/raid1/www/Hosts/bankrupt/TCRLA_Public/170405.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
Wednesday, April 5, 2017, Vol. 18, No. 68
Headlines
A R G E N T I N A
CHUBB SEGUROS: Moody's Affirms Ba3 Global LC IFS Rating
B E R M U D A
* BERMUDA: Oxfam Keeps Pressure on Country as Tax Haven
B R A Z I L
BRAZIL: Economic Activity Fell in January
OI SA: Creditors Balk at Revised Debt Restructuring Plan
C A Y M A N I S L A N D S
ALPHA STAR: S&P Assigns Prelim. 'BB' Rating to Proposed Certs.
ASIAN DEVELOPMENT: Shareholders Receive Wind-Up Report
ODEBRECHT OFFSHORE: Fitch Lowers Rating on Sr. Sec. Notes to 'D'
PHYSICIANS' GUARANTEE: Shareholder Receives Wind-Up Report
POLYMER FINANCE: Shareholders' Final Meeting Today
SYMPOSIUM MANAGEMENT: Shareholders Receive Wind-Up Report
TAO INVESTMENT: Shareholders Receive Wind-Up Report
TITRAN INVESTMENTS: Shareholders Receive Wind-Up Report
TRAFIN 2011-1: Shareholders Receive Wind-Up Report
VAN PARTICIPATIONS: Shareholders Receive Wind-Up Report
WALNUT TREE: Shareholders Receive Wind-Up Report
WAVESTONE CAPITAL: Shareholder Receives Wind-Up Report
ZICO LIMITED: Shareholder Receives Wind-Up Report
C H I L E
LATAM AIRLINES: Fitch Rates Proposed Unsec. Notes 'B+(EXP)/RR4'
LATAM FINANCE: S&P Assigns 'B+' Rating to Proposed Sr. Notes
D O M I N I C A N R E P U B L I C
DOMINICAN REPUBLIC: Labor, Gov. Set US$329 Top Minimum Wage
M E X I C O
AXTEL SAB: Moody's Revises Outlook to Negative; Affirms Ba3 CFR
COMISION ESTATAL: Moody's Withdraws Ba2 Issuer and Debt Ratings
GRUPO KALTEX: Fitch Assigns B+ Long-term Issuer Default Rating
V E N E Z U E L A
VENEZUELA: Supreme Court Assumes Powers of Congress
- - - - -
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A R G E N T I N A
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CHUBB SEGUROS: Moody's Affirms Ba3 Global LC IFS Rating
-------------------------------------------------------
Moody's Latin America Agente de Calificacion de Riesgo, S.A.
(Moody's) has affirmed Chubb Seguros Argentina S.A.'s ("Chubb
Seguros", formerly named ACE Seguros S.A.) Ba3 global local
currency (GLC) and Aaa.ar national scale (NS) insurance financial
strength (IFS) ratings. The outlook for the company's ratings
remains stable. In the same rating action, Moody's has withdrawn
the Ba3 GLC and Aaa.ar NS IFS ratings of Chubb Argentina de
Seguros S.A. ("Chubb Argentina").
These rating actions follow the approval by the regulator of the
merger of the subsidiaries of ACE and Chubb in Argentina, whereby
Chubb Argentina was absorbed by ACE Seguros which was then renamed
Chubb Seguros.
RATINGS RATIONALE
Moody's has withdrawn the ratings of Chubb Argentina due to the
reorganization of the company following its merger into ACE
Seguros.
The affirmation of Chubb Seguros' (formerly ACE Seguros) ratings
takes into account that these ratings already reflect (i) the
stronger credit profile for the newly combined entity from the
merger with Chubb Argentina as well as (ii) increased benefit of
parental support. In fact the ratings of ACE Seguros were already
upgraded on January 20, 2016 following the announcement of the
merger of ACE and Chubb on January 14, 2016.
The stronger credit profile of the combined operation is evidenced
by greater product diversification, strengthened capitalization
and improved asset quality. The rating agency went on to say that
the synergies from the merger will likely result into cost
reductions and increased efficiencies, which will positively
impact the company's profitability. Furthermore, the merger of the
Argentine subsidiaries increased the benefit of parental support
for ACE Seguros.
Moody's added that Chubb Seguros' ratings also reflect the
company's commercial strategy of maintaining multiple distribution
channels, its good market position in some property segments, its
well-diversified book of business, and its ultimate parent's solid
financial profile. Chubb Seguros' ratings are restrained primarily
by Argentina's high sovereign risk (B3/positive) and very weak
operating environment.
Among factors that could result in an upgrade of Chubb Seguros'
ratings, Moody's noted an upgrade of Argentina's sovereign bond
rating or a substantial improvement of Argentina's operating
environment, and/or explicit support arrangement either via a
capital maintenance agreement or through a guarantee from either
Chubb Limited or any of its subsidiaries. Conversely, a downgrade
of Argentina's government bond rating, a deterioration in its
operating environment, a rating downgrade of its debt-issuing
parent or its principal US/Bermuda insurance subsidiaries, a
reduction of implicit/explicit parental support or a sale of the
companies, and/or deterioration in the companies' business
diversification and financial metrics could result in a downgrade
for Chubb Seguros' ratings.
