/raid1/www/Hosts/bankrupt/TCRLA

/raid1/www/Hosts/bankrupt/TCRLA_Public/130905.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 Thursday, September 5, 2013, Vol. 14, No. 176 Headlines B R A Z I L AMPLA ENERGIA: S&P Raises CCR to 'BB+'; Outlook Stable CAMARGO CORREA: S&P Affirms 'BB' Rating; Outlook Positive FIBRIA CELULOSE: Moody's Affirms Ba1 Global Scale Rating JBS USA: Discloses Offering of Senior Notes Due 2021 JBS USA: S&P Assigns 'BB' Rating to US$400 Million Term Loan B C A Y M A N I S L A N D S A D GULAB: Shareholders' Final Meeting Set for Sept. 20 BERMUDA INVESTORS: Shareholder to Hear Wind-Up Report on Sept. 13 BLACK AND WHITE: Shareholders' Final Meeting Set for Sept. 30 CAMOMILE LIFFEY: Shareholder to Hear Wind-Up Report on Oct. 4 CREATIVE DRAGONS: Shareholders' Final Meeting Set for Sept. 17 F.A. INVESTMENTS: Shareholder to Hear Wind-Up Report on Oct. 4 HB ASIA: Shareholder to Hear Wind-Up Report on Oct. 4 JANA PIRANHA: Shareholder to Hear Wind-Up Report on Sept. 23 LIFEINVEST OPPORTUNITY: Shareholders' Meeting Set for Sept. 26 PHAROS GAS: Shareholders' Final Meeting Set for Sept. 18 PINEBANK CATALYST: Members' Final Meeting Set for Sept. 23 PINEBANK CATALYST MASTER: Members' Final Meeting Set for Sept. 23 PRIMUS CLO I: Shareholder to Hear Wind-Up Report on Oct. 4 TSUKIJI SHOCHIKU: Shareholders' Final Meeting Set for Sept. 27 WALLPAPER INVESTMENT: Shareholders' Final Meeting Set for Sept. 30 D O M I N I C A N R E P U B L I C * DOMINICAN REP: Lack of Export Strategy Fuels Monetary Fires J A M A I C A SAGICOR LIFE: Gets Nod From Shareholders to Reorganize UC RUSAL: Forecast Value of Shares Downgraded From Buy to Sell * JAMAICA: Gov't to Pump More Funds Into Small Business Sector M E X I C O DOCUFORMAS SAPI: S&P Affirms 'B+' Rating; Outlook Stable OFFICE DEPOT: S&P Assigns 'BB' Corp. Credit Rating; Outlook Stable OFFICE DEPOT: Fitch Assigns 'BB+' Issuer Default Rating SERVICIOS DE AGUA: Moody's Withdraws Ba2/A2.mx Issuer Ratings X X X X X X X X * Upcoming Meetings, Conferences and Seminars - - - - - =========== B R A Z I L =========== AMPLA ENERGIA: S&P Raises CCR to 'BB+'; Outlook Stable ------------------------------------------------------ Standard & Poor's Ratings Services raised its corporate credit ratings on Ampla Energia e Servi‡os S.A. (AMPLA) to 'BB+' from 'BB' on global scale and to 'brAA' from 'brAA-' on national scale. The outlook is stable. The upgrade reflects AMPLA's improving financial risk profile, whose assessment S&P revised to "intermediate" from "significant." The ratings also reflect the company's "fair" business risk profile and "less than adequate" liquidity. AMPLA's "intermediate" financial risk profile reflects its intermediate credit metrics, prudent financial policy, and adequate financial flexibility. Somewhat constraining the rating is the company's aggressive capital expenditure (capex) plan, which pressures the free operating cash. AMPLA has continued to show a prudent financial policy by reducing debt levels by 25% in the last 12 months and maintaining a relatively low dividend payout, of about 25%, in the last five years. The company also has a relatively smooth amortization profile, with about R$150 million of annual maturities in the next three years and access to local capital markets and low-cost loans from the Brazilian Development Bank. The ratings also incorporate AMPLA's aggressive capex plan put in place to reduce energy losses. Annual capex for the next two years will be in the R$400 million - R$430 million range, which will weaken FOCF. CAMARGO CORREA: S&P Affirms 'BB' Rating; Outlook Positive --------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'BB' ratings on Camargo Correa S.A. (Camargo). At the same time, S&P affirmed its 'BB' ratings on its cement subsidiaries InterCement Brasil S.A. (Intercement) and Cimpor Cimentos de Portugal, S.G.P.S., S.A. (Cimpor) and revised the outlook on all entities to positive. The rating action is based on S&P's expectation that Camargo's credit metrics will improve in the next few years, potentially becoming more aligned with a "significant" financial risk profile from its current "aggressive." Current leverage ratios went up significantly after the debt-financed acquisition of Cimpor, but the company should still benefit from the consolidation and synergies in its cement business through InterCement. S&P assumes debt to EBITDA from 4.0x to 5.0x in 2013 and 2014 (net debt