/raid1/www/Hosts/bankrupt/TCRLA_Public/120713.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
Friday, July 13, 2012, Vol. 13, No. 139
Headlines
A R G E N T I N A
ALUAR: Moody's Affirms 'B2' Global LC Corp. Family Rating
B R A Z I L
CPFL ENERGIAS: Moody's Assigns 'Ba2' Corporate Family Rating
* BRAZIL: Economic Activity Drops Less Than Expected in May
C A Y M A N I S L A N D S
BLACK DIAMOND: Creditors' Proofs of Debt Due Aug. 14
BLACK DIAMOND FUNDING: Creditors' Proofs of Debt Due Aug. 14
CAPITAL W FUND: Creditors' Proofs of Debt Due Aug. 2
CMT CHINAVALUE: Creditors' Proofs of Debt Due Aug. 2
CPMS HOLDINGS: Creditors' Proofs of Debt Due Aug. 3
CREF NO.1 LIMITED: Creditors' Proofs of Debt Due Aug. 3
ISATIS INVESTMENTS: Placed Under Voluntary Wind-Up
MA MILLGATE: Creditors' Proofs of Debt Due Aug. 14
MK GLOBAL: Creditors' Proofs of Debt Due July 25
WMT HOSPITALITY: Creditors' Proofs of Debt Due Aug. 14
C O L O M B I A
* COLOMBIA: Gets US$10 Million IDB Loan to Cut Financial Burdens
J A M A I C A
DIGICEL GROUP: Back in Court Again to Face Government on Dispute
M E X I C O
CORPORACION PESQUERA: Moody's Alters Outlook on 'B2' CFR to Pos.
U R U G U A Y
PLUNA SA: Declares Insolvency After Indefinite Flight Suspension
- - - - -
=================
A R G E N T I N A
=================
ALUAR: Moody's Affirms 'B2' Global LC Corp. Family Rating
---------------------------------------------------------
Moody's Latin America changed the ratings outlook for Aluar to
stable from positive and affirmed its B2 global local currency
corporate family rating, B2 senior unsecured local notes due 2014
(equivalent to US$50 million) and its Aa3.ar Argentina National
Scale Rating.
Rating Rationale
The revised outlook to stable reflects Moody's view that Aluar
ultimately cannot be completely de-linked from the credit quality
of the Argentinean government (B3, stable), and thus its ratings
need to more closely reflect the risk that they share with the
sovereign.
Moody's believes that there has been no deterioration in the
intrinsic credit quality of Aluar. However, a weaker sovereign
has the potential to create a ratings drag, and therefore it is
appropriate to limit the extent to which these issuers are rated
higher than the sovereign, in line with Moody's Rating
Implementation Guidance "How Sovereign Credit Quality May Affect
Other Ratings" published on February 13, 2012.
Aluar remains rated above the sovereign rating of B3 as a
reflection of its stronger credit quality.
The B2 and Aa3.ar ratings reflect Aluar's leading market position
as the only aluminum smelter in Argentina, its ability to
maintain competitive cost position based on its long-term volume
based supply contracts and its adequate financial performance to
face any potential slowdown in the industry's cycle. Aluar's
ratings also consider its favorable business model since Aluar
serves 100% of Argentina domestic demand and generates
significant foreign currency earnings through its worldwide
exports. Some 70% of Aluar's total production is exported.
These key strengths are offset by the nature of Aluar's business,
which is exposed to cyclical commodity aluminum prices, and its
limited geographical diversification in terms of operating
assets. The company operates a single primary aluminum production
facility and is dependent on a single alumina supplier.
The stable outlook is based on Moody's expectation that Aluar
will continue to successfully execute its business strategy, in
spite of continued weak economic fundamentals in Argentina and
aluminum price volatility. Additionally, the stable outlook
reflects Moody's expectation that Aluar will maintain adequate
liquidity to withstand a deterioration in cash generation arising
from an expected loss in production at its single smelter in
Puerto Madryn, due to weather related power disruption.
While unlikely at this juncture, rating could experience upward
pressure if Argentina's B3 government bond rating would be
upgraded. In addition, an upgrade of the ratings could result
from a continued strengthening of Aluar's revenues while
maintaining its operating margins and low leverage.