Headquartered in Buenos Aires, Argentina, ACE Seguros reported
gross premiums written of ARS 1.1 billion and net income of ARS 18
million for the first six months of the 2016/17 Argentine fiscal
year, incepting July 1. As of December 31, 2016 ACE Seguros' total
assets amounted to ARS 1.2 billion and its shareholders' equity
was ARS 213 million.
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B E R M U D A
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* BERMUDA: Oxfam Keeps Pressure on Country as Tax Haven
-------------------------------------------------------
Caribbean360.com reports that Oxfam showed no signs of easing its
pressure on Bermuda's international business sector, listing the
island in a report on the use of tax havens by Europe's 20 biggest
banks published.
The report, Opening the Vaults, researched by Oxfam and Fair
Finance Guide International, showed that European banks, including
HSBC, Barclays, RBS, Lloyds and Standard Chartered posted profits
of GBP18 billion (US$22.5 billion) in what it called global tax
havens, according to Caribbean360.com.
Oxfam claimed the UK banks paid just seven percent tax on their
profits to UK-linked tax havens, compared to the UK corporate tax
rate of 20 percent, Caribbean360.com notes.
According to the report, Bermuda held nearly US$591 million in
profits for the Euro top 20 in 2015, compared to US$205 million in
the Caymans, US$21.7 million in the British Virgin Islands and
US$206 million in the Bahamas, Caribbean360.com relays.
However, the accuracy of the data was under question, as the same
report later claimed that Bermuda had profits of US$104 million --
a massive US$487 million difference, Caribbean360.com notes.
Of that US$104 million, the report attributed nearly US$86 million
in profit to HSBC Bermuda, Caribbean360.com discloses.
UK-based HSBC is the only European bank among the four with a
physical presence on Bermuda.
Caribbean360.com notes that Oxfam however cited the French
multinational Societe Generale as generating profits in Bermuda
though it has no physical office.
In response to the latest report, Economist Peter Everson told the
Royal Gazette that HSBC did not set up in Bermuda on its own,
Caribbean360.com says.
Caribbean360.com relays that Mr. Everson stressed that the island
"was not into international banking".
"We don't have room for international banking. That's why we don't
have international banking here," he said, notes the report.
The 52-page report also listed Bermuda among "selected small tax
havens and bank activity" for 2015, Caribbean360.com discloses.
The report listed 2015 Bermuda figures for European-based banks as
a turnover of nearly US$309 million.
The Oxfam report concluded that, "despite the limitations of the
information provided . . . for measuring the effective tax rate,
it does reveal that these European banks have not paid a single
euro of tax on US$416 million of profits made in seven of these
smaller countries," Caribbean360.com notes.
It added that the findings underline the role that these countries
are playing in the "haemorrhaging of global tax resources by
competing against each other to offer ever more favorable tax
regimes to global corporations," Caribbean360.com relays.
Oxfam reiterated calls for a shift on corporate tax and
significant international and European tax reforms,
Caribbean360.com adds.
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B R A Z I L
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BRAZIL: Economic Activity Fell in January
-----------------------------------------
Rogerio Jelmayer at The Wall Street Journal reports that Brazil's
economy continues to struggle to emerge from a prolonged
recession, data showed, despite a recent improvement in confidence
among the country's businesses and consumers.
The Brazilian central bank's IBC-Br economic activity index, a
proxy for the country's monthly gross domestic product
performance, fell 0.26% in January from December in seasonally
adjusted terms, and was down 0.79% from January 2016, according to
The WSJ.
Brazil's GDP shrank 3.6% in 2016, following a contraction of 3.8%
in 2015, hit by a combination of political turmoil and a steep
decline in commodity prices, the report notes. Meanwhile, a
mammoth corruption scandal centered on state-controlled oil
company Petroleo Brasileiro SA, or Petrobras, pushed many
Brazilian companies to slash investment, while rising unemployment
forced consumers to rein in spending, the report relays.
The report says that the recession of the past two years eclipsed
Brazil's 1930-1931 recession, when GDP contracted 2.1% and 3.3%,
respectively, according to records compiled by local think tank
Fundacao Getulio Vargas.
"The recession has been so deep that it left the entire economic
system disorganized," said Newton Rosa, chief economist of Sao
Paulo-based Sulamerica Investimentos, who expects a GDP expansion
of just 0.3% this year, the report notes. The sharp drop in
investment has created "a challenging scenario for a relevant
economic recovery in the short term," he said.
The impact of the recession on Brazil's labor market has also been
significant, with a steep rise in the unemployment rate expected
to continue through the first half of this year, the report
relays. The jobless rate increased to 13.2% in the December-
through-February period, from 11.9% in the three-month period
through January, the report discloses.