to EBITDA close to 3.5x) and funds from operations (FFO) to net debt trending to 20%. "Although Camargo has historically implemented an aggressive mostly debt-financed acquisition strategy, the company also has a solid track record in successfully consolidating and developing its new businesses. We also expect the group's growth to be mostly organic and that new investments will follow capital discipline in order to deleverage," said Standard & Poor's credit analyst Renata Lotfi. FIBRIA CELULOSE: Moody's Affirms Ba1 Global Scale Rating -------------------------------------------------------- Moody's Investors Service has affirmed Fibria's Ba1 global scale rating and Aa2.br national scale ratings and changed the ratings outlook to positive from stable. The change in outlook reflects the company's ongoing improvement in operational performance, reduction in debt levels, and Moody's expectations that the depreciation of the Brazilian Real will help offset potentially weaker pulp prices in the short to medium term, supporting a continued deleveraging of Fibria's balance sheet. Moody's belief that Fibria will continue to manage capex and dividends distribution to support its improving credit profile, as well as the affiliation with Votorantim Participacoes S.A. (Baa3; positive outlook) also support the positive outlook. Ratings affirmed: Issuer: Fibria Celulose S.A. CFR: Ba1 (global scale) and Aa2.br (national scale rating) Issuer: Fibria Overseas Finance Limited $63mm notes due 2019: Ba1 (global scale) $870mm notes due 2020: Ba1 (global scale) $750mm notes due 2021: Ba1 (global scale) The outlook for the ratings is positive. Ratings Rationale: Fibria's Ba1 rating reflects its leading position as the largest producer of market pulp in the world and its competitive production costs, which are among the lowest worldwide based on structural advantages in Brazil relative to international peers. "Such competitive cost base has supported healthy operating margins for the past periods, and Fibria's financial discipline with regard to capital expenditures and shareholder distribution allowed for material free cash flow generation in the past three years, most of which was directed to gross debt reduction" says Moody's Vice President - Senior Analyst Barbara Mattos. "The change in outlook reflects Moody's expectations that Fibria's leverage will decline even further over the next 12-18 months backed by the recent depreciation of the Brazilian Real, which translates into higher local currency pulp prices and offsets the impact of potentially weaker international pulp prices in Fibria's cash flow", added Mattos. The Ba1 rating also incorporates the benefit from the ownership (29.4% of total common shares) and expected support from Votorantim Participacoes (Baa3; positive outlook) due to existing cross acceleration provisions in part of its outstanding debt. Votorantim's positive outlook reflects the company's conservative liquidity profile and strategy of leverage reduction, which is being adopted by Fibria. Conversely, Fibria's low product diversity given its full exposure to pulp and its relative small size when compared with global industry peers as measured by net revenues are constraining factors for its rating. The positive outlook incorporates Moody's expectations that Fibria will continue to deleverage its balance sheet even amid expected lower international pulp prices in the next 12-18 months. The outlook also reflects Moody's belief that Fibria will continue to manage its capex program and dividend distribution to preserve its liquidity profile while the company reduces its gross debt. The ratings could be upgraded if Fibria manages to reduce leverage as measured by Total Adjusted Debt to Adjusted EBITDA approaching 3.0x (4.7x as of LTM ended June 2013) together with Retained Cash Flow (defined as Funds From Operations less Dividends) less Capex to Total Adjusted Debt above 12% on a consistent basis (6.9% as of LTM ended June 2013). Downgrade pressure on the ratings would result if Fibria is unable to continue to deleverage, or experiences a deterioration in liquidity. Also, a deterioration of Votorantim Participacoes' (Baa3; positive outlook) credit quality could negatively impact Fibria's ratings. A substantial increase in secured debt could negatively affect the senior unsecured notes rating. Negative rating pressure would also arise if Total Adjusted Debt to Adjusted EBITDA