"We were doing good".

Mission Bufete Constructors was on a building tear in Texas--until its Mexican parent company ran into trouble with its creditors.

EARLY LAST YEAR, MISSION BUFETE Constructors was on a roll. The Texas-based subsidiary of Mexican construction giant Bufete Industrial had just renovated Houston's City Hall, built a children's center and snared two more projects to boot. It was putting up a regional headquarters for the Texas Department of Public Safety and a public broadcasting center for the University of Houston. The value of all four contracts was a tidy US$36 million.

Then the roll ended, abruptly. Last February, a group of creditors--led by U.S.-based Citibank, Mexican banks Serfin and IXE, government export finance bank Bancomext and bondholders represented by Bank of New York--took over its parent company after it missed a $100 million Eurobond payment. They threw out management, including the company's founder, Jos[acute{e}] Mendoza Fern[acute{a}]ndez, and started shoring up its finances in order to sell it off.

In March, Enron Corp., the worlds largest energy trader, provided a management team and financing for Mission Bufete's parent company. The three-year deal gives Enron eventual equity in the company.

Mission Bufete Constructors remains in limbo. Despite a healthy amount of new construction in Houston, it cannot bid on any new contracts; it's only allowed to finish those already started.

Officials at Bufete Industrial in Mexico City didn't return several calls from LATIN TRADE inquiring about their U.S. operations. And Mission Bufete Constructors' project manager in Houston, Luis Saldana, on the advice of the company's attorney, wouldn't talk about his division except to say, "Mission Bufete is a good company. I'm sorry that we haven't been able to keep bidding projects because we were doing good.'

Bufete, which had sales of $561.3 million in 1998, is just one of many Latin American companies that have tried to make names for themselves in the United States, bringing prestige to their operations as well as dollar-based revenues to their coffers. But, as other Latin American companies that have ventured overseas have found, when the parent gets in trouble, its offspring often suffer as well.

Cleaning up City Hall. Mission Bufete Constructors was started in the mid-1990s to generate new business for its parent corporation which, like many other Mexican construction companies, was reeling after the massive devaluation of the peso of 1994. While construction in Mexico had dried up, Houston had long since recovered from its own oil-related economic crisis of the mid-1980s and was building again, with construction cranes jutting up all over the city.

Mission jumped in, snaring some high-profile projects. Among its first was the $10 million renovation of the 11-story Art Deco-style City Hall. Based on designs by Austria-born architect Joseph Finger and built in 1939, the building was in much need of repair--its limestone exterior was covered with gray grime, its roof leaked and its wiring failed to pass the city's own fire code.

Mission Bufete got to work in mid1994, cleaning up the exterior, tearing out walls and replacing old wiring, ductwork and air-conditioning systems. Despite the project's taking a year longer than expected (due to a fire and an outdoor deck that had to be completely rebuilt), the new-and-improved City Hall reopened at the end of 1997 with great fanfare. "It's gorgeous," bragged Dan Jones, Houston Mayor Bob Lanier's point man for the renovation, when it was finished. "It jumps out at you. It glows. I get compliments on the building every day of the week."

The builder's next project, equally headline-grabbing, was the $10 million Children's Assessment Center for counseling sexually abused kids. The 53,000-square-foot center, a colorful, whimsical place financed by public and private monies, is the largest of its kind in the country. When the building officially opened in March 1998, first lady Hillary Rodham Clinton attended the ribbon-cutting ceremony.

Last-ditch efforts. Following these successes, Mission Bufete continued to land big projects around town, ranging from the renovation of the football stadium and the construction of a new broadcasting center at the University of Houston ($12.5 million) to a new suburban elementary school ($7.5 million) and a three-story office building that would serve as the central command post for Region Two of the Texas Department of Public Safety ($7.6 million).

Then, in July 2000, came the bad news: Mission's parent, Bufete Industrial, defaulted on a $100 million Eurobond. While Bufete waited for rescue, cash grew short, credit lines were tapped and the company began selling concessions it had already won in a last-ditch attempt to raise funds. Among the sales were a water treatment facility in Mexico City it sold to Industrias Pe[tilde{n}]oles and a natural gas distribution facility in Tamaulipas it passed off to Gaz de France.

The proceeds didn't help either the parent company or its subsidiaries, including Mission Bufete Constructors. So the Houston builder had to stop bidding on further projects and focus on finishing what it had already started. The stadium had been completed, and the broadcasting center and elementary school are both expected to be concluded by May The Texas Department of Public Safety building should be finished by June.

Despite its parent company's financial problems, Mission Bufete's customers remain pleased. "They're a good contractor," says Andrew Mokry, the Texas Department of Public Safety's building program manager in Austin. "They tend to their subs [subcontractors], they do really good administrative work and they don't mind when I criticize them."

While its projects in Houston have been successful, Mission Bufete experienced trouble in San Antonio. It formed a joint venture with HJ Group, a San Antonio construction company to put up a school, some military buildings and a $17 million hospital for diabetics. It finished the projects, but booked a big loss on the contracts because of building delays and unexpected work that wasn't included in its original budgets. It is now in the midst of closing its operation there and reassigning its employees.

Carlos Perezalonso, an analyst at ABN Amro in Mexico City, says Bufete's U.S. operations used to be important to the company (which includes another builder, GBI Construction Co. in Norcross, Georgia, that has been focusing on schools). He blames the parent's misfortunes not on the operational side but on the company taking on too much debt. "They destroyed the company with bad financial management," Perezalonso says. And until its parent company gets its house in order, Mission Bufete will have to remain content watching from the sidelines as other firms enjoy the building boom in Houston.