/raid1/www/Hosts/bankrupt/TCRLA

/raid1/www/Hosts/bankrupt/TCRLA_Public/110228.mbx T R O U B L E D C O M P A N Y R E P O R T E R L A T I N A M E R I C A Monday, February 28, 2011, Vol. 12, No. 41 Headlines A R G E N T I N A 329 PIRAN: Creditors' Proofs of Debt Due May 2 ABC IMPRESORES: Applies for Reorganization Proceedings ARTES GRAFICAS: Applies for Reorganization Proceedings HOMERO AUTOMOTORES: Creditors' Proofs of Debt Due April 1 INDUSTRIA TEXTILES: Applies for Bankruptcy Proceedings MICROTECLADOS SRL: Asks for Bankruptcy Proceedings NENICA FOOD: Creditors' Proofs of Debt Due April 1 SGA SEMILLAS: Creditors' Proofs of Debt Due April 8 SKY BLUE: Creditors' Proofs of Debt Due May 2 TEYLO SA: Creditors' Proofs of Debt Due April 15 B E R M U D A GEROVA FINANCIAL: NYSE Suspends Firm's Shares B R A Z I L EMPRESA CATARINENSE: Moody's Assigns 'Ba1' Issuer Ratings EMPRESA NORTE: Moody's Assigns 'Ba1' Rating to Senior Bonds MARFRIG ALIMENTOS: S&P Affirms 'B+' Global Scale Ratings SUL AMERICA: S&P Affirms 'BB-' Senior Unsecured Debt Rating TAM SA: Fitch Maintains Issuer Default Rating at 'B+' J A M A I C A JAMAICA PUBLIC SERVICE: Secures US$60-Million Loan From PROPARCO M E X I C O TUBO DE PASTEJE: IUSA Has Deal to Cover Tubo-Cambridge Lee Plans VITRO SAB: Wins Delay of Bankruptcy Hearing for Mediation P E R U DOE RUN PERU: Renco Grp Offers US$50MM for Environment Clean-Up V E N E Z U E L A CRYSTALLEX INT'L: Seeks Arbitration of Dispute vs. Venezuela X X X X X X X X * S&P Updates Annual Study of Sovereign Defaults * BOND PRICING: For the Week February 21, to February 26, 2011 - - - - - ================= A R G E N T I N A ================= 329 PIRAN: Creditors' Proofs of Debt Due May 2 ---------------------------------------------- Jorge Edmundo Sahade, the court-appointed trustee for 329 Piran SA's bankruptcy proceedings, will be verifying creditors' proofs of claim until May 2, 2011. Mr. Sahade will present the validated claims in court as individual reports. The National Commercial Court of First Instance No. 4 in Buenos Aires, with the assistance of Clerk No. 8, will determine if the verified claims are admissible, taking into account the trustee's opinion, and the objections and challenges that will be raised by the company and its creditors. The Trustee can be reached at: Jorge Edmundo Sahade Avenida de Mayo 1324 Argentina ABC IMPRESORES: Applies for Reorganization Proceedings ------------------------------------------------------ ABC Impresores SA applied for reorganization proceedings. The company has defaulted on its payments due on June 3, 2010. ARTES GRAFICAS: Applies for Reorganization Proceedings ------------------------------------------------------ Artes Graficas Negri SRL applied for reorganization proceedings. HOMERO AUTOMOTORES: Creditors' Proofs of Debt Due April 1 --------------------------------------------------------- Silvia Pirraglia, the court-appointed trustee for Homero Automotores SA's bankruptcy proceedings, will be verifying creditors' proofs of claim until April 1, 2011. Ms. Pirraglia will present the validated claims in court as individual reports. The National Commercial Court of First Instance No. 11 in Buenos Aires, with the assistance of Clerk No. 21, will determine if the verified claims are admissible, taking into account the trustee's opinion, and the objections and challenges that will be raised by the company and its creditors. The Trustee can be reached at: Silvia Pirraglia Talcahuano 426 Argentina INDUSTRIA TEXTILES: Applies for Bankruptcy Proceedings ------------------------------------------------------ Industria Textiles Zuco's SA applied for bankruptcy proceedings. The company has defaulted on its payments due on December 15, 2010. MICROTECLADOS SRL: Asks for Bankruptcy Proceedings -------------------------------------------------- Microteclados SRL asked for bankruptcy proceedings. The company has defaulted on its payment due on July 16, 2010. NENICA FOOD: Creditors' Proofs of Debt Due April 1 -------------------------------------------------- Adriana E. Torrado, the court-appointed trustee for Nenica Food SA's bankruptcy proceedings, will be verifying creditors' proofs of claim until April 1, 2011. Ms. Torrado will present the validated claims in court as individual reports. The National Commercial Court of First Instance No. 23 in Buenos Aires, with the assistance of Clerk No. 45, will determine if the verified claims are admissible, taking into account the trustee's opinion, and the objections and challenges that will be raised by the company and its creditors. The Trustee can be reached at: Adriana E. Torrado Tucuman 1553 Argentina SGA SEMILLAS: Creditors' Proofs of Debt Due April 8 --------------------------------------------------- Stella Maris Diaz, the court-appointed trustee for SGA Semillas, Granos y Agroquimicos SA's bankruptcy proceedings, will be verifying creditors' proofs of claim until April 8, 2011. Ms. Diaz will present the validated claims in court as individual reports. The National Commercial Court of First Instance No. 9 in Buenos Aires, with the assistance of Clerk No. 18, will determine if the verified claims are admissible, taking into account the trustee's opinion, and the objections and challenges that will be raised by the company and its creditors. The Trustee can be reached at: Stella Maris Diaz Colombres 1070 Argentina SKY BLUE: Creditors' Proofs of Debt Due May 2 --------------------------------------------- Bernardo Mafer, the court-appointed trustee for Sky Blue SA's bankruptcy proceedings, will be verifying creditors' proofs of claim until May 2, 2011. Mr. Mafer will present the validated claims in court as individual reports. The National Commercial Court of First Instance No. 6 in Buenos Aires, with the assistance of Clerk No. 12, will determine if the verified claims are admissible, taking into account the trustee's opinion, and the objections and challenges that will be raised by the company and its creditors. The Trustee can be reached at: Bernardo Mafer Avenida Corrientes 4434 Argentina TEYLO SA: Creditors' Proofs of Debt Due April 15 ------------------------------------------------ Jose Angel Sallon, the court-appointed trustee for Teylo SA's bankruptcy proceedings, will be verifying creditors' proofs of claim until April 15, 2011. Mr. Sallon will present the validated claims in court as individual reports. The National Commercial Court of First Instance No. 5 in Buenos Aires, with the assistance of Clerk No. 9, will determine if the verified claims are admissible, taking into account the trustee's opinion, and the objections and challenges that will be raised by the company and its creditors. The Trustee can be reached at: Jose Angel Sallon Libertad 860 Argentina ============= B E R M U D A ============= GEROVA FINANCIAL: NYSE Suspends Firm's Shares --------------------------------------------- Jonathan Kent at The