Quantitatively, upward momentum could result if Aluar's total
debt to EBITDA is sustained below 1.0x times (1.3x times as of
the last twelve months ending March 31, 2012) and EBIT margin
above 19% (13.2% as of the last twelve months ending March 31,
2012), both on a sustainable basis.
Negative rating pressure could arise if there is a prolonged
slowdown in Aluar's end markets, with sustained aluminum price
weakness leading to a deterioration in operating margins.
Quantitatively, a downgrade in the ratings or outlook could be
caused by EBIT/interest of below 2.5x, debt/EBITDA above 5.0x or
operating cash flow less dividends to debt of less than 10% for
an extended period of time.
Moody's notes that any downward rating action at the sovereign
level would likely result in negative rating actions at Aluar, as
the current notching gap will likely be maintained in the absence
of a significant change in credit quality at Aluar.
Aluar Aluminio Argentino S.A.I.C. (Aluar) is the sole primary
aluminum producer and the main semi-manufactured aluminum maker
in Argentina. With total revenues of US$1.2 billion as of the
last twelve months ending March 31, 2012, approximately 30% of
Aluar's production is sold in Argentina and the remaining 70% is
exported worldwide.
===========
B R A Z I L
===========
CPFL ENERGIAS: Moody's Assigns 'Ba2' Corporate Family Rating
------------------------------------------------------------
Moody's America Latina Ltda assigned to CPFL Energias Renovaveis
S.A. (CPFL Renovaveis) a Ba2 local currency corporate family
rating on the global scale and a Aa3.br local currency corporate
family rating on the national Brazilian scale. The outlook is
stable. This is the first time Moody's has assigned a rating to
CPFL Renovaveis.
Ratings Rationale
The Ba2/Aa3.br corporate family ratings reflect the company's
expertise at constructing and operating small power hydro plants
and biomass fueled thermo plants. They also reflect the implicit
support of strong shareholders and a diversified portfolio of
power sources. Moody's also expects cash flows to be relatively
stable as the company has medium and long-term supply contracts
to both the regulated and free markets. The company's ability to
secure long-term funding further support the ratings.
The company's relatively short track record of operations in its
current form, high financial leverage, a huge capital expenditure
program and the execution risks associated with the construction
and operation of wind farm projects constrain the ratings. The
increasing volume of free market sales concentrated in one single
client, one of its shareholders CPFL Comercializadora, further
constrains the ratings, as does the relatively short life of the
Brazilian regulatory framework.
Given that CPFL Renovaveis was formed only recently in August
2011, an analysis of its past operational and financial
performance is somewhat limited and not completely meaningful
given the magnitude of its projected capital expenditure program.
When executed, this program will create a company dramatically
larger than the two predecessor companies that initially created
CPFL Renovaveis when they merged their generation assets.
Moody's projects leverage to grow during the next two years given
the company's sizeable capital expenditure program of BRL4.1
billion. Cash flow metrics will be relatively weak as measured by
the CFO Pre-WC to debt ratio, which should average 5.2% over the
next three years which falls towards the low end of the B range
using the suggested metric ranges outlined in Moody's methodology
for power companies. Interest coverage which is expected to be
around 1.9x during this period, falls within the low end of the
Ba range due to the relatively low annual interest rates of
around 8% the company pays on most of its borrowings, largely
consisting of long-term debt provided by BNDES, which also offers
a grace period for the payment of principal and interest during
the construction phase.
Given the company's sizeable capital expenditures program over
the next couple of years, annual average FCF (Free Cash Flow)
will be negative during this period, which Moody's estimates to
be around BRL 1.6 billion or 25% over debt. In 2014, FCF is
expected to gradually improve when most of the company's power
projects are fully operational and capital expenditures are
significantly reduced.
The major downside risks to these estimates are delays in the
start-up of some of the power projects, the most critical being
the wind farm projects; cost overruns, lower wind farm load
factors than planned and approved by the regulator; and being
unable to obtain timely and adequate funding. Moody's assumes
that any additional sizeable investment will be followed by a
capital injection, as management has recently stated, also
signaling that it would be pursuing an IPO transaction of around
BRL 1 billion within this year.