stays above 4.5x consistently in the upcoming quarters together with Retained Cash Flow (defined as Funds From Operations less Dividends) less Capex to Total Adjusted Debt below 5% on a consistent basis and Adjusted EBITDA to Interest Expenses below 2.5x (3.1x as of LTM ended June 2013) on a consistent basis. All credit metrics are adjusted according to Moody's standard adjustments and definitions. The principal methodology used in this rating was the Global Paper and Forest Products Industry Methodology published in September 2009. Moody's National Scale Ratings (NSRs) are intended as relative measures of creditworthiness among debt issues and issuers within a country, enabling market participants to better differentiate relative risks. NSRs differ from Moody's global scale ratings in that they are not globally comparable with the full universe of Moody's rated entities, but only with NSRs for other rated debt issues and issuers within the same country. NSRs are designated by a ".nn" country modifier signifying the relevant country, as in ".mx" for Mexico. Fibria Celulose S.A. is the world's largest producer of market pulp with annual production capacity of 5.25 million metric tons. With the conclusion of the sale of the Piracicaba paper unit in the third quarter of 2011, Fibria became solely a market pulp producer focused on the international market. In the last twelve months ended June 2013, Fibria reported consolidated net revenues of BRL 6.5 billion ($ 3.2 billion converted by the average foreign exchange rate for the period), coming mostly from Europe (40%), North America (27%), Asia (24%) and Latin America (9%). JBS USA: Discloses Offering of Senior Notes Due 2021 ---------------------------------------------------- JBS USA, LLC, a wholly-owned subsidiary of JBS S.A., disclosed that it intends to commence, subject to market conditions, a private offering of $400.0 million aggregate principal amount of a new series of senior notes due 2021. JBS USA and JBS USA Finance, Inc. will be co-issuers of the Notes. Concurrently with the issuance of the Notes, JBS USA intends to borrow incremental term loans in the aggregate principal amount of US$400.0 million (the "Incremental Term Loans"), pursuant to its existing senior secured term loan facility. JBS USA intends to use the net proceeds of the Notes and the Incremental Term Loans to fund a tender offer and consent solicitation in respect of any and all 11.625% senior notes due 2014 (the "2014 Notes") issued by JBS USA and JBS USA Finance (which it has announced separately) and the remainder, if any, for general corporate purposes. JBS USA: S&P Assigns 'BB' Rating to US$400 Million Term Loan B -------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'BB' ratings to JBS USA LLC's proposed incremental US$400 million term loan B due 2020 and to JBS USA LLC's and JBS USA Finance Inc.'s US$400 million senior unsecured bond reopening due 2021. The terms and conditions of the new bonds are the same as for the existing US$650 million bonds issued in January 2012. The issue-level ratings reflect the credit quality of the parent company, JBS S.A. (BB/Stable/--), as it and its wholly owned subsidiary, JBS USA, unconditionally guarantee the debts. JBS will use most of the proceeds to refinance its US$700 million bond due May 2014, extend debt maturities, and improve its capital structure. RATINGS LIST JBS S.A. Corporate credit rating BB/Stable/-- Ratings Assigned JBS USA LLC $400 million term loan BB Reopening JBS USA LLC JBS USA Finance Inc. US$400 million add-on senior unscd bond BB ========================== C A Y M A N I S L A N D S ========================== A D GULAB: Shareholders' Final Meeting Set for Sept. 20 ------------------------------------------------------- The shareholders of A D Gulab (Grand Cayman) will hold their final meeting on Sept. 20, 2013, at 11:00 a.m., to receive the liquidator's report on the company's wind-up proceedings and property disposal. The company's liquidator is: Richard John Luce 43/45 La Motte Street St Helier, Jersey JE4 8SD Channel Islands Telephone: +44 (1534) 702800 Facsimile: +44 (1534) 702870 BERMUDA INVESTORS: Shareholder to Hear Wind-Up Report on Sept. 13 ----------------------------------------------------------------- The shareholder of Bermuda Investors Limited will hear on Sept. 13, 2013, at 10:00 a.m., the liquidator's report on the company's wind-up proceedings and property