Royal Gazette Online reports that trading in shares of Gerova Financial Group was suspended on the New York Stock Exchange. "After a discussion with the NYSE, we concur that the best decision was to halt the trading of our securities. The added time will enable the company to disseminate to the market in an orderly way a comprehensive update on recent developments and strategic direction," The Royal Gazette Online quotes Michael Hlavsa, chief financial officer of Gerova Financial, as saying. The NYSE cited the need for more information from the company, according to The Royal Gazette Online. Bermuda insurer Argus Group Holdings Ltd said it had no direct exposure to Gerova Financial, though the companies are fellow investors in another insurance company, according to The Royal Gazette Online. The Royal Gazette Online discloses that Gerova Financial is scheduled to merge with London firm Seymour Pierce in the coming weeks in a deal reportedly worth more than US$60 million. The report relates that Keith Harris, the Seymour Pierce chief executive best known for advising Premier League football clubs, was reported on the Daily Telegraph's website to be sticking by the deal as of February 24, 2011. Other sources have reported that the deal is likely to be scuppered, The Royal Gazette Online notes. The report says that documents shown to the U.S. Securities and Exchange Commission last June had expressed doubts about some asset values. The Royal Gazette Online relates that a boardroom shake-up has done little to help the company's reputation and the share price has plunged from a high of US$92.50 in June last year to US$5.28 before the suspension took effect. Gerova Financial Group is headquartered in Bermuda. =========== B R A Z I L =========== EMPRESA CATARINENSE: Moody's Assigns 'Ba1' Issuer Ratings --------------------------------------------------------- Moody's America Latina assigned issuer ratings of Ba1 on the global scale and Aa2.br on the Brazilian National Scale to Empresa Catarinense de Transmissao de Energia S.A. At the same time, Moody's assigned a Ba1 global scale rating and Aa2.br rating on the Brazilian National Scale to the 5-year BRL75 million senior unsecured debentures to be issued by ECTE in the local market. The outlook for all ratings is stable. This is the first time Moody's has rated ECTE. The proceeds of the proposed BRL75 million debentures will be used to replace around BRL43 million of existing long-term debt with the BNDES and to support dividend distributions to the shareholders in the near term. Assignments: Issuer: Empresa Catarinense de Transmissao de Energia S.A. -- Issuer Rating: Ba1 (global scale) / Aa2.br (Brazilian national scale) -- BRL75 million senior unsecured debentures: Ba1 / Aa2.br Ratings Rationale The Ba1 and Aa2.br issuer ratings reflect ECTE's predictable and stable cash flows provided by its long-term regulated concession agreement to operate an electricity network in the south of Brazil. The relatively long track record of operations, management's expertise in the transmission business and the company's strong credit metrics further support the ratings. The high level of investment activity of its controlling shareholders: Alupar (Ba1/Aa2.br Corporate Family Ratings, Outlook stable) and Cemig (Ba1/Aa2.br Issuer Ratings, Outlook stable) constrains the ratings, as does the limited structural provisions embedded in the proposed debentures and ECTE's evolving corporate governance practices. ECTE's relative small scale and geographic concentration further constrain the rating. Moody's views the regulatory framework for transmission companies in Brazil as well developed and highly predictable in terms of cost recovery and return on invested capital. The secure and stable nature of the transmission segment stems from the Permitted Annual Revenues (RAP), which are based on fixed capacity payments throughout the concession period that have provisions for automatic annual adjustments for inflation. Nevertheless, the track record of the current framework is rather limited and some procedures are still untested, such as the indemnification of non- depreciated assets upon the non-renewal or termination of an existing concession. ECTE operates a single transmission line under a 30-year concession that was signed in November 2000; the line started operations in March 2002. The company largely benefits from a concession granted prior to 2006 wherein the tariffs are not subject to periodic reviews. On the other hand, the Permitted Annual Revenue for this concession is scheduled to step down 50% starting in March 2018. The current RAP authorized by the regulator is BRL62 million, which is valid from July 2010 through June 2011. The inherently stable nature of its transmission services provides ECTE predictable cash flows, while the high internal rate of return and low investment requirements support its strong credit metrics for the rating category. The network availability has been around 99.9% over the last three years and maintenance capital expenditures represent less than 1% of its regulated asset base. As a result of its insignificant ongoing capital requirements, ECTE's leverage is very low, which is evidenced by a Net Debt to EBITDA ratio of just 1.1x in 2009. This level is well below the limitation included in the proposed debentures of a maximum Net debt of BRL153.4 million representing approximately 3 times ECTE's current EBITDA. This maximum amount of net debt as defined in the indenture will be adjusted annually by the general price index (IGP-M). Leverage as measured by the Funds from Operations to Net Debt ratio averaged 43.5% from 2007 through 2009, while the FFO interest coverage ratio was 4.0x in the same period. Under normal circumstances, Moody's would expect a gradual and consistent improvement in ECTE's capital structure given its very stable and predictable cash flows under the assumption that capital expenditures are restricted to maintenance expenditures only. Moody's believes that the lack of clarity with regard to expansion capital expenditures, new concessions or possible acquisitions represents a potential change to the above-outlined scenario. A dividend payout ratio estimated at 95% also tempers the view of an improving capital structure. ECTE has corporate governance standards that are below the average of its peer group of electric utilities with investment grade ratings. Moody's view is that the entrance of CEMIG into the capital structure of ECTE in August 2006 helped to enhance its corporate governance practices and assures higher transparency, given that CEMIG is a company with corporate governance standards above the average; however, Moody's believe there is still room for further improvement by the publication of audited and consolidated cash flows on a quarterly basis. The stable outlook reflects Moody's expectation that ECTE will