
state owes it, said Luis Felipe Cruz, analyst at Uniao de Bancos
Brasileiros SA in Sao Paulo. Centrais Eletricas de Santa Catarina
SA (Celesc) shares jumped 10 percent to 53 centavos on the news,
reports Bloomberg.
If the federal government accepts the debt, the Company would
receive government bonds that could be immediately sold in the
market, he said. Celesc could receive up to 620 million reais
from Santa Catarina state, or 80 centavos per 1,000 shares.
Celesc also rose after the Santa Catarina Gov. Esperidiao Amin
signed a law authorizing the Company to be divided into four
parts -- holding, generation, distribution and telecommunication.
"This is clearly a step to prepare the company to be privatized,"
said Cruz.
CONTACTS: CELESC
Francisco De Asis Kuster, Chairman
Enio Andrade Branco, Finance Director
Their Address:
Rodovia SC 404 - Km 3
Itacorubi 88034-900 Florianopolis - SC
Brazil
Phone +55 48 231 6011
Home Page http://www.celesc.com.br
ENRON CORP.: Brazilian Elektro Unit Ditches $82M Bond Sale
----------------------------------------------------------
Elektro Eletricidade e Servicos SA, a Brazilian power
distribution unit of U.S. energy trading company Enron Corp.,
informed the Sao Paulo bourse that it has canceled its plans to
sell 195 million reais ($82 million) in the domestic market after
its parent filed for bankruptcy last month, reports Bloomberg.
Elektro, which was acquired by Enron in 1998, sought approval
from the country's Securities regulator in October for the sale,
which would be managed by Banco Sudameris SA in Brazil.
In December, Brazil's securities regulator ordered Elektro to
reinstate its earnings going back to 1998 following a similar
decision by the U.S. Securities and Exchange Commission on the
controlling company.
Elektro has posted losses for six quarters.
CONTACTS: ENRON CORP., +1-713-853-4738
Mark Palmer, Investor Relations Dept.
P.O. Box 1188, Suite 4926B
Houston, TX 77251-1188
(713) 853-3956
Email: investor-relations@enron.com
Enron Corp.
Public Relations Dept.
P.O. Box 1188, Suite 4712
Houston, TX 77251-1188
(713) 853-5670
TRANSFER AGENT, REGISTRAR, DIVIDEND PAYING AND
REINVESTMENT PLAN AGENT (DIRECTSERVICE PROGRAM)
Equiserve Trust Company, N.A.
P.O. Box 2500
Jersey City, NJ 07303-2500
(800) 519-3111
(201) 324-1225
TDD: (201) 222-4955
equiserve.com
VARIG: Shareholders To Decide On VEM Share Capital Increase
-----------------------------------------------------------
Shareholders in the Brazilian airline Varig are to decide this
week whether or not to authorize Varig Engenharia e Manutencao
(VEM) to up its share capital by R$419.5 million, reports O
Globo.
VEM is Varig's new engineering and maintenance subsidiary. Varig
controls 99.9 percent of the company. VEM, which was created in
December last year, is expected to launch operations by the end
of this month.
Varig has been hampered by slow ticket sales and rising operating
costs since the September 11 attacks along with most other
airlines. The company has announced it would cut 10 percent of
its 17,500 workers and roll back fleet growth plans.
VARIG CONTACTS: VARIG Brazilian Airlines, Miami
Jeff Kriendler, 305/866-2115
email: jkriendler@aol.com
Legal Department:
Rua 18 de Novembro nr. 800 Navegantes
Zip : 90240-040
City : Porto Alegre / RS - Brazil
Telephone numbers: (51) 358-7039/7040
(51) 358-7010/7042
INDEPENDENT ACCOUNTANTS
Arthur Andersen S/C
Rua Alexandre Dumas 1981
Cep: 04.717-906 - Centro / Sao Paulo / S P-
Brazil
Tels.: (11) 5504-8200
Fax: (11) 5504-8373
INVESTOR RELATIONS MANAGER/STOCKHOLDER SERVICES
Leir s Stortti
E-mail: leir.stortti@varig.com.br
Av. Almte. Silvio de Noronha, n 365 -
Bloco "A" - s/416
Centro - Rio de Janeiro - RJ
Cep.: 20021-010
Tels.: (21) 3814-5401/5402/5403/5415
Fax: (21) 3814-5543
=========
C H I L E
=========
TELEX-CHILE: Southern Cross Seeks To Raise Stake By Up To 90%
-------------------------------------------------------------
US-based investment fund Southern Cross, which already has an
18.1-percent stake in Telex Chile, is looking to raise its
ownership in the Chilean telecoms operator to between 34 percent
and 90 percent, says Business News Americas.