While Moody's would agree that such a potential IPO transaction
is feasible, to be conservative, an IPO transaction was not
included in Moody's projections; however, it remains to be seen
if any potential capital injection of such magnitude would be
used to recapitalize the company or instead be used to leverage
new projects. Moody's does not rule out that CPFL Renovaveis
would look to further expand its current power plant portfolio
provided that it can obtain adequate long-term funding at the
level of the projects.
The concentration of around 35% of volume sales in one of its
shareholders CPFL Comercializadora, also a full subsidiary of
CPFL Energias, would stand out as a potential major credit risk
if it were not for CPFL Comercializadora's track record and the
overall creditworthiness of CPFL Energia and its other operating
subsidiaries.
CPFL Renovaveis recently announced the acquisition of four wind
farm plants with an installed capacity of 157.5MW for an
estimated purchase price of BRL 1.1 billion, of which around BRL
600 million were disbursed to the wind farm's former shareholders
in June 2012 while the remaining portion consists of existing
debt.
These four wind farm projects started operating in 2007 under the
PROINFA (a federally sponsored program to develop renewable
energy), based on a 20-year supply contract. The off-taker of
this contract is Eletrobras (Baa2; stable).
CPFL Energias' Ba2 corporate family rating is one notch higher
than the rating implied by Moody's rating methodology grid for
power companies. The notching uplift incorporates the implicit
support of its strong major shareholder, CPFL Energia. This
support is evidenced by existing guarantees of around BRL700
million as of December 31, 2011 and Moody's expectation that CPFL
Energia would step in to help this subsidiary, if needed, due to
the strategic role that CPFL Renovaveis is expected to play
within its business strategy.
The stable outlook reflects Moody's expectation that CPFL
Renovaveis will secure adequate long-term funding in a timely
manner so that there will be no pressure on liquidity over the
next 4 quarters and that the various power projects currently
under construction will come on stream and perform reasonably in
line with management's projections.
Moody's has also factored in that new sizeable projects or
acquisitions will necessarily be followed by capital increases so
that the company's credit metrics remain adequate for its rating
category.
Moody's does not foresee any rating upgrade in the short- to-
medium term given the various projects under construction and the
risks inherent in their execution. Therefore, Moody's will
require a longer track record of operational performance before
it considers any upgrade rating action.
Moody's would consider a downgrade rating action if the company
fails in securing adequate long-term funding as planned leading
to a deterioration in liquidity and an increase in leverage above
Moody's expectations. Quantitatively, Moody's would consider a
downgrade rating action if the CFO Pre-WC to debt ratio stays
below 5% and interest coverage falls below 1.7x on a prolonged
basis.
CPFL Renovaveis was formed in August 2011 as a result of the
merger of some of the generation assets (small hydro and biomass
plants) of CPFL Energia (not rated) with the generation assets of
ERSA. The latter was a holding company with interests in small
power plants and wind farm projects.
CPFL Energia controls CPFL Renovaveis with 63.6% of its voting
and total capital. As of December 31, 2011, CPFL Renovaveis had a
total installed capacity of 747MW, of which 307 MW were small
power plants, 210 MW wind farms and 230MW biomass plants.
Currently, power plants under construction total 808MW, largely
concentrated on wind farms that represent around 550 MW.
* BRAZIL: Economic Activity Drops Less Than Expected in May
-----------------------------------------------------------
Bloomberg News reports that Brazil's economic activity in May
declined less than analysts expected, signaling that interest-
rate cuts and stimulus measures may be having some effect in
offsetting the impact of the global crisis.
The seasonally adjusted economic activity index, a proxy for
gross domestic product, fell 0.02% in May, after rising a revised
0.10% in April, the central bank said, according to Bloomberg
News.
Analysts expected a decline of 0.4%, according to the median
estimate from 26 economists surveyed by Bloomberg.
The non-seasonally adjusted index rose 1.09% from a year ago, the
biggest increase in four months and also more than expected by 24
economists surveyed by Bloomberg, whose median estimate was for a
0.25% increase.
Bloomberg News says that forecasts for economic growth in the
biggest emerging market after China have fallen nine straight
weeks to 2.01%, according to the latest central bank survey, even
as the government has lowered borrowing costs, cut taxes and
boosted lending by the state development bank.
The central bank has cut the benchmark Selic rate by 4.5
percentage points since August to a record low 8%, Bloomberg News
relays.
Bloomberg News discloses that retail sales in May fell the most
in more than three years, while industrial output declined for a
third month and 3.3% from a year before.