continue to prudently manage the capital expenditures and the distribution of dividends in tandem with its cash flow capacity while maintaining an adequate liquidity position. The ratings could be upgraded if ECTE's corporate governance practices improve along with a track record of continued strong financial performance, such that the FFO interest coverage ratio is greater than 4.5x along with a FFO to Net debt above 45% on a sustainable basis. The ratings or outlook could be downgraded if there is significant increase in leverage and deterioration of the liquidity profile driven, for example, by an unexpected sizeable investment program or dividend distribution. Quantitatively, the ratings or outlook could come under downward pressure if the FFO interest coverage ratio falls below 3.5x and the FFO to Net debt stays below 35% for an extended period. A material change in the regulatory framework in Brazil could also cause a downgrade in the ratings or outlook. Empresa Catarinense de Transmissao de Energia S.A., owns a 30-year concession contract that expires in November 2030 to operate a 253 kilometer high-voltage transmission line in the state of Santa Catarina. Alupar Investimentos S.A. is ECTE major shareholder with 40.01% of its voting and total capital. The other shareholders are Centrais Eletricas de Santa Catarina with 30.88%, Companhia Energetica de Minas Gerais with 19.09% and MDU Resources with 10.01%. In 2009, ECTE posted consolidated net revenues of BRL54 million (US$27million) and EBITDA of BRL50 million (US$25 million). EMPRESA NORTE: Moody's Assigns 'Ba1' Rating to Senior Bonds ----------------------------------------------------------- Moody's America Latina assigned issuer ratings of Ba1 on the global scale and Aa2.br on the Brazilian National Scale to Empresa Norte de Transmissao de Energia S.A. At the same time, Moody's assigned a Ba1 global scale rating and Aa2.br rating on the Brazilian National Scale to the 5-year BRL190 million senior unsecured debentures to be issued by ENTE in the local market. The outlook for all ratings is stable. This is the first time Moody's has rated ENTE. The proceeds of the proposed BRL190 million debentures will be used to replace around BRL140 million of existing long-term debt with the BNDES and to support dividend distributions to the shareholders in the near term. Assignments: -- Issuer: Empresa Norte de Transmissao de Energia S.A. -- Issuer Rating: Ba1 (global scale) / Aa2.br (Brazilian national scale) -- BRL190 million senior unsecured debentures: Ba1 / Aa2.br Ratings Rationale The Ba1 and Aa2.br issuer ratings reflect ENTE's predictable and stable cash flows provided by its long-term regulated concession agreement to operate an electricity network in the north of Brazil. The relatively long track record of operations, management's expertise in the transmission business and the company's strong credit metrics further support the ratings. The high level of investment activity of its controlling shareholders: Alupar (Ba1/Aa2.br Corporate Family Ratings, Outlook stable) and Cemig (Ba1/Aa2.br Issuer Ratings, Outlook stable) constrains the ratings, as does the limited structural provisions embedded in the proposed debentures and ENTE's evolving corporate governance practices. ENTE's relatively small scale and limited portfolio diversification further constrain the ratings. Moody's views the regulatory framework for transmission companies in Brazil as well developed and highly predictable in terms of cost recovery and return on invested capital. The secure and stable nature of the transmission segment stems from the Permitted Annual Revenues (RAP), which are based on fixed capacity payments throughout the concession period that have provisions for automatic annual adjustments for inflation. Nevertheless, the track record of the current framework is rather limited and some procedures are still untested, such as the indemnification of non- depreciated assets upon the non-renewal or termination of an existing concession. ENTE operates two transmission lines under a 30-year concession that was signed in Dec. 2002; the lines started operations in February 2005. The company largely benefits from a concession granted prior to 2006 wherein the tariffs are not subject to periodic reviews. On the other hand, the Permitted Annual Revenue for this concession is scheduled to step down 50% starting in Feb. 2021. The current RAP authorized by the regulator is BRL142 million, which is valid from July 2010 through June 2011. The inherently stable nature of its transmission services provides ENTE predictable cash flows, while the high internal rate of return and low investment requirements support its strong credit metrics for the rating category. The network availability has been around 99.9% over the last three years and maintenance capital expenditures represent less than 1% of its regulated asset base. ENTE's cash generation has been further boosted by fiscal incentives that have lowered its income tax rate. Moody's estimates the effective tax rate to be around 15% over the next five years, after which it would return to the regular 34% rate. As a result of its ongoing insignificant capital requirements, ENTE's leverage is low, which is evidenced by a Net Debt to EBITDA ratio of just 1.4x in 2009. This level is well below the limitation included in the proposed debentures of a maximum Net debt of BRL354.1 million representing approximately 3 times ENTE's current EBITDA. This maximum amount of net debt as defined in the indenture will be adjusted annually by the general price index (IGP-M). Leverage as measured by the Funds From Operations to Net averaged 27% from 2007 through 2009, while the FFO interest coverage ratio was 3.2x in the same period. Under normal circumstances, Moody's would expect a gradual and consistent improvement in ENTE's capital structure given its very stable and predictable cash flow under the assumption that capital expenditures are restricted to maintenance expenditures only. Moody's believes that the lack of clarity with regard to possible expansion capital expenditures, new concessions or acquisitions represents potential changes to the above-outlined scenario. A dividend payout ratio estimated at 95% also tempers the view of an improving capital structure. ENTE has corporate governance standards that are below the average of its peer group of electric utilities with investment grade ratings. Moody's view is that the entrance of CEMIG into the capital structure of ENTE in August 2006 helped to enhance its corporate governance practices and assures higher transparency, given that CEMIG is a company with corporate governance standards above the average; however, Moody's believe there is still room for further improvement by the publication of audited and consolidated cash flows on a quarterly basis. The stable outlook reflects Moody's