disposal. The company's liquidator is: Joseph Zuiker 6 Front Street, Hamilton HM11, Bermuda BLACK AND WHITE: Shareholders' Final Meeting Set for Sept. 30 ------------------------------------------------------------- The shareholders of Black and White Investment Ltd. will hold their final meeting on Sept. 30, 2013, at 12:00 noon, to receive the liquidator's report on the company's wind-up proceedings and property disposal. The company's liquidator is: MBT Trustees Ltd. Telephone: 945-8859 Facsimile: 949-9793/4 P.O. Box 30622 Grand Cayman KY1-1203 Cayman Islands CAMOMILE LIFFEY: Shareholder to Hear Wind-Up Report on Oct. 4 ------------------------------------------------------------- The shareholder of Camomile Liffey Investments (UK) Ltd. will receive on Oct. 4, 2013, at 8:45 a.m., the liquidator's report on the company's wind-up proceedings and property disposal. The company's liquidator is: Intertrust SPV (Cayman) Limited 190 Elgin Avenue, George Town Grand Cayman KY1-9005 Cayman Islands c/o Kim Charaman/Jennifer Chailler Telephone: (345) 943 3100 CREATIVE DRAGONS: Shareholders' Final Meeting Set for Sept. 17 -------------------------------------------------------------- The shareholders of Creative Dragons SPC will hold their final meeting on Sept. 17, 2013, at 9:00 a.m., to receive the liquidator's report on the company's wind-up proceedings and property disposal. The company's liquidator is: Gene Dacosta c/o Noel Webb Telephone: (345) 814 7394 Facsimile: (345) 945 3902 P.O. Box 2681 Grand Cayman KY1-1111 Cayman Islands F.A. INVESTMENTS: Shareholder to Hear Wind-Up Report on Oct. 4 -------------------------------------------------------------- The shareholder of F.A. Investments of Cayman will receive on Oct. 4, 2013, at 9:15 a.m., the liquidator's report on the company's wind-up proceedings and property disposal. The company's liquidator is: Intertrust SPV (Cayman) Limited 190 Elgin Avenue, George Town Grand Cayman KY1-9005 Cayman Islands c/o Kim Charaman/Jennifer Chailler Telephone: (345) 943 3100 HB ASIA: Shareholder to Hear Wind-Up Report on Oct. 4 ----------------------------------------------------- The shareholder of HB Asia Holdings, Ltd. will hear on Oct. 4, 2013, at 9:45 a.m., the liquidator's report on the company's wind- up proceedings and property disposal. The company's liquidator is: Intertrust SPV (Cayman) Limited 190 Elgin Avenue, George Town Grand Cayman KY1-9005 Cayman Islands c/o Kim Charaman/Jennifer Chailler Telephone: (345) 943 3100 JANA PIRANHA: Shareholder to Hear Wind-Up Report on Sept. 23 ------------------------------------------------------------ The shareholder of Jana Piranha Offshore Fund, Ltd will hear on Sept. 23, 2013, at 11:00 a.m., the liquidator's report on the company's wind-up proceedings and property disposal. The company's liquidator is: Ogier c/o Piers Dryden Telephone: 815 1842 Facsimile: (345) 949 9877 LIFEINVEST OPPORTUNITY: Shareholders' Meeting Set for Sept. 26 -------------------------------------------------------------- The shareholders of Lifeinvest Opportunity Fund LDC will hold their meeting on Sept. 26, 2013, at 10:00 a.m., to receive the liquidator's report on the company's wind-up proceedings and property disposal. The company's liquidator is: Darren P. Riley c/o BNP Paribas Bank & Trust Cayman Limited PO Box 10632, 3rd Floor, Royal Bank House 24 Shedden Road, George Town Grand Cayman KY1-1006 Cayman Islands PHAROS GAS: Shareholders' Final Meeting Set for Sept. 18 -------------------------------------------------------- The shareholders of Pharos Gas Investment Fund Ltd. will hold their final meeting on Sept. 18, 2013, at 10:15 a.m., to receive the liquidator's report on the company's wind-up proceedings and property disposal. The company's liquidator is: Pharos Investment Management LLC c/o Barnaby Gowrie Telephone: +1 (345) 914 6365 PINEBANK CATALYST: Members' Final Meeting Set for Sept. 23 ---------------------------------------------------------- The members of Pinebank Catalyst Fund, Ltd. will hold their final meeting on Sept. 23, 2013, to receive the liquidator's report on the company's wind-up proceedings and property disposal. The company's liquidator is: CDL Company Ltd. P.O. Box 31106 Grand Cayman KY1-1205 Cayman Islands PINEBANK CATALYST MASTER: Members' Final Meeting Set for Sept. 23 ----------------------------------------------------------------- The members of Pinebank Catalyst Master Fund, Ltd. will hold