Exxel's Shaky Empire

At first glance, Juan Navarro wears the trappings of success just as naturally as when he was crowned Argentina's buyout king in the 1990s. The 48-year-old founder and president of Exxel Group, a private-equity outfit with some $2.2 billion in assets, still smokes Cuban Cohiba cigars, jots notes with a Mont Blanc pen, and from his penthouse suite overlooking Buenos Aires, can speed-dial anyone from the U.S. Ambassador to the heads of any number of Wall Street investment banks.

But below the surface, the empire Navarro rules over is showing some serious cracks. As Argentina's recession enters its fourth year, several of the 13 companies Exxel owns are now on life support. Saddled with a combined $688 million debt, Navarro's businesses, which have a total workforce of 20,000, have been scrambling to stay afloat. Exxel ordained a 20% pay cut for nonunion employees last year. Now it's resorting to more extreme remedies, like renegotiating loans and deferring payments to suppliers. But it hasn't been enough. Over the course of the past month, one of Exxel's companies has filed for bankruptcy, a second missed a payment on a bank loan, and a third has ceded management control to a creditor. Meanwhile, several other of Exxel's businesses are desperately searching for buyers. "We're in survival mode," says Navarro.