expectation that ENTE will continue to prudently manage capital expenditures and the distribution of dividends in tandem with its cash flow capacity while maintaining an adequate liquidity position. The ratings could be upgraded if ENTE's corporate governance practices improve along with a track record of continued strong financial performance, such that FFO interest coverage is greater than 4.5x along with FFO to Net debt above 45% on a sustainable basis. The ratings or outlook could be downgraded if there is significant increase in leverage and deterioration of the liquidity profile driven, for example, by an unexpected sizeable investment program or dividend distribution. Quantitatively, the ratings or outlook could come under downward pressure if the FFO interest coverage ratio falls below 3.0x and the FFO to Net debt stays below 30% for an extended period. A material change in the regulatory framework in Brazil could also cause a downgrade in the ratings or outlook. Empresa Norte de Transmissao de Energia S.A., owns a 30-year concession contract that expires in December 2032 to operate a 464 kilometer high-voltage transmission network in the states of Maranhao and Para. ENTE is controlled by Alupar Investimentos S.A., which has 50.01% of ENTE's voting and total capital. The other major shareholder is Companhia Energetica de Minas Gerais with 49.99% of ENTE's voting and total capital. In 2009, ENTE posted consolidated net sales of BRL 124 million (US$62 million) and EBITDA of BRL115 million (US$57 million). MARFRIG ALIMENTOS: S&P Affirms 'B+' Global Scale Ratings -------------------------------------------------------- Standard & Poor's Ratings Services said that it affirmed the 'B+' global scale and 'brBBB+' national scale ratings on Brazil-based food producer Marfrig Alimentos S.A. The outlook is stable. "S&P believes Marfrig has limited capacity to reduce debt levels, even though recent acquisitions have improved the company's business profile," said Standard & Poor's credit analyst Flavia Bedran. Marfrig's improved asset portfolio and geographic diversification should bring more stable cash flow generation, but the company's deleveraging may be lengthy because of the lower EBITDA contribution of acquired businesses coupled with unfavorable market fundamentals in some countries where Marfrig operates, such as Argentina and Uruguay. The ratings on Marfrig reflect the company's highly leveraged financial profile, which is a result of several acquisitions in the past few years, as well as potential margin volatility because of the exposure to global commodity prices, and still-limited benefits from its stronger business portfolio. S&P assess Marfrig's business profile as fair because of its well- diversified portfolio that includes protein, industrialized processed food, and food distribution; its efficient distribution network in Brazil and in operations abroad; the economies of scale in cattle and grain sourcing, and large retail chain negotiations; and the maintenance of adequate liquidity to cushion against market volatility. S&P believes that favorable demand fundamentals, mostly in Brazil, will allow the company to pass on the increased cost of raw materials to clients, which occurred recently with the hike in cattle and grain prices. However, Marfrig might face problems integrating Keystone's operations and merging the expected benefits of its asset portfolio. Consolidated EBITDA margin is expected to be lower than the historical average (projected at 6%-7%), given Keystone's traditionally lower margin businesses, although Keystone's more predictable and consistent cash flow somewhat offsets the high volatility of commodity-type fresh meat sales. As Marfrig integrates its assets and increases the utilization capacity of its plants, it should face some working capital needs, which, combined with high capital expenditure and sizable interest payments, should lead to negative free operating cash flow this year, limiting capacity to significantly reduce its leverage parameters. S&P expects adjusted debt to EBITDA to improve very gradually from S&P's projection of about 6.7x by December 2011. S&P views Marfrig's liquidity as adequate. Cash reserves accounted for Brazilian reais (BRL)5.3 billion as of Sept. 30, 2010, out of which BRL1.52 billion was disbursed in fourth-quarter 2010 to pay down Keystone's acquisition. Total adjusted debt amounted to BRL12 billion in Sept. 2010, from which BRL2.2 billion matures in the short term. According to S&P's criteria, S&P adjust the company's debt to include the BRL2.5 billion convertible debentures issued to fund Keystone's acquisition, renegotiated taxes, discounted trade receivables, and operating leases. S&P considers Marfrig to have some refinancing risks to roll over short-term debt (mainly export finance operations) at the same time it invests in working capital to increase the capacity of slaughtering plants and to integrate acquired assets. However, S&P views the company's access to equity and credit markets, and long-term relationship with banks as positive, which has enabled it to refinance loans and gradually extend its debt profile. S&P expects free operating cash flow to remain negative in 2011, given the company's sizable capital expenditure and working capital needs. Financial covenants are calculated based on balance sheet debt and are very comfortable. The stable outlook reflects S&P's expectation that Marfrig will deliver more stable cash flows with higher participation of branded products and distribution services in consolidated revenues. S&P also believe that positive growth fundamentals in most markets in which it is present will allow Marfrig to gradually increase cash generation to help it deleverage. S&P could raise the ratings if the company reduces adjusted leveraged ratios, including a total adjusted debt to EBITDA consistently below 6x coupled with maintaining adequate liquidity. If the company lags deleveraging because of additional debt to fund further acquisitions or if unfavorable market conditions occur, including higher raw material prices that would hurt operating margins or weaken liquidity, S&P could lower the ratings. SUL AMERICA: S&P Affirms 'BB-' Senior Unsecured Debt Rating ----------------------------------------------------------- Standard & Poor's Ratings Services said that it affirmed its long- term counterparty credit rating on holding company Sul America S.A. and its 'BB-' senior unsecured debt rating on the company's senior notes. S&P also affirmed the rating on subsidiary Sul America Companhia Nacional de Seguros at 'BB+'. At the same time, S&P revised the outlook on both companies to positive from stable. "The outlook revision reflects S&P's view that the company's strong franchise and its established relationship with brokers-- Sul America has the largest brokerage network in the country--will help the