The U.S. firm's plan to broaden its control will be implemented
through a three-step process.
The first stage involves the acquisition of debt, said Southern
Cross representative Raul Sotomayor. Next, a public tender offer
to acquire shares and, finally, capitalization through a capital
increase.
According to the Sotomayor, Southern Cross has already signed
debt repurchasing contracts with Telex's creditors for $96
million, which, added to a $10 million cash injection, total $106
million. Once the operation is completed, Telex will be left with
debts between $10 million and $12 million.
The public tender offer, scheduled for early February, will be
for 65,392,249 Series A and B shares. Southern Cross will pay
around 18 pesos for each share, well below the current market
price of 49.5 pesos a share.
A $379-million capital increase should take place following an
extraordinary shareholders' meeting on January 28. The capital
increase proposal mandates that the capitalization must equal at
least 70 percent of Telex's debt, and 85 percent in the case of
its subsidiary Chilesat, and be completed in 270 days.
===============
C O L O M B I A
===============
MINERCOL: To Begin Restructuring Process
----------------------------------------
Hector Piedrahita, president at Minercol, announced that the
Colombian state mining company will continue to exist but will
undertake a restructuring process, reports Business News
Americas. The announcement came amid speculations that Minercol
would be wound up or merged with another entity in the sector.
But according to Piedrahita: "the company will continue in its
role as a state body under the Ministry of Mines... We are
adjusting to the new reality and the new circumstances of the
mining code."
The new mining code, which came into force at the end of last
year, aims to facilitate investment.
"Our clients are the national and foreign investors who are
prepared to come to the country to invest in exploration and
production," Piedrahita said.
The new code formally ended the state's corporate role in the
sector, given its lack of resources, and transformed it into a
vehicle to promote investment, both domestic and foreign.
Minercol, under the new legislation, will also be responsible for
administration of mineral resources, titles, technical
assistance, development, regulation and overseeing of concession
contracts. It will also act as an adviser to the government on
matters related to mining.
CONTACTS: MINERCOL
Hector Piedrahita, President
Carrera 7 #31-10 Piso 5
Bogot D.C.
Tel:+57 (1) 350 3111 / 9111
Fax:+57(1) 350 3569 / 2380
www.minercol.gov.co
===========
M E X I C O
===========
AHMSA: Bank Creditors Blast CFE Deal
------------------------------------
A committee of bank creditors of Altos Hornos de Mexico (AHMSA)
said state-owned power utility the Federal Electricity Commission
(CFE) should not have signed a long-term contract with AHMSA
subsidiary Minera Nueva Rosita while AHMSA is still under
suspension of debt payments, reports Mexico City daily Reforma.
Mexican law prohibits state-owned companies from signing
contracts with companies that have suspended their debt payments
or that are in bankruptcy.
However, as reported in a previous TCR-LA edition, AHMSA
Spokesperson Francisco Orduna insisted that the deal AHMSA signed
to CFE is legal.
"The agreement that was signed is completely in line with the
law, because the CFE signed it with a subsidiary of AHMSA that is
not under a suspension of payments," said Orduna.
The spokesperson had refused to provide the name of the
subsidiary that signed the deal with the CFE but reports suggest
that the deal was made through subsidiary Minera Nueva Rosita,
which is not under suspension of payments.