their final meeting on Sept. 23, 2013, to receive the liquidator's report on the company's wind-up proceedings and property disposal. The company's liquidator is: CDL Company Ltd. P.O. Box 31106 Grand Cayman KY1-1205 Cayman Islands PRIMUS CLO I: Shareholder to Hear Wind-Up Report on Oct. 4 ---------------------------------------------------------- The shareholder of Primus CLO I, Ltd. will receive on Oct. 4, 2013, at 9:00 a.m., the liquidator's report on the company's wind- up proceedings and property disposal. The company's liquidator is: Intertrust SPV (Cayman) Limited 190 Elgin Avenue, George Town Grand Cayman KY1-9005 Cayman Islands c/o Kim Charaman/Jennifer Chailler Telephone: (345) 943 3100 TSUKIJI SHOCHIKU: Shareholders' Final Meeting Set for Sept. 27 -------------------------------------------------------------- The shareholders of Tsukiji Shochiku Building Investment Limited will hold their final meeting on Sept. 27, 2013, to receive the liquidator's report on the company's wind-up proceedings and property disposal. The company's liquidator is: David Dyer Telephone: (345)949 8244 Facsimile: (345)949 5223 P.O. Box 1984 Grand Cayman KY1-1104 Cayman Islands WALLPAPER INVESTMENT: Shareholders' Final Meeting Set for Sept. 30 ------------------------------------------------------------------ The shareholders of Wallpaper Investment Ltd. will hold their final meeting on Sept. 30, 2013, at 12:00 noon, to receive the liquidator's report on the company's wind-up proceedings and property disposal. The company's liquidator is: MBT Trustees Ltd. Telephone: 945-8859 Facsimile: 949-9793/4 P.O. Box 30622 Grand Cayman KY1-1203 Cayman Islands =================================== D O M I N I C A N R E P U B L I C =================================== * DOMINICAN REP: Lack of Export Strategy Fuels Monetary Fires ------------------------------------------------------------- Dominican Today reports that the Greater Santo Domingo (AEIH) Industries Association warned that the country will be "putting out monetary fires" until it develops an export strategy that guarantees a strong external sector to generate currency. Organization president Victor Castro said the Central Bank's measures to contain the unusual spike in the dollar's rate confirm the need to move towards production with a widened competitive platform, according to Dominican Today. "Other economies have withstood major devaluations than Dominican Republic's, but we haven't seen any of the monetary nonsense as here, because they are supported by sectors that earn sufficient foreign currency," AEIH said, the report notes. Campaign Promise Mr. Castro noted that although president Danilo Medina's campaign promised stimulus for Dominican exporter, little efforts are currently seen, starting with the notion of getting the Foreign Service to conquer markets, Dominican Today relates. Dominican Today adds that Mr. Castro said official decisions are neither seen, as the campaign promised, on making tourism a motor for development. "It will be impossible to achieve the sector's goal "doing more of the same." ============= J A M A I C A ============= SAGICOR LIFE: Gets Nod From Shareholders to Reorganize ------------------------------------------------------ RJR News reports that Sagicor Life Jamaica shareholders have given the nod for the reorganization of the company into the Sagicor Group. The shareholders unanimously voted on a scheme of arrangement at an extraordinary general meeting, according to RJR News. The report relates that the Scheme of Arrangement must now be sanctioned by an Order of the Supreme Court. The Registrar of Companies must also be notified before it becomes effective, the report notes. It will result in all stock units in Sagicor Life Jamaica being cancelled and the newly-created holding company, Sagicor Group Jamaica, issuing and allotting ordinary shares of equal value to shareholders, the report relates. Sagicor Life shares will be delisted from the Jamaica Stock Exchange and Sagicor Group stocks listed in their place, the report adds. UC RUSAL: Forecast Value of Shares Downgraded From Buy to Sell -------------------------------------------------------------- RJR News reports that Bank of America Merrill Lynch Global Research has downgraded the forecast value of shares in aluminum giant Rusal. The bank also switched its recommendation for UC Rusal securities from buy to sell, according to RJR News. The report