group sustain its relevant competitive position in the local market and continue to post good profitability in its core business lines," said Standard & Poor's credit analyst Ricardo Brito. The counterparty credit rating on Sul America is based on the stiff competition for insurance companies in Brazil and the difficulties to sustain its market share in the auto insurance segment after the termination of its bancassurance agreement, where an insurance company uses a bank sales channel to sell products, with Banco do Brasil. The company's significant position in the country's health and auto insurance markets as well as its good operating performance, which S&P views as a rating strength, support the ratings. In addition, the company has sound capitalization and good cash position, which makes it, in S&P's opinion, well placed for consolidation opportunities in the Brazilian insurance market. Sul America is the largest independent insurance company in Brazil, holding a strong position in number of policies issued and more than 6.7 million clients. The company is among the three largest insurers in health and auto insurance segments. These two segments represent more than 87% of the company's total premiums. Sul America's operating performance continues to be satisfactory, and for the first nine months of 2010, Sul America reported gross premiums written of Brazilian reais (BRL)6.2 billion and recurring profit of BRL268 million, which correspondents to a good return on revenues of 10.2% in the same period. The positive outlook indicates that S&P may raise the ratings if Sul America maintains its satisfactory financial performance despite facing more challenging competition over the next 12 months. In particular, S&P is looking to see if the company preserves its auto insurance business by keeping its competitive position in that market, and maintaining its adherence to underwriting policies to keep its adequate operating performance. TAM SA: Fitch Maintains Issuer Default Rating at 'B+' ----------------------------------------------------- Fitch Ratings maintains the Rating Watch Positive on TAM S.A.'s ratings: -- Foreign currency Issuer Default Rating 'B+'; -- Local currency IDR at 'B+'; -- Long-term national scale rating at 'BBB+(bra)'. -- US$300 million senior unsecured note due to 2020 at 'B+/RR4'; -- US$300 million senior unsecured note due 2017 at 'B+/RR4'; -- BRL500 million debentures issuance due 2012 at 'BBB+(bra)'. On Aug. 16, 2010, Fitch placed TAM's ratings on Rating Watch Positive and LAN's 'BBB' IDR on Rating Watch Negative. These rating actions followed the announcement by TAM and LAN that they had reached an agreement to combine their holdings under a single parent entity. The Rating Watch Positive on TAM's ratings reflects the view that the combined credit profile of the two companies would be stronger than TAM's current credit profile. The merger of the two airlines has been delayed by anti-trust authorities. The ratings of TAM remain on Rating Watch Positive to reflect the possibility the transaction will ultimately be approved, and that the transaction, if approved would benefit TAM's creditors. TAM's 'B+' and 'BBB+ (bra)' ratings reflect the company's high leverage and volatile cash flow generation during the last few years. They factor in the company's solid liquidity position and its strong market presence in the domestic air-passenger transportation sector, with a market share of approximately 42%. TAM's ratings also factors in the company's solid market position as the sole Brazilian airline operator in long-haul routes to Europe and the U.S., which is strengthened by several code share agreements. Industry-related risks such as fuel cost volatility, high operating leverage, and cyclicality are factored into the ratings, as is the company's high degree of sensitivity to changes in the macroeconomic scenario. TAM is expected to continue to benefit from positive traffic trends in Brazil's domestic and international markets. With the Brazilian economy growing 6.5% during 2010, the total number of transported passengers (arrivals and departures) in Brazil's domestic and international segments were 138 million and 16 million, respectively, representing increases of 20.35% and 21.17% over the levels reached in 2009. The company's revenue for the LTM September 2010 was BRL10.7 billion (US$6.3 billion), an increase of 4% over the company's revenue for the latest 12 months ended September 2009 of BRL10.3 billion (US$5.9 billion). TAM ended up September 2010 with a fleet of 148 aircrafts, 72 of which were under operating leases. Considering that the Brazilian economy is expected to grow by 4.5% during 2011, Fitch expects demand in the domestic and international markets to increase in the 12%-15% range during 2011, which is in line with expected increases in TAM's capacity of between 10% and 14% in the domestic market and by about 10% in the international segments. Yields are expected to remain relatively flat during 2011, pressured by increasing competition primarily from small players. TAM's net leverage is expected to decline by the end of fiscal year 2010 as the company continues to improve its cash flow generation, measured by EBITDAR and reduce moderately its level of total adjusted debt. During 2009 and the LTM period ended September 2010, TAM generated BRL 1.4 billion and BRL1.6 billion of EBITDAR, respectively. These EBITDAR levels represented EBITDAR margins of 14.3% and 14.6%. Further improvement in cash flow generation is expected, with EBITDAR margin around 15% for full year 2010. TAM's on balance sheet debt was BRL7.7 billion at the end of September. Lease expenses for the LTM ended Sept. 30, 2010 were BRL445 million, resulting in an off balance sheet debt adjustment of BRL3.1 billion. This gives TAM a total debt adjusted for operating leases of BRL10.8 billion, which is moderately lower than the company's total adjusted debt at the end of 2009 (BRL11.2 billion). This level of debt compares with a cash and marketable securities balance of BRL2.2 billion, resulting in an adjusted net debt-to-EBITDAR ratio of 5.5x for the LTM ended Sept. 30, 2010. This ratio compares favorably with the company's net leverage for 2009 of 6.5x. ============= J A M A I C A ============= JAMAICA PUBLIC SERVICE: Secures US$60-Million Loan From PROPARCO ---------------------------------------------------------------- RadioJamaica reports that the Jamaica Public Service Company (JPS) has received a US$60 million loan from the French financing institution, PROPARCO. The report relates that the loan agreement was signed on Feb. 24, 2011. The money will go towards JPSCO' renewable energy projects and initiatives to reduce electricity theft, according to RadioJamaica. The report notes that the loan will be repaid over 10 years, in semi-annual installments. RadioJamaica says that JPSCO has been given up