Hopes for a solid recovery this year have faded amid persistent
negative indicators since the start of this year, the report says.
Some economists nevertheless say they are seeing some
improvements, notes WSJ.
"The recession was unquestionably long, deep and broad-based but
there are now increasing signs that the economy may be about to
reach an inflection point," Alberto Ramos, an economist at Goldman
Sachs, wrote in a note obtained by the news agency.
Mr. Ramos cited the improvement in confidence levels among
individuals and companies, anchored mainly by slower inflation and
falling interest rates, as a bright spot, the report relays.
Consumer confidence in Brazil increased in March, reaching its
highest level since December 2014, according to a report from the
Getulio Vargas foundation published, the report says.
After years of high inflation, Brazil's has seen a slowdown in
price increases in the past year, paving the way for aggressive
interest-rate cuts by the central bank, according to the report.
Brazil's 12-month of consumer-price index slowed to 4.73% in mid-
March, from 5.02% in mid-February and from 10.7% at the start of
2016, WSJ notes. The central bank, meanwhile, has cut its
benchmark Selic rate four times in recent months, to 12.25% in
February from 14.25% in October, the report adds.
As reported in the Troubled Company Reporter-Latin America on
Nov. 15, 2016, Fitch Ratings has affirmed Brazil's Long-Term
Foreign and Local Currency Issuer Default Ratings (IDRs) at 'BB'/
Negative Outlook. Brazil's senior unsecured Foreign- and Local-
Currency bonds are also affirmed at 'BB'. The Country Ceiling is
affirmed at 'BB+' and the Short-Term Foreign and Local-Currency
IDRs at 'B'.
OI SA: Creditors Balk at Revised Debt Restructuring Plan
--------------------------------------------------------
Ana Mano at Reuters reports that the two biggest bondholder groups
in Brazilian telephone operator Oi SA said they "strongly oppose"
the terms of a new debt restructuring plan the company intends to
present in bankruptcy court.
Claiming the proposed terms "were not previously negotiated with
either of the Oi bondholder groups," the creditors said in a joint
statement that Oi has "failed to engage" with them, nine months
after filing for bankruptcy protection, according to Reuters.
The statement, the first joint communication since the two
bondholder groups split over the fate of the company in November,
indicates that Oi SA's creditors and controlling shareholders are
far from consensus, the report notes.
Oi is Brazil's No. 4 wireless carrier. It declined to comment,
says Reuters.
Last June, the company sought court protection from creditors on
about BRL65 billion ($21 billion) in Brazil's biggest-ever
bankruptcy filing, the report recalls. Oi SA unveiled a revised
version of its restructuring proposal, which was originally
presented in September, the report relays.
Under the new terms, Oi SA's financial creditors would receive 25
percent of the company's equity and convertible bonds to be called
in three years, giving them up to 38 percent of its shares, the
report notes.
Oi Chief Executive Officer Marco Schroeder said the new plan is an
improvement as it offers a debt-for-equity option to accommodate
feedback from creditors, the report relays.
Mr. Schroeder said the proposal should be submitted to the court
in its current form, though technically it can be changed until
the moment creditors formally vote on it, the report notes.
One of the bondholder groups, advised by Moelis & Co and supported
by Orascom TMT Holdings SAE, calls for an alternative plan to
inject up to $1.25 billion into Oi SA in return for a 95 percent
stake, the report discloses.
The other group, advised by G5 Evercore and including Aurelius
Capital Management, is also prepared to inject new capital into
the company, but does not see a need for a new strategic investor,
according to a person with direct knowledge of the matter, Reuters
relays. The person spoke anonymously because negotiations with Oi
are private.
In the same joint statement, a third group of Oi creditors
constituted of export credit agencies and banks also said the
terms of the company's proposal "were unacceptable," the report
notes.
The two bondholder groups and the export credit agencies said they
jointly have claims worth about $6 billion against Oi and
subsidiaries, the report adds.
* * *
As reported in the Troubled Company Reporter-Latin America on
Feb. 24, 2017, S&P Global Ratings affirmed its 'D' corporate
credit and issue-level global and national scale ratings on Oi
S.A. At the same time, S&P withdrew the recovery ratings on the
company's rated debt, until it has an updated capital structure
once Oi emerges from judicial reorganization.
==========================
C A Y M A N I S L A N D S
==========================
ALPHA STAR: S&P Assigns Prelim. 'BB' Rating to Proposed Certs.
--------------------------------------------------------------
S&P Global Ratings assigned its preliminary 'BB' issue rating to
the proposed U.S. dollar-denominated sukuk trust certificates to
be issued by Alpha Star Holding III Ltd. (Alpha Star III).
Incorporated in Cayman Islands, Alpha Star III (the issuer) is a
special purpose vehicle of Dubai-based residential property
developer Damac Real Estate Development Ltd.
