AUDITORS VIEW Also on Thursday the company disclosed a letter by itsauditor PriceWaterHouseCoopers to Comerci's shareholders

AUDITORS VIEW Also on Thursday, the company disclosed a letter by itsauditor, PriceWaterHouseCoopers, to Comerci's shareholders. In an interview with Reuters last month, the head ofMexico's market regulator urged shareholders to sue companiesthat have suffered massive losses due to undisclosedderivatives bets. Mexican authorities are probing whether Comerci broke thelaw by not clearly disclosing its derivatives bets, which someexperts say were unsuited to running a supermarket chain. The source said creditors have been pushing for a stake inthe company in lieu of part of the debt they are owed. Another $500 million would be paid over six yearsand would be guaranteed by its Costco Wholesale (COST.O)venture and land reserves. Comerci's current offer would see the company repay $950million from ongoing operations over seven years, according tothe source. Creditors, which include JP Morgan Chase & Co (JPM.N),Barclays Plc (BARC.L), Goldman Sachs Group Inc (GS.N) and Bankof America Corp's (BAC.N) Merrill Lynch, claim they are owedmore than $3 billion, mostly from soured derivatives bets.

A source close to the talks told Reuters last week thatComerci, controlled by Mexico's Gonzalez family, offered torepay $1.45 billion. Comerci said debt convertible into shares was part of theproposal, but did not mention amounts, specific assets or otherdetails. In a filing with the Mexican stock exchange, the companyknown as as Comerci (COMEUBC.MX) said it had proposed payingundisclosed debt between six and eight years as well as assetsales over two to six years. Since then it has been trying to reach a dealwithout selling key assets or giving up ownership of thecompany. The company defaulted on its debt in October after theglobal credit crisis sparked massive losses on extensivederivatives bets. Shares of the supermarket operator were down 3.32 percentto 7.56 pesos, recovering from a slump of 14 percent after thenews was released.

* Eyes convertible instrument in debt restructuring Stocks  |  Bonds  |  Mexico * Company has until June 10 to strike deal * Comerci shares slump as much as 14 percent * No big changes to board after shareholders meeting (Adds background, details on meeting, updates stock quotes) By Cyntia Barrera Diaz MEXICO CITY, June 4 (Reuters) - Troubled retailer ComercialMexicana said on Thursday that its latest debt restructuringproposal to creditors includes a possible equity stake. statesare planning to slash spending for only the second time since1983, said the report [ID:nN04206080] (Editing by Leslie Adler) Stocks Bonds. The National Governors Association said in areport released on Thursday that deficits could hit $200billion to $250 billion over the next three years U.S. A spokesman was not immediately available for furthercomment Many U.S states are struggling with plummeting taxcollections. Other provisions allow workers to accrue seven "leavedays," which cannot be used until after the next fiscal yearends and avoid overtime while ensuring state offices arestaffed through scheduling mechanisms, Corzine said.