===========================
C A Y M A N I S L A N D S
===========================
BLACK DIAMOND: Creditors' Proofs of Debt Due Aug. 14
----------------------------------------------------
The creditors of Black Diamond Capital I, Ltd. are required to
file their proofs of debt by Aug. 14, 2012, to be included in the
company's dividend distribution.
The company commenced liquidation proceedings on June 21, 2012.
The company's liquidator is:
David Dyer
Deutsche Bank (Cayman) Limited
PO Box 1984 Grand Cayman KY1-1104
Cayman Islands
BLACK DIAMOND FUNDING: Creditors' Proofs of Debt Due Aug. 14
------------------------------------------------------------
The creditors of Black Diamond Capital Funding I, Ltd. are
required to file their proofs of debt by Aug. 14, 2012, to be
included in the company's dividend distribution.
The company commenced liquidation proceedings on June 21, 2012.
The company's liquidator is:
David Dyer
Deutsche Bank (Cayman) Limited
PO Box 1984 Grand Cayman KY1-1104
Cayman Islands
CAPITAL W FUND: Creditors' Proofs of Debt Due Aug. 2
----------------------------------------------------
The creditors of Capital W Fund SPC are required to file their
proofs of debt by Aug. 2, 2012, to be included in the company's
dividend distribution.
The company commenced liquidation proceedings on June 20, 2012.
The company's liquidator is:
Walkers Corporate Services Limited
Walker House, 87 Mary Street, George Town
Grand Cayman KY1-9005
Cayman Islands
c/o Jennifer Chailler
Telephone: (345) 814 6847
CMT CHINAVALUE: Creditors' Proofs of Debt Due Aug. 2
----------------------------------------------------
The creditors of CMT Chinavalue Capital Partners Limited are
required to file their proofs of debt by Aug. 2, 2012, to be
included in the company's dividend distribution.
The company commenced liquidation proceedings on June 19, 2012.
The company's liquidator is:
Walkers Corporate Services Limited
Walker House, 87 Mary Street, George Town
Grand Cayman KY1-9005
Cayman Islands
c/o Jennifer Chailler
Telephone: (345) 814 6847
CPMS HOLDINGS: Creditors' Proofs of Debt Due Aug. 3
---------------------------------------------------
The creditors of CPMS Holdings are required to file their proofs
of debt by Aug. 3, 2012, to be included in the company's dividend
distribution.
The company commenced wind-up proceedings on May 16, 2012.
The company's liquidator is:
Linburgh Martin
c/o Neil Gray
Telephone: (345) 949 8455
Facsimile: (345) 949 8499
Intertrust (Cayman) Limited
Fourth Floor, Harbour Place
P.O. Box 1034 Grand Cayman KY1-1102
Cayman Islands
CREF NO.1 LIMITED: Creditors' Proofs of Debt Due Aug. 3
-------------------------------------------------------
The creditors of CREF No.1 Limited are required to file their
proofs of debt by Aug. 3, 2012, to be included in the company's
dividend distribution.
The company commenced wind-up proceedings on June 21, 2012.
The company's liquidator is:
Linburgh Martin
c/o Neil Gray
Telephone: (345) 949 8455
Facsimile: (345) 949 8499
Intertrust (Cayman) Limited
Fourth Floor, Harbour Place
P.O. Box 1034 Grand Cayman KY1-1102
Cayman Islands
ISATIS INVESTMENTS: Placed Under Voluntary Wind-Up
--------------------------------------------------
At an extraordinary general meeting held on June 21, 2012, the
shareholders of Isatis Investments Limited passed a resolution
that voluntarily winds up the company's operations.
The company's liquidator is:
Raymond E. Whittaker
FCM Ltd.
Governor's Square
Ground Floor, West Bay Road
PO Box 1982 Grand Cayman KY-1104
Cayman Islands
MA MILLGATE: Creditors' Proofs of Debt Due Aug. 14
--------------------------------------------------
The creditors of MA Millgate International Limited are required
to file their proofs of debt by Aug. 14, 2012, to be included in
the company's dividend distribution.
The company commenced liquidation proceedings on June 21, 2012.