(Damac; BB/Stable/--).
On the closing date, Alpha Star III will enter into a sale and
purchase agreement with group operating companies of Damac to
invest approximately 40% of the proceeds of the sukuk notes toward
a portfolio of Ijara (lease financing) agreements and the rest
toward a Murabaha agreement. While the sukuk notes remain
outstanding, at least 33% of the notes' outstanding face value
will be held in the Ijara portfolio.
Under the guarantee undertaking, Damac has undertaken, to make up
any shortfall between the distribution amount (profit and
principal) and the amounts collected from the underlying assets.
The proposed rating on the sukuk reflects S&P's rating on Damac,
since the proposed transaction fulfills the five conditions of
S&P's criteria for rating sukuk:
-- Damac has undertaken to make up any shortfall between the
collections from the underlying assets and the periodic
distributions and principal payable by the SPV to the
investors.
-- The guarantee provides that Damac's obligations under the
sukuk's terms and conditions are irrevocable.
-- These obligations will rank pari passu with Damac's other
senior unsecured financial obligations.
-- Damac will undertake to cover all the costs related to the
transaction through the servicing agency agreement and the
guarantee undertaking for the benefit of Alpha Star III.
-- Although the documentation mentions a risk of a total loss
event (TLE), S&P views as remote the risk that a TLE would
jeopardize the full and timely repayment of the sukuk.
S&P's opinion is based on the fact that any TLE would
typically be mitigated by Damac's guarantee to provide full
payment of principal and accrued unpaid profit upon such an
event. Ijara Servicing Agent has the obligation to ensure
that the assets are covered by insurance and also the
obligation to make up any shortfall between insurance
proceeds and the principal amount, unless it proves beyond
any doubt that it has complied with its insurance
obligations. Although such exclusion might result in a
residual exposure of investors to the underlying Ijara
assets' risks, S&P bases its rating on the guarantee that
Damac will cover all periodic distributions and principal in
the event of a TLE.
The '3' recovery rating reflects S&P's expectation of meaningful
recovery, in the higher half of the 50%-70% range. Under S&P's
criteria, it therefore equalizes the preliminary rating on the
proposed sukuk with S&P's long-term foreign currency issuer credit
rating on Damac. The rating on the sukuk transaction is
preliminary and based on draft documentation. Should the final
documentation differ substantially from the draft, the rating on
the sukuk could be changed.
This report does not constitute a recommendation to buy, hold, or
sell the certificates. S&P Global Ratings neither structures
sukuk transactions nor provides opinions with regard to compliance
of the proposed transaction with Sharia.
S&P's assessment is based on information as of March 23, 2017.
Subsequent information may result in the assignment of a final
rating that differs from the preliminary rating. The final rating
will depend upon receipt and satisfactory review of all final
transaction documentation, including legal opinions. Accordingly,
the preliminary rating should not be construed as evidence of the
final rating. If S&P Global Ratings does not receive final
documentation within a reasonable time frame, or if final
documentation departs from materials reviewed, S&P Global Ratings
reserves the right to withdraw or revise its rating.
ASIAN DEVELOPMENT: Shareholders Receive Wind-Up Report
------------------------------------------------------
The shareholders of Asian Development Finance, Ltd. received on
March 31, 2017, the liquidator's report on the company's wind-up
proceedings and property disposal.
The company's liquidator is:
Yao Chye Chiang
6 Temasek Boulevard
#38-03, Suntec
Tower Four
Singapore 038986
Telephone: + (65) 6827-9276
ODEBRECHT OFFSHORE: Fitch Lowers Rating on Sr. Sec. Notes to 'D'
----------------------------------------------------------------
Fitch Ratings has downgraded the senior secured notes issued by
Odebrecht Offshore Drilling Finance Ltd. (OODFL) to 'D' from 'CC'
and maintained OODFL's recovery estimate (RE) at RE60%. The
outstanding balance on the notes is approximately $1,883.4
million. A full list of rating actions follows at the end of this
release.
The downgrade follows the missed payment of scheduled interest due
in March 1, 2017, and reflects increased liquidity pressure on the
notes, as operating cash flows have not been sufficient to cover
all operating expenses, capex and debt service in recent quarters.
The ratings also reflect the continued depressed oil market
conditions, the linkage to Petrobras' credit quality and the
overall strength of the off-takers' payment obligation.
KEY RATING DRIVERS
Missed Scheduled Interest Payment
Fitch's rating action reflects missed payment of scheduled
interest due in March 1, 2017 following a 30-day grace period and
the majority noteholders' instructing the trustee not to draw on
transaction reserve accounts to make payment prior to the end of
the grace period. On March 31, 2017, Fitch received notification
indicating that the interest due on 2022 notes for March 2017 is
expected to be paid on April 7th, after the end of the grace
period. The trustee is expected to draw pro rata under the
existing letter of credit and payment guarantee in the amount of
approximately US$9.44 million, which, together with cash available
in the offshore project receipts accounts, should be sufficient to
pay the interest due on March 1, 2017.