to one year to access the loan funds, and repayment will begin a year after. JPSCO President and Chief Executive Officer Damian Obiglio said the loan was received at very attractive rates, RadioJamaica notes. About JPSCO Headquartered in Kingston, Jamaica -- https://www.jpsco.com/ -- Jamaica Public Service Company Limited is an integrated electric utility company and the sole distributor of electricity in Jamaica. The company is engaged in the generation, transmission and distribution of electricity, and also purchases power from five Independent Power Producers. Japanese-based Marubeni Corporation owns 80 percent of the company. The Government of Jamaica and a small group of minority shareholders own the remaining shares. JPS currently has roughly 582,000 customers who are served by a workforce of over 1,600 employees. The Company owns and operates 28 generating plants, 54 substations, and roughly 14,000 kilometers of distribution and transmission lines. * * * As reported in the Troubled Company Reporter-Latin America on March 12, 2010, RadioJamaica said that the multi-billion dollar show down between the Jamaica Public Service and the three unions -- BITU, NWU, and UCASE -- representing workers at the company has entered the penultimate stage before the Industrial Disputes Tribunal. The report related that the IDT heard testimony from the Chairman of JPSCO, Tommy Fukuda who was called as the last witness. According to the report, Mr. Fukuda maintained that JPSCO has paid the US$2.3 billion it owed the workers following the 2001 job reclassification exercise. However, the report related, the three unions argued that the company still owed the workers an additional JM$500 million to JM$600 million in retroactive, overtime and redundancy payments. =========== M E X I C O =========== TUBO DE PASTEJE: IUSA Has Deal to Cover Tubo-Cambridge Lee Plans ---------------------------------------------------------------- Bill Rochelle, Bloomberg News' bankruptcy columnist, reports that Industrias Unidas SA, a Mexico City-based manufacturer of copper and electrical products, said it has an agreement in principle with creditors for a US$371 million debt swap. According to Mr. Rochelle, the bankruptcy court on Feb. 22 extended the exclusive rights of IUSA units Tubo de Pasteje SA and Cambridge-Lee Holdings Inc. to propose a Chapter 11 plan until March 7. In requesting the exclusivity extension, the companies said there exists a "term sheet outlining the terms of a consensual restructuring." Tubo said it hoped the plan would be filed in the "near term." Holders of US$200 million in 11.5% senior notes due 2016 are to receive new secured notes, according to the statement. About Tubo de Pasteje Tubo de Pasteje SA and subsidiary Cambridge-Lee Holdings Inc. filed Chapter 11 petitions (Bankr. D. Del. Case No. 09-14353) on Dec. 7, 2009 following a Nov. 15 payment default on US$200 million in 11.5% senior notes due 2016. Tubo and its subsidiary sought bankruptcy protection when the 30-day grace period was nearing its end. Tubo is a subsidiary of Mexico City-based Industrias Unidas SA de CV, a manufacturer of copper and electrical products. The U.S. subsidiary Cambridge-Lee is based in Reading, Pennsylvania. IUSA is the issuer of the notes which were secured by a pledge of Cambridge-Lee stock. VITRO SAB: Wins Delay of Bankruptcy Hearing for Mediation --------------------------------------------------------- David McLaughlin at Bloomberg News reports that Vitro, S.A.B. de C.V. won a court delay to allow mediation to take place with bondholders seeking to force U.S. units of the Mexican glassmaker into bankruptcy. U.S. Bankruptcy Judge Russell Nelms in Fort Worth, Texas, granted a request by Vitro SAB to postpone a hearing on creditors' involuntary bankruptcy petition against the subsidiaries, according to Bloomberg. The report relates that the company asked for the delay so it can mediate with creditors. Judge Nelms has put off the hearing until March 31. Bloomberg notes that the postponement comes as Vitro SAB is battling hedge funds over its default, grappling with litigation in Texas, New York and Mexico. Vitro stopped making interest payments on its notes in February 2009, according to a court filing, Bloomberg recounts. Bloomberg says that the company couldn't negotiate a restructuring deal with bondholders, a group of which filed the involuntary case against the U.S. units in November. Its effort to pursue a restructuring plan through a Mexican proceeding failed after a judge dismissed the proposal, Bloomberg relates. The report notes that creditors, including hedge funds Elliott Management Corp. and Davidson Kempner Capital Management LLC, opposed delaying the hearing on the involuntary bankruptcy petition. Bloomberg discloses that John Cunningham, a lawyer for a group that says it holds more than US$700 million in notes, told Judge Nelms that a delay hurts creditors that haven't been paid on their debt for more than two years. There is "no prospect for a quick resolution and settlement," Bloomberg quotes Mr. Cunningham as saying. About Vitro SAB Headquartered in Monterrey, Mexico, Vitro, S.A.B. de C.V. (BMV: VITROA; NYSE: VTO), through its two subsidiaries, Vitro Envases Norteamerica, SA de C.V. and Vimexico, S.A. de C.V., is a global glass producer, serving the construction and automotive glass markets and glass containers needs of the food, beverage, wine, liquor, cosmetics and pharmaceutical industries. Vitro is the largest manufacturer of glass containers and flat glass in Mexico, with consolidated net sales in 2009 of MXN23,991 million (US$1.837 billion). Vitro defaulted on its debt in 2009, and is now seeking to restructure around US$1.5 billion in debt, including US$1.2 billion in notes. Vitro launched an offer to buy back or swap US$1.2 billion in debt from bondholders. The tender offer would be consummated with a bankruptcy filing in Mexico and Chapter 15 filing in the United States. Vitro said noteholders would recover as much as 73% by exchanging existing debt for cash, new debt or convertible bonds. The offer was to expire December 7. Noteholders who oppose the exchange, namely Knighthead Master Fund, L.P., Lord Abbett Bond-Debenture Fund, Inc., Davidson Kempner Distressed Opportunities Fund LP, and Brookville Horizons Fund, L.P. -- which hold US$75 million, or approximately 6% of the outstanding bond debt -- commenced involuntary bankruptcy cases under Chapter 11 of the U.S. Bankruptcy Code against Vitro Asset Corp. (Bankr. N.D. Tex. Case No. 10-47470) and nine other affiliates on November 17, 2010. Vitro engaged Susman Godfrey, L.L.P. as U.S. special litigation Counsel to analyze the potential rights that Vitro may exercise in the United States against the ad hoc group of dissident bondholders and its advisors. A larger group of noteholders, known as the Ad Hoc Group of Vitro Noteholders -- comprised of