The company's liquidator is:
David Dyer
Deutsche Bank (Cayman) Limited
PO Box 1984 Grand Cayman KY1-1104
Cayman Islands
MK GLOBAL: Creditors' Proofs of Debt Due July 25
------------------------------------------------
The creditors of MK Global Developing Markets Offshore, Ltd. are
required to file their proofs of debt by July 25, 2012, to be
included in the company's dividend distribution.
The company commenced wind-up proceedings on June 12, 2012.
The company's liquidator is:
Ogier
c/o Sarah Federspiel
Telephone: (345) 815-1833
Facsimile: (345) 949-9877
89 Nexus Way, Camana Bay
Grand Cayman KY1-9007
Cayman Islands
WMT HOSPITALITY: Creditors' Proofs of Debt Due Aug. 14
------------------------------------------------------
The creditors of WMT Hospitality Investment II, Holdings are
required to file their proofs of debt by Aug. 14, 2012, to be
included in the company's dividend distribution.
The company commenced liquidation proceedings on June 21, 2012.
The company's liquidator is:
David Dyer
Deutsche Bank (Cayman) Limited
PO Box 1984 Grand Cayman KY1-1104
Cayman Islands
===============
C O L O M B I A
===============
* COLOMBIA: Gets US$10 Million IDB Loan to Cut Financial Burdens
----------------------------------------------------------------
A US$10 million loan from the Inter-American Development Bank
(IDB) will finance a program to help the government of Colombia
improve the management of cases in lawsuits brought against the
state.
According to Colombia's Finance Ministry, over the past four
years payments for lawsuits brought against the state increased
nearly 50%, from US$230 million in 2007 to $450 million in 2011.
In mid-2011, 240,000 lawsuits -- most of them labor -- related
were in progress against some 100 Colombian government agencies.
The Colombian state loses about seven of every 10 lawsuits
brought against it. In Brazil, the state prevails in nearly six
in 10 cases, while in Chile, nine out of 10 cases are resolved in
favor of the state.
The program will improve the case management of lawsuits brought
against Colombian public entities by supporting the newly created
National Agency for State Legal Defense. This agency will enable
the government to consolidate its legal defense actions, better
manage case information, more closely monitor the activities of
government lawyers, and improve the fiscal cost by generating
greater social investment.
The four-year program is expected to help the Colombian
government increase the percentage of cases resolved through
alternative dispute mechanisms and conduct faster and less costly
trials. It is also expected that lawsuits resolved in the favor
of the state will increase and average payments will be reduced,
resulting in greater fiscal sustainability.
The loan is for 15 years, with a grace period of the same
extension on principal repayments and a variable interest rate.
=============
J A M A I C A
=============
DIGICEL GROUP: Back in Court Again to Face Government on Dispute
----------------------------------------------------------------
The Royal Gazette reports that the Bermuda government and Digicel
Bermuda faced off in court again in the long-running
international long distance dispute. The company is a subsidiary
of Digicel Group Limited.
Saul Froomkin, the private lawyer representing the Telecoms
Department, argued for Digicel Bermuda's judicial review
proceedings to be set aside, according to The Royal Gazette. The
report relates that Digicel Bermuda is pushing for a trial date.
The report notes that the June 10 hearing was adjourned and the
parties asked to make written submissions in reply to the
arguments within seven days, the Chief Justice Ian Kawaley will
make a decision.
The Royal Gazette has learned that the Telecoms Commission has
advised government that it has found Digicel Bermuda and Transact
are not in compliance with their licenses.
However, the report notes that Minister of Environment, Planning
and Infrastructure Strategy Marc Bean has told the Commission
that before he makes any decision in the case he needs more
information on how it reached its findings.
Digicel Bermuda is seeking an injunction preventing the Minister
from even making such a decision in the first place because it
says it was approved so he cannot make any decision against that
approval now, The Royal Gazette relays.
The government argued Digicel Bermuda needs to wait for an actual
decision before seeking such action, the report discloses.
Long distance provider TBi is joined with government in objecting
to Digicel Bermuda's launch of ILD, the report notes
The Royal Gazette says that Digicel Bermuda has accused the
government of making a "dramatic u-turn on its decision to allow
it to provide international long distance service", causing it to
suffer "enormous reputation damage."