Increased Liquidity Pressure
Operating cash flows have not been sufficient to cover all
operating expenses, capex payments and debt service in recent
periods. As a result, debt service coverage ratios (DSCRs) have
been below 1x during the most recent quarters and the transaction
has become more reliant on existing liquidity mechanisms and/or
any sponsor support to make timely debt service payments. Also, as
previously noted by Fitch, cancellation of the Tay IV contracts
resulted in reduced cash flows to OODFL and increased dependence
on cash reserves and/or sponsor support. Significant downtimes and
opex requirements will consequently impact the cash available for
debt service, thus consuming more liquidity.
Supply and Demand Fundamentals
While oil prices have rebounded from the lows of early 2016,
prices remain more than 50% below 2015. As a response to this
macro environment, energy companies have continued to cut
expenses, putting significant pressure on exploration spending.
The overall rig market remains severely depressed as day rates and
asset prices are not expected to rebound over the next several
years.
Linkage to Petrobras' Credit Quality
The off-taker's credit quality is a key risk factor for
determining the strength of the off-taker's payment obligation. On
May 10, 2016, Fitch downgraded Petrobras' Long-Term Issuer Default
Rating (IDR) to 'BB' from 'BB+'/Outlook Negative. Petrobras'
ratings continue to reflect its close linkage with the sovereign
rating of Brazil due to the government's control of the company
and its strategic importance to Brazil as its near-monopoly
supplier of liquid fuels.
Strength of Off-taker Obligation
Fitch's view on the strength of the off-taker's payment obligation
is typically notched from the off-taker's IDR, and will act as the
ultimate rating cap to the transaction. Fitch's qualitative
assessment of asset/contract/operator characteristics and the off-
taker's/industry's characteristics related to this transaction
would ultimately cap the transaction at two notches below
Petrobras' Long-Term IDR. However the ratings are constrained by
the credit quality of the operator/sponsor.
Quality of Operator/Sponsor
Odebrecht Oil and Gas' (OOG) credit quality as operator of the
vessels backing the transactions is taken into consideration, as
the contracts have termination clauses related to the bankruptcy
of the operator/sponsor and its financial position might constrain
its ability to operate the vessels through the life of the
transaction.
On April 2016, OOG missed interest payments due on its 7%
unsecured perpetual notes, even after exercising its right to a
30-day grace period. Nonetheless, as per Fitch's methodology,
there may be further differentiation within distressed transaction
ratings ('CCC' and below) when the operator/sponsor is impaired,
but the performance of the transaction remains uninterrupted.
Operational Performance
Petrobras has demonstrated a willingness to terminate existing
charter agreements related to less strategic assets when a
termination clause is breached. With current market conditions and
market day-rates for Ultra Deep Water (UDW) assets close to the
contracted day-rates for the rigs within the sponsor's fleet,
Petrobras may approach the operator in an attempt to restructure
certain contracts to reduce expenses over the medium term.
Continued pressure on global day-rates and asset values caused by
stressed oil prices imply a low likelihood that the underlying
assets would be re-contracted. This underlines the importance of a
strong operating performance to avoid any performance-related
contract terminations.
Recovery Estimates
Fitch has maintained OODFL's RE at RE60. This recovery estimate
reflects a longer than expected depressed oil market. This market
caused a substantial reduction in the development plans from
national oil companies, and lead to higher than expected
efficiency of the vessels, consequently generating a higher supply
of rigs. Additionally, the RE estimate for the OODFL notes
reflects a lower expectation of the disposition value for Tay IV
to reflect recent market comparable sales
Fitch assigns REs to all classes rated 'CCC' or below. REs are
forward-looking, taking into account Fitch's expectations for
principal repayments on a distressed structured finance security.
Fitch's RE considers estimated cash reserves and underlying asset
values as reflected by a discounted cash flow analysis of net
revenues generated during the remaining useful life of the
contracted vessels (including cash flows generated under the
Petrobras contracts) and potential liquidation of Tay IV (for
OODFL). REs are not intended to represent the actual recovery
noteholders may get upon sale of the underlying vessels or
potential restructuring of the notes
RATING SENSITIVITIES
Although the March 1, 2017 scheduled interest payment is expected
to be paid on April 7th, Fitch does not expect to upgrade the
notes at this time as the transaction will continue to be exposed
to liquidity pressures and to a potential restructuring.
DUE DILIGENCE USAGE
No third-party due diligence was provided to or reviewed by Fitch
in relation to this rating action.
Fitch has taken the following rating actions:
Odebrecht Offshore Drilling Finance Ltd.
-- Series 2013-1 senior secured notes downgraded to 'D' from
'CC'; RE maintained at RE60 %;
-- Series 2014-1 senior secured notes downgraded to 'D' from
'CC'; RE maintained at RE60%.