holders, or investment advisors to holders, which represent approximately US$650 million of the Senior Notes due 2012, 2013 and 2017 issued by Vitro -- was not among the Chapter 11 petitioners, although the group has expressed concerns over the exchange offer. The group says the exchange offer exposes Noteholders who consent to potential adverse consequences that have not been disclosed by Vitro. The group is represented by John Cunningham, Esq., and Richard Kebrdle, Esq. at White & Case LLP. The U.S. affiliates subject to the involuntary petitions are Vitro Chemicals, Fibers & Mining, LLC (Bankr. N.D. Tex. Case No. 10- 47472); Vitro America, LLC (Bankr. N.D. Tex. Case No. 10-47473); Troper Services, Inc. (Bankr. N.D. Tex. Case No. 10-47474); Super Sky Products, Inc. (Bankr. N.D. Tex. Case No. 10-47475); Super Sky International, Inc. (Bankr. N.D. Tex. Case No. 10-47476); VVP Holdings, LLC (Bankr. N.D. Tex. Case No. 10-47477); Amsilco Holdings, Inc. (Bankr. N.D. Tex. Case No. 10-47478); B.B.O. Holdings, Inc. (Bankr. N.D. Tex. Case No. 10-47479); Binswanger Glass Company (Bankr. N.D. Tex. Case No. 10-47480); Crisa Corporation (Bankr. N.D. Tex. Case No. 10-47481); VVP Finance Corporation (Bankr. N.D. Tex. Case No. 10-47482); VVP Auto Glass, Inc. (Bankr. N.D. Tex. Case No. 10-47483); V-MX Holdings, LLC (Bankr. N.D. Tex. Case No. 10-47484); and Vitro Packaging, LLC (Bankr. N.D. Tex. Case No. 10-47485). Vitro SAB on December 13, 2010, filed its voluntary petition for a pre-packaged Concurso Plan in the Federal District Court for Civil and Labor Matters for the State of Nuevo Leon, thereby commencing its voluntary concurso mercantil proceedings. Vitro SAB believes that, as a result of the implementation of the Concurso Plan through the Mexican Proceeding, the holders of the Restructured Debt will recover 68% to 75% of the face value of their respective claims. Vitro SAB also commenced parallel proceedings under Chapter 15 of the U.S. Bankruptcy Code (Bankr. S.D.N.Y. Case No. 10-16619) in Manhattan on December 13, 2010, to seek U.S. recognition and deference to its bankruptcy proceedings in Mexico. Alejandro Francisco Sanchez-Mujica, as foreign representative of Vitro, has asked the U.S. Bankruptcy Court to enter an order recognizing the Mexican Proceeding as "foreign main proceeding" pursuant to 11 U.S.C. Sections 1515 and 1517. Early in January 2011, the Mexican Court dismissed the Concurso Mercantil proceedings. ======= P E R U ======= DOE RUN PERU: Renco Grp Offers US$50MM for Environment Clean-Up --------------------------------------------------------------- Alex Emery at Bloomberg News reports that Doe Run Peru said parent company Renco Group Inc. offered to lend its unit up to US$50 million to finance an environmental cleanup. The loan offer is "contingent" on the restart of negotiations with the Peruvian government, including agreeing on a plan to restructure the company's debt, Doe Run Peru said in an e-mailed statement obtained by Bloomberg. As reported in the Troubled Company Reporter-Latin America on July 29, 2010, Bloomberg News said that Doe Run Peru failed to reopen its smelter by a government-set deadline of July 27, 2010. A separate TCR-LA report on July 27, 2010, related that Reuters said Peru's mining ministry said that Doe Run Peru failed to submit proof it has financial guarantees that will allow it to reopen its sprawling metals smelter. According to Reuters, the Peruvian government gave Doe Run Peru until July 22, 2010, to prove it has sufficient financing to restart its metals smelter, and to submit signed agreements with its suppliers and creditors. Bloomberg News said that Doe Run Peru filed for a government- monitored financial restructuring because it was worried creditors might try to freeze its assets or operations. Reuters related that Doe Run Peru owes some US$100 million to its suppliers and needs to spend another US$150 million to clean up La Oroya. About Doe Run Peru Doe Run Company operates an integrated primary lead operation and a recycling operation located in Missouri, referred to as Buick Resource Recycling. Fabricated Products operates a lead fabrication operation located in Arizona and a lead oxide business located in Washington. Doe Run Peru is a subsidiary of the company. Doe Run Peru operates a polymetallic smelter at La Oroya and copper mine at Cobriza both in Peru. * * * As of June 21, 2010, the company continues to carry Moody's bank financial strength rating at "D-" and Fitch Ratings' individual rating at "D". ================= V E N E Z U E L A ================= CRYSTALLEX INT'L: Seeks Arbitration of Dispute vs. Venezuela ------------------------------------------------------------ Crystallex International Corporation announced that it has filed a Request for Arbitration before the Additional Facility of the World Bank's International Centre for Settlement of Investment Disputes against the Bolivarian Republic of Venezuela pursuant to the Agreement between the Government of Canada and the Government of the Republic of Venezuela for the Promotion and Protection of Investments. The arbitration has been commenced following the failure of the Venezuelan Government to propose any resolution to the dispute notified by Crystallex on Nov. 24, 2008 and the subsequent unlawful termination on Feb. 3, 2011, of the Mine Operation Contract it had entered into with Corporacion Venezolana de Guayana. The claim is for breach of the Treaty's protections against expropriation, unfair and inequitable treatment and discrimination. Crystallex seeks the restitution by Venezuela of Crystallex's investments, including the MOC, and the issuance of the Permit and compensation for interim losses suffered, or, alternatively full compensation for the value of its investment in an amount in excess of US$3.8 billion. About Crystallex International Based in Toronto, Canada, Crystallex International Corporation (TSX: KRY) (NYSE Amex: KRY) -- http://www.crystallex.com/-- is a Canadian-based company, which has been granted the Mine Operating Contract to develop and operate the Las Cristinas gold properties located in Bolivar State, Venezuela. The Company's balance sheet at Sept. 30, 2010, showed US$63.62 million in total assets, US$108.10 million in total liabilities, and a stockholders' deficit of US$44.48 million. "As at Sept. 30, 2010, the Company had working capital of US$12.50 million, including cash of US$21.47 million. Management estimates that these funds will be sufficient to meet the Company's obligations and budgeted expenditures for the foreseeable future, but will not be sufficient to repay the US$100.00 million notes payable due on December 23, 2011." =============== X X X X X X X X =============== * S&P Updates Annual Study of Sovereign Defaults ------------------------------------------------ Standard & Poor's Ratings Services' sovereign ratings have been effective indicators