As reported in the Troubled Company Reporter on June 8, 2012, The
Royal Gazette said that Digicel Bermuda is suing the
Bermuda government for substantial damages "for misfeasance in
public office" as part of the protracted legal battle over its
launch last year of international long distance. The Royal
Gazette noted that Digicel Bermuda's recent judicial review
proceedings included the claim for damages, which Government
applied to set aside. The report related that the proceedings
were adjourned, but both sides are due back in court soon. It's
been government's case, as stated in previous affidavits, that
the Digicel ILD offered through sister company and ISP Transact
was not lawful, The Royal Gazette noted. However, the report
relayed that Digicel Bermuda claims government approved it to
carry ILD.
About Digicel Group
Digicel Group Limited -- http://www.digicelgroup.com/-- is
renowned for competitive rates, unbeatable coverage, superior
customer care, a wide variety of products and services and state-
of-the-art handsets. By offering innovative wireless services
and community support, Digicel Group has become a leading brand
across its 31 markets worldwide. Digicel is based in Jamaica.
It has operations in 31 markets worldwide. Its Caribbean and
Central American markets comprise Anguilla, Antigua & Barbuda,
Aruba Barbados, Bermuda, Bonaire, the British Virgin Islands, the
Cayman Islands, Curacao, Dominica, El Salvador, French Guiana,
Grenada, Guadeloupe, Guyana, Haiti, Honduras, Jamaica,
Martinique, Panama, St. Kitts Nevis, St. Lucia, St. Vincent & the
Grenadines, Suriname, Trinidad & Tobago and Turks & Caicos. The
Caribbean company also has coverage in St. Martin and St. Barts.
Digicel Pacific comprises Fiji, Papua New Guinea, Samoa, Tonga
and Vanuatu.
* * *
As of June 25, 2012, the company continues to carry Moody's
"Caa1" senior unsecured debt rating.
===========
M E X I C O
===========
CORPORACION PESQUERA: Moody's Alters Outlook on 'B2' CFR to Pos.
----------------------------------------------------------------
Moody's Investors Service changed Corporacion Pesquera Inca
S.A.C.'s rating outlook to positive from stable. At the same
time, Moody's affirmed the company's B2 corporate family and
senior unsecured debt ratings.
Ratings Rationale
"The outlook change reflects the company's progress in improving
its operating performance under the individual transferable quota
system and expectations for a sustainable free cash generation
with the conclusion of its expansion plan," said Alonso Sanchez
Rosario, a Moody's Assistant Vice President.
Copeinca's B2 ratings reflect the company's limited operating
scale and modest business diversification compared to protein-
industry and regional peers; its exposure to potentially volatile
volume and price trends of the commoditized global fishmeal and
fish oil market; the sensitivity of cash flows to climatic
conditions and regulation; and a pronounced cash flow
seasonality. These credit negatives are to some extent offset by
Copeinca's position as the second largest fishmeal producer in
Peru, the world's leading fishmeal nation; a successful operating
history in its current business configuration; and favorable
earnings prospects resulting from improved efficiency potential
under Peru's individual transferable quota (ITQ) system. Moody's
believes that Copeinca has solid corporate governance for the
region because of its parent company (Copeinca ASA)'s listing in
Oslo, Norway and adherence to Oslo stock exchange standards.
Copeinca has a short but successful operating history under the
ITQ system implemented in Peru in 2009. The implementation of the
ITQ system drove Copeinca to invest over US$80 million to build 3
new vessels, increase installed capacity in its factories and
convert all of them to steam dried production in order to
increase operating efficiency and product quality. With a more
efficient production structure Copeinca's profitability, measured
as EBITDA per metric ton, increased from US$306/MT in 2008 to
US$544/MT in 2011. Furthermore, EBITDA margin improved
significantly from 32.1% in the last twelve months (LTM) ended
March 31, 2011 to 38.7% in LTM 1Q12.
As of March 31, 2012, Copeinca's financial information reflects a
better credit profile than in previous years. In the LTM 1Q12,
Moody's adjusted debt/EBITDA improved to 1.9x (from over 2.4x in
prior years) mainly as a result of higher EBITDA generation.
Similarly, interest coverage (EBIT/Interest) as adjusted by
Moody's has also improved from 4.1x in 2011 to 5.2x in LTM 1Q12
due to higher EBIT as interest expense has remained relatively
constant. These credit metrics are strong for a B2 rating and
compare favorably with other rated industry peers.