relates that the Bank of America said the downgrade was due to aluminum prices, which could drop by three per cent by the end of 2013. The report notes that the bank's analysts believe that by mid-2014 a ton of aluminum could be worth 10 per cent less than it is now, which means a reduction in the company's profitability. And UC Rusal may delay the start of production at one of its biggest projects, seeking to ease a global glut of aluminum, the report notes. RJR News relays that UC Rusal and other big aluminum makers are cutting output in response to record inventories and stubbornly low prices of the metal used in vehicles and packaging. US producer Alcoa Incorporated, Rusal's main rival, recently suspended production at smelters in Brazil as part of a review of its capacity. UC Rusal last month reported a steeper-than-expected loss for the second quarter and said it may postpone the start of production at its smelter in Siberia to 2014, the report relates. * * * As reported in the Troubled Company Reporter-Latin America on April 25, 2013, RJR News reported that UC Rusal said its financial losses for 2012 were bigger than initially reported. The company has revised its net loss to US$337 million from the US$55 million US dollar loss reported the previous month, according to RJR News. The report related that UC Rusal said the adjustment was made after reviewing its share of profit from its subsidiary Norilsk Nickel. UC Rusal, the report added, said the adjusted financial statements have been reviewed by its auditor. TCRLA reported on Sept. 28, 2012, that RJR News said UC Rusal expects to reach a deal with its lenders within six months to refinance part of an US$11 billion debt burden. It said it will agree to new loan conditions by the end of 2012 before its covenant holiday expires, according to RJR News. * JAMAICA: Gov't to Pump More Funds Into Small Business Sector -------------------------------------------------------------- RJR News reports that the Jamaican government appears set to provide more funds to boost the small business sector. The money will come from the National Insurance Fund's (NIF) job creation initiative, according to RJR News. The report relates that Derrick Kellier, Minister of Labor and Social Security, is scheduled to provide details at a media briefing. Mr. Kellier, the report notes, will outline increases in the credit facility for medium and small enterprises. =========== M E X I C O =========== DOCUFORMAS SAPI: S&P Affirms 'B+' Rating; Outlook Stable -------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'B+' global scale and 'mxBBB/mxA-3' Mexican national scale ratings on Docuformas S.A.P.I. de C.V. The outlook is stable. "The ratings on Docuformas reflect its adequate asset quality, adjusted capitalization and good profitability. On the other hand, the company's revenues are concentrated in its core business line amid strong competition. It has client concentration and is highly reliant on market debt," said Standard & Poor's credit analyst Ingrid Ortiz Machain. Docuformas' credit quality has improved markedly with its stricter underwriting policies and collection procedures intended to strengthen its credit risk management. As of June 2013, nonperforming assets (NPAs) represented 3.9%, down from 4.8% at the end 2011 and 7.5% in 2010. The company's loan-loss reserves have fully covered its NPAs since 2010, with a drop in its net charge-off ratio to 0.7% in June 2013, from 3.9% in December 2011. The company has improved its asset quality despite a sustained compound annual growth rate (CAGR) of 15% for the past three fiscal years. S&P expects a 25% growth rate for 2013 stemming from its larger and more efficient commercial unit and revised sales practices. OFFICE DEPOT: S&P Assigns 'BB' Corp. Credit Rating; Outlook Stable ------------------------------------------------------------------ Standard & Poor's Ratings Services assigned its 'BB' global scale corporate credit rating to Office Depot de Mexico, S.A. de C.V. (ODM). S&P also assigned its 'BB' issue-level rating to the company's proposed 7-year senior unsecured notes for up to $350 million, with a recovery rating of '3'. ODM's Mexican and Colombian subsidiaries will guarantee the proposed notes. The outlook on the corporate credit rating is stable. "The ratings on ODM reflect its favorable profitability and market position in the office supplies segment, a moderate financial policy, our