AHMSA: Announces Restructuring Plan Will Be In SEC's Hands Soon
---------------------------------------------------------------
Altos Hornos de Mexico announced that within the next few days it
will formally present its debt-restructuring agreement to the
U.S. Securities and Exchange Commission (SEC), reports Mexico
City daily el Economista.
"The lawyers are making adjustments to the text of the document,"
said AHMSA Communications Director Francisco Orduna Mangiola. The
Company is unable to make further comments because of legal
restrictions, he said.
Under U.S. law, AHMSA executives can't comment on the subject
until the process is concluded, Orduna explained.
The announcement of the submission of the agreement came amid
pressure from the Company's bank creditors to quickly submit it
to the SEC. Creditors are now running out of patience after the
Company delayed filing the document on several occasions.
CONTACTS: Alonso Ancira Elizondo, CEO, Vice Chairman, Pres.&CEO
Jorge Ancira Elizondo, Chief Financial Officer
Manuel Ancira Elizondo, Chief Operating Officer
Their Address:
Prolongacion B. Juarez s/n,
Monclova , Coahuila 25770
Mexico
http://www.ahmsa.com
Phone: +52 86 33 81 72
Fax: +52 86 33 65 66
BANCRECER: Banorte Begins Integration By Sacking 490 Employees
--------------------------------------------------------------
Grupo Financiero Banorte dismissed 490 employees, in a move that
marked the start of its integration process of the recently-
acquired Bancrecer, reports Mexico City daily Reforma. Some 65
percent of the fired employees belonged to the bank's corporate
center.
Banorte will begin a second round of layoffs on January 31, and a
third at the end of March. Banorte is expected to end up reducing
its payroll by between 2,000 and 2,500 employees as a result of
its acquisition of Bancrecer.
Banorte has decided on Bancrecer's Tlalpan computer center for
the banks' merged operations, and will use Banorte's computer
center in Monterrey as a backup.
CONTACTS: BANORTE
Institutional Investors
Jorge Coln
Director de Relaciones con Inversionistas
(528) 319 52 10
Gabriela Renovato
Gerente de Relaciones con Inversionistas
(528) 319 52 19
E-mail: investor@banorte.com
Fax.- (528) 319 52 35
Correspondent Bank
Eduardo Gonz lez
Vice Presidente de Banca Internacional
(528) 319 62 07
Claudia Zapata Cantœ
Gerente de Bancos Corresponsales
(528) 319 62 65
e-mail: claudia.zapata@banorte.com
Fax.- (528) 319 62 43
Brokerage House
Gerardo Molina
Vice Presidente de An lisis
(52) 53 25 28 40
Fabiola Molina
Analista del Sector Burs til
(52) 53 25 28 00 ext.2656
E-mail: fvmolina@cbbanorte.com.mx
Fax.- (52) 53 25 29 54
CINTRA: Continental Airlines Maintains Acquisition Interest
-----------------------------------------------------------
Joseph Mohan, sales director at U.S.-based Continental Airlines,
said the company is still interested in acquiring Cintra, the
holding company that owns Aeromexico and Mexicana, relates Mexico
City daily el Economista.
Regardless of how Cintra ends up being sold, Continental is
interested, because Mexico is its main market outside of the
United States, Mohan said.
The U.S. airline has been operating in Mexico for more than 20
years, and Fitch's recent upgrade of Mexico to investment grade
makes Continental even more confident in the country.
In a previous TCR-LA report, Cintra admitted that both Mexicana
and Aeromexico would not be able to comply with some of their
obligations linked to a debt program.
The holding company, which analysts expect to close the year with
net losses amounting to almost 1 billion pesos, blames its
financial situation to the world economic recession that stemmed
from the September 11 terrorist attacks in the United States.
