Time to Re-Engineer

Feb 1, 2002

Bloated with debt, Mexico's conglomerates have largely failed to reshape themselves into profitable, efficient companies capable of competing globally.

In the middle of last year with profits down 84%, Grupo Cydsa, a Mexican textile and chemical conglomerate, sold $152 million-worth of subsidiaries and other assets in a vain effort to keep current on its bank and bond debt. But by October, with its banks pressing for payment and a $200 million bond maturing, the company had to sell its Monterrey headquarters to stay afloat. Cydsa managed to generate $60 million from the sale, and with a decidedly lower profile, the company moved across town and started paying rent. Like many conglomerates in Mexico, Cydsa is majority-owned by a rich family unaccustomed to scrimping on corporate trappings. However humiliating the sale may have been for the González Sada family, it at least helped the company win some support from its bankers. "The new offices are modern and functional, but down-to-earth," says Antonio Ortíz, head of corporate banking at Banorte,...

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