of default risk of governments worldwide on relative and absolute bases, according to the latest annual study on the performance and default rates of its global sovereign ratings, published Feb. 23. The study, titled "Sovereign Defaults And Rating Transition Data, 2010 Update," shows that since 1975, on average only 1.0% of investment-grade sovereigns (those rated 'BBB-' and above) have defaulted on their foreign-currency obligations within 15 years compared with 28.6% of those in the speculative-grade category. "Default rates rise as sovereign ratings decline across time horizons," said John Chambers, chairman of Standard & Poor's sovereign rating committee. "For example, since 1975, the average 15-year cumulative default rates for sovereign foreign-currency ratings are zero for the 'AAA', 'AA', and 'A' categories and 5.6%, 17.5%, and 42.8% for the 'BBB' through 'B' categories." Jamaica was the only rated sovereign to default in 2010. Standard & Poor's revised its ratings on Jamaica to 'SD' (selective default) from 'CCC' on Jan. 14, 2010, following its announced exchange for foreign-currency and local-currency government debt governed under domestic law. After its debt restructuring, S&P assigned 'B-' sovereign ratings to Jamaica on Feb. 24, 2010. The study uses transition matrices, Lorenz curves, and cumulative default statistics to examine the correlation between Standard & Poor's sovereign ratings and actual sovereign defaults. The study also concludes that: -- Sovereign ratings have been more stable at higher rating levels. -- Over the last 15 years, SY&P has raised more foreign- currency sovereign credit ratings than S&P has lowered, though downgrades far outnumbered upgrades in 2008 and 2009, and the ratio of negative to positive rating outlooks suggest they could again in 2011. -- Sovereign ratings are no more volatile than other credit ratings; large rating movements in either direction are the exception and not the rule, even over several years. -- The relative rank ordering of sovereign ratings is consistent. -- The sovereign rating default experience is in line with reference default rates proposed under the Basel II guidelines, even though default rates for individual years vary widely. The article tracks the incidence of default and rating changes for sovereign governments between 1975 and 2010. First published in March 1999 and updated annually, the report includes rating data on the 126 sovereigns Standard & Poor's rated at year-end 2010. It also includes data on the autocorrelation of rating actions. * BOND PRICING: For the Week February 21, to February 26, 2011 -------------------------------------------------------------- Issuer Coupon Maturity Currency Price ------ ------ -------- -------- ----- ARGENTINA --------- ARGENT- DIS 5.83 12/31/2033 ARS 165.8 ARGENT-PAR 1.18 12/31/2038 ARS 62.5 ARGENT-DIS 7.82 12/31/2033 EUR 70.25 ARGENT-DIS 7.82 12/31/2033 EUR 72 ARGENT-DIS 4.33 12/31/2033 JPY 42 ARGENT-PAR&GDP 0.45 12/31/2038 JPY 8 BODEN 2014 2 9/30/2014 ARS 162 BOGAR 2018 2 2/4/2018 ARS 151 CAYMAN ISLAND ------------- BANCO BPI (CI) 4.15 11/14/2035 EUR 49.121 BANIF FIN LTD 3 12/31/2019 EUR 18.75 BCP FINANCE BANK 5.01 3/31/2024 EUR 56.783 BCP FINANCE BANK 5.31 12/10/2023 EUR 59.599 BCP FINANCE CO 5.543 EUR 59.83186 BCP FINANCE CO 4.239 EUR 58 BES FINANCE LTD 5.772 2/7/2035 EUR 58.15221 BES FINANCE LTD 5.58 EUR 61.01657 BES FINANCE LTD 4.5 EUR 60.46845 CHINA FORESTRY 7.75 11/17/2015 USD 62 CHINA FORESTRY 7.75 11/17/2015 USD 55 DUBAI HLDNG COMM 6 2/1/2017 GBP 76.14821 EFG ORA FUNDING 1.7 10/29/2014 EUR 65.36897 ESFG INTERNATION 5.753 EUR 59.725 IMCOPA INTL CAYM 10.375 12/16/2014 USD 38 PUBMASTER FIN 6.962 6/30/2028 GBP 53.09666 PUBMASTER FIN 8.44 6/30/2025 GBP 55.724 THPA FINANCE LTD 8.241 3/15/2028 GBP 72.93495 CHILE ----- AGUAS NUEVAS 3.4 5/15/2012 CLP 1.0996 CGE DISTRIBUCION 3.25 12/1/2012 CLP 39.74357 ESVAL S.A. 3.8 7/15/2012 CLP 37.65094 MASISA 4.25 10/15/2012 CLP 40.4049 VENEZUELA --------- PETROLEOS DE VEN 12.75 2/17/2022 USD 76.51667 VENEZUELA 7 3/31/2038 USD 55.25 VENEZUELA 7 3/31/2038 USD 54.07785 VENEZUELA 6 12/9/2020 USD 57.35 VENEZUELA 7.65 4/21/2025 USD 59.6 VENEZUELA 8.25 10/13/2024 USD 62.15 VENEZUELA 9.25 5/7/2028 USD 65.75 VENEZUELA 7.75 10/13/2019 USD 66.25 VENEZUELA 9 5/7/2023 USD 67 VENEZUELA 7 12/1/2018 USD 66.75 VENEZUELA 9.25 9/15/2027 USD 68.94757 VENEZUELA 9.25 9/15/2027 USD 71.5 VENEZUELA 5.75 2/26/2016 USD 71.1 VENZOD - 189000 9.375 1/13/2034 USD 66.25 *********** Monday's edition of the TCR-LA delivers a list of indicative prices for bond issues that reportedly trade well below par. Prices are obtained by TCR-LA editors from a variety of outside sources during the prior week we think are reliable. Those sources may not, however, be complete or accurate. The Monday Bond Pricing table is compiled on the Friday prior to publication. Prices reported are not intended to reflect actual trades. Prices for actual trades are probably different. Our objective is to share information, not make markets in publicly traded securities. Nothing in the TCR-LA constitutes an offer or solicitation to buy or sell any security of any kind. It is likely that some entity affiliated with a TCR-LA editor holds some position in the issuers' public debt and equity securities about which we report. Tuesday's edition of the TCR-LA features a list of companies with insolvent balance sheets obtained by our editors based on the latest balance sheets publicly available a day prior to publication. At first glance, this list may look like the definitive compilation of stocks that are ideal to sell short. Don't be fooled. Assets, for example, reported at historical cost net of depreciation may understate the true value of a firm's assets. A company may establish reserves on its balance sheet for liabilities that may never materialize. The prices at which equity securities trade in public market are determined by more than a balance sheet solvency test. A list of Meetings, Conferences and Seminars appears in each Thursday's edition of the TCR-LA. Submissions about insolvency- related conferences are encouraged. Send announcements to conferences@bankrupt.com *********** S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter-Latin America is a daily newsletter co-published by Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Frederick, Maryland USA, Marites O. Claro, Joy A. Agravante, Rousel Elaine T. Fernandez, Valerie U. Pascual, Psyche A. Castillon, Julie Anne G. Lopez, Ivy B. Magdadaro, Frauline S. Abangan, and Peter A. Chapman, Editors. Copyright 2011. All rights reserved. ISSN 1529-2746. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR Latin America subscription rate is US$625 per half-year, delivered via e-mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are US$25 each. For subscription information, contact Christopher Beard at 240/629-3300. * * * End of Transmission * * *