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Grupo Hermes to Focus Resources on Growth Opportunities in Energy Sectors and Telecommunications

3 December 1997

Grupo Hermes to Focus Resources on Growth Opportunities in Energy Sectors and Telecommunications

         Sale of Aralmex Shock Absorber Business Marks Key Initiative

         - Aralmex Transaction Valued at Approximately $94 Million -

    MEXICO CITY, Dec. 3 -- Grupo Hermes, one of Mexico's leading
industrial companies, today announced that it is reconfiguring its asset base
to be well-positioned to take advantage of growth opportunities related to the
privatization of Mexico's energy and telecommunications sectors.
    Consistent with this strategic shift, Grupo Hermes today has completed the
sale of its subsidiary, Aralmex, a worldwide leader in vehicle shock
absorbers, to the German-based Mannesmann Sachs, one of the world's largest
auto parts manufacturers and suppliers.  Aralmex is owned 60% by Grupo Hermes
and 40% by the General Motors Corporation.  The transaction is valued at
approximately US$94 million, including the assumption of approximately
US$24 million of debt by Mannesmann Sachs.
    Ing. Carlos Hank Rhon, Chairman of Grupo Hermes, said, "I very much
enjoyed my business relationship with the fine people of General Motors but
auto parts manufacturing is not a part of Grupo Hermes' current strategic
vision.
    "This transaction holds important benefits and potential to Grupo Hermes,
Aralmex and Mannesmann Sachs.  For Grupo Hermes, it adds substantial capital
to the company's already strong balance sheet.  This enhances our flexibility
to be an important participant in the privatizations now underway in Mexico in
energy and telecommunications -- markets with very appealing growth potential.
For Aralmex, it assures that the company, through its association with
Mannesmann, will have a continued strong future as a global leader in its line
of business.  For Mannesmann Sachs, the transaction provides an important
strategic platform on which to grow its worldwide presence in serving the
demands of the automotive marketplace."
    Ing. Ramon Torres, President of Grupo Hermes, stated, "We are extremely
pleased with what we have achieved with Aralmex under Grupo Hermes ownership
over the past fifteen years.  Under our ownership, Aralmex has grown from a
relativity small operation to one which now is producing six million units per
year; serves fifty-five percent of the replacement automotive market in
Mexico; and produces shock absorbers for the Mexican plants of General Motors,
Volkswagen and Nissan vehicles which these companies manufacture both for the
domestic Mexican market and for export.  We are pleased that Grupo Hermes has
been able to help build Aralmex into the dominant player in its market.
    "At the same time, Grupo Hermes moves forward with a strong business
presence in the rapidly growing energy sector, in both co-generation and
equipment and services, and in automotive distribution and transportation.
We are confident that, with our solid entry base already in place and with our
financial flexibility further enhanced, Grupo Hermes will be an important
participant in the growth areas of energy and telecommunications," he said.
    Grupo Hermes is part of the industrial and financial services conglomerate
of which Ing. Carlos Hank Rhon is the founder and major shareholder.  The
financial services component, Grupo Financiero Interacciones, is involved in
securities brokerage, banking and insurance.  Interacciones has offices in
Mexico City, Monterrey, Puebla, Guadalajara, New York, Buenos Aires, Sao Paolo
and London.  Grupo Hermes was also recently the successful bidder in a joint
venture with AES of McClean, Virginia for the construction and operation of a
484 megawatt combined cycle plant in Merida, Mexico.  The project cost is
expected to be approximately $250 million.  Grupo Hermes and Grupo Financiero
Interacciones will employ approximately 3,000 people after the sale of
Aralmex.

SOURCE  Grupo Hermes