PHYSICIANS' GUARANTEE: Shareholder Receives Wind-Up Report
----------------------------------------------------------
The shareholder of Physicians' Guarantee Insurance Company SPC
Ltd. received on March 21, 2017, the liquidator's report on the
company's wind-up proceedings and property disposal.
The company's liquidator is:
K.D. Blake
c/o Scharmarie van der Vyver
Telephone: (345) 914-4183
Facsimile: (345) 949-7164
P.O. Box 493 Grand Cayman KY1-1106
Cayman Islands
Telephone: +1 (345) 949-4800
Facsimile: +1 (345) 949-7164
POLYMER FINANCE: Shareholders' Final Meeting Today
--------------------------------------------------
The shareholders of Polymer Finance Ltd. will hold their final
meeting today, April 5, 2017, 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:
Alexandria Bancorp Limtied
c/o Dayra Triana-Munroe
Barbara Conolly
The Grand Pavilion Commercial Centre
802 West Bay Road
P.O. Box 2428 Grand Cayman KY1-1105
Cayman Islands
Telephone: (345) 945-1111
Facsimile: (345) 945-1122
SYMPOSIUM MANAGEMENT: Shareholders Receive Wind-Up Report
---------------------------------------------------------
The shareholders of Symposium Management Partners Ltd received on
March 27, 2017, the liquidator's report on the company's wind-up
proceedings and property disposal.
The company's liquidator is:
Razorfish Limited
Campbells Corporate Services (BVI) Limited
Road Town, Tortola VG1110
P.O. Box4541, Floor 2, Romasco Place
British Virgin Islands
Telephone: +1 284 494 2423
Facsimile: +1 284 494 24
TAO INVESTMENT: Shareholders Receive Wind-Up Report
---------------------------------------------------
The shareholders of Tao Investment Company received on March 28,
2017, the liquidator's report on the company's wind-up proceedings
and property disposal.
The company's liquidator is:
CDL Company Ltd.
Grand Cayman KY1-1205
Cayman Islands
TITRAN INVESTMENTS: Shareholders Receive Wind-Up Report
-------------------------------------------------------
The shareholders of Titran Investments received on March 23, 2017,
the liquidator's report on the company's wind-up proceedings and
property disposal.
The company's liquidator is:
SCL Limited
c/o FrancisGrey
Attorneys-at-Law
Reference: JAPF
Suite 2206, Cassia Court
72 Market Street, Camana Bay
P.O. Box 32302 Grand Cayman KY1-1209
Cayman Islands
Telephone: +1 (345) 815 2800
Facsimile: +1 (345) 947 4728
TRAFIN 2011-1: Shareholders Receive Wind-Up Report
--------------------------------------------------
The shareholders of Trafin 2011-1, Ltd. received on March 31,
2017, the liquidator's report on the company's wind-up proceedings
and property disposal.
The company's liquidator is:
David Dyer
P.O. Box 1984 Grand Cayman KY1-1104
Cayman Islands
Telephone: (345)949-8244
Facsimile: (345)949-5223
VAN PARTICIPATIONS: Shareholders Receive Wind-Up Report
-------------------------------------------------------
The shareholders of Van Participations Limited received on March
28, 2017, the liquidator's report on the company's wind-up
proceedings and property disposal.
The company's liquidator is:
Maricorp Services Ltd.
c/o Steven J. Barrie
P.O. Box 2075 Grand Cayman KY1-1105
Cayman Islands
Telephone: (345) 949-9710
WALNUT TREE: Shareholders Receive Wind-Up Report
------------------------------------------------
The shareholders of Walnut Tree received on March 27,
2017, the liquidator's report on the company's wind-up proceedings
and property disposal.
The company's liquidator is:
Razorfish Limited
Campbells Corporate Services (BVI) Limited
Road Town, Tortola VG1110
P.O. Box4541, Floor 2, Romasco Place
British Virgin Islands
Telephone: +1 284 494 2423
Facsimile: +1 284 494 24
WAVESTONE CAPITAL: Shareholder Receives Wind-Up Report
------------------------------------------------------
The sole shareholder of Wavestone Capital Australian Absolute
Return (Offshore) Fund received on March 21, 2017, the
liquidator's report on the company's wind-up proceedings and
property disposal.
The company's liquidator is:
Walkers Liquidations Limited
Cayman Corporate Centre
27 Hospital Road, George Town
Grand Cayman KY1-9008
Cayman Islands
Telephone: +1 (345) 949 0100
ZICO LIMITED: Shareholder Receives Wind-Up Report
-------------------------------------------------
The sole shareholder of Zico Limited received on March 22, 2017,
the liquidator's report on the company's wind-up proceedings and
property disposal.