expectations of positive free operating cash flow, and its adequate liquidity. Somewhat mitigating these factors are the company's geographic concentration mainly in Mexico, its limited product diversification, the intense competition, cyclicality of the office supplies sector, and credit metrics in line with a significant financial risk profile given the expected bond issuance, said Standard & Poor's credit analyst Sandra Tinoco. With 258 stores and about 7,000 stock-keeping units (SKUs) as of June 30, 2013, ODM is the largest chain of office supplies in Mexico, also offering consumer electronics, furniture and business services. To a lesser extent, the company has presence in Colombia, Guatemala, Costa Rica, El Salvador, Honduras and Panama. In July 2013, Grupo Gigante S.A.B. de C.V. (GG; NR) acquired the final 50% stake in ODM held by Office Depot Inc. (ODI); with this, GG now fully owns ODM. OFFICE DEPOT: Fitch Assigns 'BB+' Issuer Default Rating ------------------------------------------------------- Fitch Ratings has assigned the following ratings to Office Depot de Mexico S.A. de C.V. (ODM): -- Foreign currency Long-term Issuer Default Rating (IDR) at 'BB+'; -- Local currency Long-term IDR at 'BB+'; -- Proposed USD350 million senior notes due 2020 at 'BB+(exp)'. The Rating Outlook is Stable. Proceeds from the offering will be used to finance part of the buyout of Office Depot Inc.'s 50% ownership in ODM by Grupo Gigante (Gigante). On June 3, 2013, Gigante signed a stock purchase agreement acquiring the remaining 50% of ODM through a bridge loan for up to MXN8.85 billion. Half of the bridge loan will be paid by the notes' issuance, with the remainder paid for by an initial public offering (IPO) by Gigante of ODM. The bridge loan has guarantees by all subsidiaries, including ODM. Despite ODM not being able to pay dividends as per the covenants, Fitch believes that Gigante has flexibility to service the remaining debt of the bridge loan were the IPO to be delayed. As per the description of the notes, the shareholder dividend declared by ODM prior to the issuance and related to the shareholder loan are excluded from those restrictions. The ratings reflect ODM's leadership position in the office products super-store segment, diversified geographical footprint, low historical adjusted leverage, and generally consistent free cash flow (FCF) generation. The rating also incorporates the company's new leverage structure, of about 2.6x debt-to-EBITDA and adjusted debt-to-EBITDAR of 3.5x, based on the proposed USD350 million issuance. ODM's operating profile is supported by its national retail presence in Mexico, as well as its operations in Central America and Colombia, its mix of large corporate customers, small businesses and consumers. It has a leading position among Mexican office supply super stores, while non-Mexican sales represent about 15% of total sales. In addition, its extensive distribution network, preponderance of cash sales and mostly local sourcing of inventory, further supports ODM's business profile. The company has shown consistent organic growth over the last 12 years, with solid EBITDA generation even during economic downturns. Fitch expects EBITDA margin to be in the 10%-11% range as the Carvajal operation, acquired in late 2010, is being fully migrated to ODM's business model. Same store sales (SSS) were about 2.9% in 2012, in line with previous years. EBITDA margin has held broadly constant at 10.5% as of second quarter 2013 (2Q'13), on a last 12-months (LTM) basis. The Mexican office supply industry is very fragmented, with the potential for consolidation by big players such as ODM. Going forward, ODM will pursue a modest growth strategy, with about eight store openings per year on average, most of them within Mexico. Fitch expects these openings to be funded with internally generated cash flow, as the company has done in the past. Fitch also believes there are growth opportunities for penetration in smaller cities, as well as some gains achievable in taking away market share from mom & pops. Fitch expects the proposed USD350 million senior notes to increase leverage to around 2.6x-2.5x on a debt-to-EBITDA basis adjusted debt-to-EBITDAR: 3.x5-3.4x) for the next few years. Prior to the proposed issuance, adjusted financial leverage (adjusted debt/EBITDAR), is 1.5x as of 2Q'13 LTM. Adjusted leverage is currently completely derived from operating