CONTACTS: Jaime Corredor Esnaola, Chairman
Juan Dez-Canedo Ruiz, CEO
Rodrigo Ocejo Rojo, CFO
Xola 535, Piso 16, Col. del Valle
03100 M,xico, D.F., Mexico
Phone: +52-5-448-8050
Fax: +52-5-448-8055
OR
C.P. Francisco Cuevas Feliu, Investor Relations
Xola 535, Piso 16
Col. del Valle
03100 M,xico, D.F.
Tel. (52) 5 448 80 50
Fax (52) 5 448 80 55
infocintra@cintra.com.mx
ENRON CORP: May Begin Selling Three Energy Assets This Week
------------------------------------------------------------
Enron, the US-based energy company that filed for bankruptcy
protection on December 2 last year after Dynegy Inc. abandoned
its $23 billion takeover of the energy trader, is expected to
begin the sale of its Mexican assets this week, says Business
News Americas. The assets reportedly include a cogeneration
electricity plant, a gas pipeline and permission to transport
gas.
The decision to sell, however, depends on the proceedings to
which the operation will be subjected, said company spokesman
Eric Thodc.
Proceedings are to take place in the New York southern district
bankruptcy court, where Swiss investment bank UBS Warburg
recently negotiated to take over Enron's trading operations.
CONTACTS: Mark Palmer of Enron Corp., +1-713-853-4738
Enron Corp.
Investor Relations Dept.
P.O. Box 1188, Suite 4926B
Houston, TX 77251-1188
(713) 853-3956
Email: investor-relations@enron.com
Enron Corp.
Public Relations Dept.
P.O. Box 1188, Suite 4712
Houston, TX 77251-1188
(713) 853-5670
TRANSFER AGENT, REGISTRAR, DIVIDEND PAYING AND
REINVESTMENT PLAN AGENT (DIRECTSERVICE PROGRAM)
Equiserve Trust Company, N.A.
P.O. Box 2500
Jersey City, NJ 07303-2500
(800) 519-3111
(201) 324-1225
TDD: (201) 222-4955
equiserve.com
=======
P E R U
=======
AEROCONTINENTE: DEA Says Owner Involved In Drug Trafficking
-----------------------------------------------------------
U.S. Drug Enforcement Administration (DEA), in a document
published Wednesday, revealed that Fernando Zevallos, the founder
of AeroContinente, has been involved in drug trafficking for
decades, the AP reports.
The November 16, 2001, letter from Terry Parham, director of the
DEA's Lima office, to a Peruvian judge was published in El
Comercio, Lima's leading daily. A U.S. Embassy spokesman
confirmed that the document was authentic but said he could not
comment on an ongoing investigation.
Meanwhile, Lupe Zevallos, AeroContinente's president and Fernando
Zevallos' sister, denied accusations that the airline had links
to drug trafficking.
"What they are trying to do is eclipse AeroContinente's
successes," Zevallos told reporters, accusing El Comercio of bias
against AeroContinente and links to rival LanPeru, the Peruvian
unit of LanChile. "We are going to show point by point that (the
charges) don't wash," she said.
Fernando Zevallos has been accused of accepting at least $1
million from drug runners to help found the airline, as well as
of having had links to Peru's jailed ex-spy chief Vladimiro
Montesinos. He denies those charges.
"It's a commercial war," said Zevallos.
AEROCONTINENTE: To Commence European Flight By February
-------------------------------------------------------
Peruvian airline AeroContinente, which recently managed to escape
bankruptcy after it reached an agreement with creditors involving
debts of $17.1 million, said it would begin flights to Madrid --
its first European route -- as soon as February, reveals Reuters.
AeroContinente recently inaugurated three Boeing 767-200s into
the airline's fleet of some 20 aircraft.
Aero Continente is Peru's biggest carrier and is known for its
aggressive pricing. It flies to eight Latin American countries
and the United States and boasts some 60 percent of Peru's air
travel market.
The unlisted airline has said it hoped to expand its European
roster to include London, Lisbon, Rome and Paris.
The airline's operations in Chile, where it ranks second after
LanChile, were grounded for nearly two months last year amid a
money laundering inquiry. AeroContinente said that setback cost
the airline up to $1.5 million a day. Currently the company's
management is embattled in a DEA drug trafficking investigation.
***********
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 Fe Ong Va¤o, Editors.
Copyright 2002. 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 * * *