The company's liquidator is:
Stuart Sybersma
c/o Yvonne Lorimer
Deloitte & Touche
Citrus Grove Building, 4th Floor
Goring Avenue, George Town KY1-1109
Cayman Islands
Telephone: +1 (345) 814 2214
Facsimile: +1 (345) 949 8258
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C H I L E
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LATAM AIRLINES: Fitch Rates Proposed Unsec. Notes 'B+(EXP)/RR4'
---------------------------------------------------------------
Fitch Ratings has assigned an expected rating of 'B+(EXP)/RR4' to
LATAM Airlines Group S.A.'s (LATAM) proposed unsecured notes to be
issued through its fully owned subsidiary LATAM Finance Limited.
The notes will be fully guaranteed by LATAM. The target amount for
the proposed transaction is in the USD500 million to USD750
million range. The total amount and tenor for the proposed
issuance will depend on market conditions. Proceeds from the
proposed issuance are expected to be used primarily to refinance
debt and for general corporate purposes.
Fitch currently rates LATAM's Long-Term Issuer Default Rating
(IDR) 'B+' with a Stable Outlook. A full list of LATAM's ratings
follows the end of this press release.
LATAM's ratings and Stable Outlook reflect expectations that
improvement in the company's credit metrics will continue during
2017. The company reached improvement in liquidity and significant
reduction in fleet commitments in 2017-2018. During 2017, the
company's EBIT margin is expected to reach 6.5%, adjusted gross
leverage 5.5x, and liquidity (measured as cash and unused
committed credit lines/latest 12 months [LTM] revenues ratio)
should remain near 18%.
LATAM's ratings are supported by its diversified business model,
important regional market position, and adequate liquidity. These
positive factors are tempered by the company's still high gross
adjusted leverage and operational volatility related to some key
markets. The ratings of LATAM and TAM and their subsidiaries take
into account the credit linkage between the two companies, which
stems from their operational, strategic, and legal ties. These
links are reflected in the existence of cross-guarantee and cross-
default clauses related to the financing of aircraft acquisitions
for both LATAM and TAM.
KEY RATING DRIVERS
Moderate Traffic Growth
Fitch expects the company's consolidated boarded passengers to
reach an annual growth rate in the 3% to 4% range during 2017.
This view incorporates the expectation that traffic trends for the
Spanish Speaking Countries (SSC) and International segments will
continue performing well, while traffic levels for the Brazilian
segment will stabilize in 2017. Declining yields have been one of
the key factors affecting LATAM's total revenues and operational
margin during 2015-2016. Fitch expects the company's average
passenger yields to remain relatively stable during 2017 driven by
a better operating environment, particularly in the Brazilian
segment.
EBIT Margin Projected at 6.5%
LATAM plans capacity increases in 2017 of 0%-2% in the
international segment and 4%-6% in the SSC segment, along with a
planned capacity decrease at -2%-0% in the Brazilian domestic
segment. The cargo segment should see a contraction in the range
of -10%/-12%. Under its base case, Fitch expects LATAM's 2017
total revenues to be approximately USD10.1 billion, representing a
6% increase over 2016, compensating for some increase in fuel cost
and resulting in an EBIT margin of 6.5% in 2017.
Better Fundamentals in the Brazilian Market
Expected trends in traffic and passenger yields should result in
better operational margins for the Brazilian market in 2017.
Industry capacity reductions, executed through 2016, should drive
a recovery in passenger yields while the improvement in Brazil's
macroeconomic conditions is anticipated to drive moderate traffic
growth in 2017. Fitch forecasts Brazil's GDP growth to be 0.7% in
2017, an improvement from the contraction of 3.5% in 2016.
Slow Deleveraging
LATAM's gross adjusted leverage was 6x in December 2016, a
moderate improvement from 6.5x in 2015. Fitch's base case
envisions the company's gross leverage trending to 5.5x by year-
end 2017. LATAM's adjusted gross leverage, measured as total
adjusted debt/EBITDAR, was 6x at Dec. 31, 2016. The company's
total adjusted debt was USD12.6 billion at Dec. 31, 2016. This
debt includes USD8.6 billion of on-balance-sheet debt and USD3.9
billion of off-balance-sheet obligations related to operating
leases with combined rental payments of approximately USD570
million in 2016.
Positive Free Cash Flow (FCF) in 2017
Fitch views the company's on-going capex reduction as positive for
its FCF generation. LATAM maintains a total capex plan that calls
for capex levels of USD487 million and USD982 million during 2017
and 2018, respectively, which represents a material reduction when
compared with the company's historical capex levels. Fitch expects
LATAM's FCF margin to be positive during 2017-2018 driven by
revenue growth, continued EBIT margin improvement, and low capex
levels relative to historical 2014-2015 levels. The company's 2017
FCF generation is estimated in the USD500 million to USD700
million range, representing a 5% to 7% FCF margin, respectively.
Fitch's base case assumes the company's gross on-balance-sheet
debt will decline to about USD8 billion by year-end 2017.
Strong Credit Linkage
LATAM maintains indirectly all of the economic rights and 49% of
the voting rights in TAM, which is an affiliate company of LATAM.