leases, as the firm does not have any debt on its balance sheet as of 2Q'13. ODM's liquidity position is adequate, with cash and cash equivalents of approximately MXN620 million as of 2Q'13. FCF after dividends has been mostly positive over the past four years, averaging about MXN60 million, and Fitch expects modest FCF generation going forward, with Capex around MXN600 million per year in the medium term. After the USD350 million issuance and aside from its related shareholder loan and shareholder dividend to Gigante, the issuer will not be able to pay dividends, according to covenants, so Fitch would expect for cash to accumulate, to be used possibly for gross debt reduction. Rating Sensitivities Factors that could be detrimental to credit quality include weaker-than-expected SSS, lower EBITDA margin, or other factors that could lead to higher-than-expected leverage in the medium term, including the liability related to guarantees derived from the bridge loan granted to Gigante to fund the acquisition of 50% of ODM from Office Depot Inc. Factors that could improve creditworthiness include stronger-than- expected operating results or lower debt levels that lead to adjusted debt-to-EBITDAR ratios below 2.5x, as well a commitment from a financial policy standpoint to permanently maintain leverage at this lower level. SERVICIOS DE AGUA: Moody's Withdraws Ba2/A2.mx Issuer Ratings ------------------------------------------------------------- Moody's de Mexico has withdrawn the issuer ratings of Ba2/A2.mx, negative outlook of Servicios de Agua y Drenaje de Monterrey (SADM). At the same time, Moody's de Mexico has withdrawn debt ratings of Ba2/A2.mx on the following three loans: MXN1.835 billion (original face value) loan from Banobras MXN1.6 billion (original face value) loan from Banorte, and MXN1.16 billion (original face value) loan from Banorte Ratings Rationale: Moody's has withdrawn the rating because of insufficient information to monitor the rating, due to the issuer's decision to cease participation in the rating process. Given the issuer's decision to cease participation in the rating process, Moody's believes that the information publicly available will not allow to continue monitoring SADM's creditworthiness. In addition, without access to the trust reports for the three bank loans or to potential changes made to the loans' structures (pledge and reserve funds), Moody's believes that it is unable to provide the market with an informed assessment of the current credit quality of these debt instruments. The principal methodology used in this rating was "Government- Related Issuers: Methodology Update" published in July 2010. Moody's National Scale Ratings (NSRs) are intended as relative measures of creditworthiness among debt issues and issuers within a country, enabling market participants to better differentiate relative risks. NSRs differ from Moody's global scale ratings in that they are not globally comparable with the full universe of Moody's rated entities, but only with NSRs for other rated debt issues and issuers within the same country. NSRs are designated by a ".nn" country modifier signifying the relevant country, as in ".mx" for Mexico. =============== X X X X X X X X =============== * Upcoming Meetings, Conferences and Seminars --------------------------------------------- Oct. 3-5, 2013 TURNAROUND MANAGEMENT ASSOCIATION TMA Annual Convention Marriott Wardman Park, Washington, D.C. Contact: http://www.turnaround.org/ Nov. 1, 2013 AMERICAN BANKRUPTCY INSTITUTE NCBJ/ABI Educational Program Atlanta Marriott Marquis, Atlanta, Ga. Contact: 1-703-739-0800; http://www.abiworld.org/ Dec. 2, 2013 BEARD GROUP, INC. 19th Annual Distressed Investing Conference The Helmsley Park Lane Hotel, New York, N.Y. Contact: 240-629-3300 or http://bankrupt.com/ Dec. 5-7, 2013 AMERICAN BANKRUPTCY INSTITUTE Winter Leadership Conference Terranea Resort, Rancho Palos Verdes, Calif. Contact: 1-703-739-0800; http://www.abiworld.org/ *********** 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., Washington, D.C., USA, Marites O. Claro, Joy A. Agravante, Rousel Elaine T. Fernandez, Valerie U. Pascual, Julie Anne L. Toledo, Frauline S. Abangan, and Peter A. Chapman, Editors. Copyright 2013. 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$775 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 A. Chapman at 215-945-7000 or Nina Novak at 202-241-8200. * * * End of Transmission * * *