In 2010 and 2011, Copeinca's cash flow generation was affected by
adverse weather conditions, high dividend payments and high
capital expenditures which resulted in negative free cash flow.
In contrast, for the LTM 1Q12, free cash flow was US$18 million
as the company had strong cash from operations (defined as funds
from operations after changes in working capital), lower capital
spending and no dividend payments. For the rest of the year
Copeinca's cash flow generation will benefit from lower capex as
it will be reduced to around US$15 million (vs. US$36 million in
2011 and US$60 million in 2010) and smaller dividend payment of
US$39 million (vs. US$50 million in 2010). Longer term Moody's
expects cash flow generation to remain strong as capex and
dividends are estimated to be around US$15 million and US$28
million, respectively, per year.
Copeinca's liquidity is adequate with cash on hand of US$63
million that can cover 3.1x short term debt of US$20 million as
of March 31, 2012. Copeinca's liquidity is somewhat affected by
cash flow seasonality caused by the working capital build-up that
tends to occur during Peru's two anchovy fishing seasons in the
second and fourth calendar quarters and the subsequent cash
inflow when inventories are shipped in the first and third
quarters. Copeinca typically funds these working capital needs
with uncommitted inventory-based short-term bank facilities with
local banks which currently account for US$62 million. Copeinca
has an acceptable long-term debt maturity profile with no major
debt maturity before 2017 when the US$175 million global senior
notes are due.
The positive ratings outlook reflects Moody's expectation that
Copeinca's cash position should improve by generating positive
free cash flow as dividend payments and capital expenditures are
expected to remain moderate. The outlook also incorporates
Moody's expectation that the company will continue to operate
successfully under the ITQ system, while improving earnings
trends.
Upward ratings pressure could emerge if the company is able to
maintain positive free cash flow generation while maintaining
strong credit metrics on a sustainable basis with debt/EBITDA
below 2.5x. On the other hand, a prolonged period of negative
free cash flow generation with material additional external
funding needs, for example because of an abrupt deterioration of
global fishmeal demand or anchovy supply, could cause downward
pressure on the ratings.
The principal methodology used in rating Copeinca was Moody's
Global Food -- Protein and Agricultural Industry rating
methodology, published in September 2009.
Corporacion Pesquera Inca S.A.C., headquartered in Lima, Peru, is
the second largest fishmeal and fish oil producer in Peru and the
third largest globally. Copeinca currently operates 28 vessels
and five processing plants along the Peruvian coast. For the last
twelve months ended March 31, 2012, the company had revenues of
US$326 million.
=============
U R U G U A Y
=============
PLUNA SA: Declares Insolvency After Indefinite Flight Suspension
----------------------------------------------------------------
AFP reports that Uruguay's flagship airline Pluna has declared
insolvency, one day after announcing the indefinite suspension of
all flights due to the company's financial difficulties.
AFP says company president Fernando Pasadores made the
announcement in a radio interview on Friday. Pluna executives
said the next step would likely be to liquidate the company,
which was taken over by the state last month, the report relates.
The report notes that the state had originally owned 25% of
shares, but took control of the company after the withdrawal of
private consortium LeadGate, which owned 75%.
According to the news agency, Mr. Pasadores said that despite
attempts to find a new shareholder, the company ran short of
funds, which "makes it impossible to continue operations under
these conditions."
After LeadGate's departure, AFP recalls, the Uruguayan government
reached out to Canadian airliner Jazz Air, a minority member of
the consortium, but failed to reach an agreement.
AFP notes that Mr. Pasadores explained the company's monthly
revenue of about $15 million was "not enough to pay the costs" of
operation.
The suspension of flights comes just ahead of a popular travel
season, with students about to go on break, the report says.
According to the report, the company has a fleet of 13 Bombardier
CRJ900 aircraft and some 900 employees. Six of the airplanes
operated on lease will be returned, and the remaining seven will
be sold, add AFP.
Pluna SA operated flights connecting Uruguay to Argentina,
Brazil, Chile and Paraguay. The company carried some 1.5 million
passengers annually.
***********
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, Ivy B. Magdadaro, Frauline S.
Abangan, and Peter A. Chapman, Editors.
Copyright 2012. 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 Peter Chapman at 240/629-3300.
* * * End of Transmission * * *