The ratings of LATAM and TAM also incorporate the strong credit
linkage between both entities with significant legal, operational
and strategic ties existing between the two companies. In
addition, the financing of the combined fleet plan capex is
implemented through LATAM, with the new aircraft being subleased
to TAM. Furthermore, the view of strong legal ties existing
between LATAM and TAM is supported by cross default clauses
incorporated in LATAM's USD500 million unsecured notes due in
2020.
KEY ASSUMPTIONS
Fitch's key assumptions within the rating case for LATAM include:
-- 2017 net revenues to increase 6%;
-- 2017 EBIT margin 6.5%;
-- 2017 gross adjusted leverage, measured as total adjusted debt
to EBITDAR, of 5.5x;
-- 2017 coverage ratio, EBITDAR/(net interest expense plus
rents), 2.4x;
-- 2017 Liquidity (measured as readily available cash plus unused
committed credit facilities over LTM net revenues), 18%;
-- 2017 FCF generation positive in the USD500 million to USD700
million range.
RATING SENSITIVITIES
Positive Rating Action:
Considerations that could lead to a positive rating action (rating
or Outlook) include liquidity, measured as cash/LTM revenues,
consistently above 15%; gross adjusted leverage consistently
approximately 4.5x; neutral-to-positive FCF generation; coverage
ratio, measured as the total EBITDAR/(net interest expense plus
rents) consistently above 2.5x; and EBIT margin moving to 8%.
Negative Rating Actions:
Considerations that could lead to a negative rating action (rating
or Outlook) include sustained negative FCF; liquidity, measured as
cash/LTM revenues, consistently below 10%; gross adjusted leverage
consistently above 5.5x; EBIT margin consistently below 6.5%; and
coverage ratio, measured as total EBITDAR/(interest expense plus
rents), consistently below 2.25x.
LIQUIDITY
Adequate Liquidity, Cash plus Revolving at 18% of Revenues
Fitch views the company's liquidity position as adequate for the
rating category. LATAM recently completed the capital injection
from Qatar Airways (QA) in exchange for 10% of the airline's total
shares. LATAM held cash of USD1.4 billion as of Sept. 30, 2016,
compared with short-term debt of USD1.8 billion. The USD608
million capital injection occurred during fourth-quarter 2016.
LATAM's liquidity is expected to remain approximately USD1.5
billion during 2017-2018.
Since December 2016, LATAM has in place a senior secured revolving
credit facility (RCF) of approximately USD325 million. The RCF is
collateralized by a combination of aircraft, spare engines and
spare parts. Including the RCF, the company's level of liquidity,
measured as total cash and marketable securities plus unused
committed credit lines over LTM revenues, is expected to be around
18% during 2017.
LATAM faces debt amortizations of USD1.5 billion and USD952
million during 2017 and 2018, respectively, which will be
primarily addressed through the combination of FCF generation and
refinancing. The company's 2017 FCF generation is estimated in the
USD500 million to USD700 million range. Furthermore, the company's
coverage ratio, measured as EBITDAR/(net interest Expense plus
rents), is expected to be at 2.4x and 2.6x in 2017 and 2018,
respectively.
FULL LIST OF RATING ACTIONS
LATAM Finance Limited:
Fitch has assigned an expected rating of 'B+/RR4' to LATAM's
proposed unsecured notes to be issued through its fully owned
subsidiary LATAM Finance Limited. The notes will be fully
guaranteed by LATAM.
Fitch currently rates LATAM and TAM S.A. as follows:
LATAM Airlines Group S.A.:
-- Long-Term Foreign Currency IDR 'B+';
-- National Equity Rating 'Primera Clase Nivel 3 (cl)'
-- USD500 million senior unsecured note due 2020 'B+/RR4'.
TAM S.A.
-- Long-Term Foreign Currency IDR 'B+';
-- Long-Term Local currency IDR 'B+';
-- National long-term rating 'A-(bra)'.
Tam Linhas Aereas S.A.
-- Long-Term Foreign Currency IDR 'B+';
-- Long-Term Local currency IDR 'B+';
-- National long-term rating 'A-(bra)'.
Tam Capital Inc.
-- USD300 million senior unsecured note due 2017 'B+/RR4'.
Tam Capital Inc. 3
-- USD500 million senior unsecured note due 2021 'B+/RR4'.
The Rating Outlook for the corporate ratings is Stable.
LATAM FINANCE: S&P Assigns 'B+' Rating to Proposed Sr. Notes
------------------------------------------------------------
S&P Global Ratings assigned a 'B+' issue-level rating to LATAM
Finance Ltd.'s proposed senior unsecured notes. The issue of up
to $750 million has a proposed weighted average term of seven
years. The rating on the proposed issue reflects the full and
unconditional guarantee of holding company, Latam Airlines Group
S.A. (LATAM; BB-/Stable/--). The latter will use the proceeds
from the issue for general corporate purposes.
The proposed issues-level rating is one notch below S&P's 'BB-'
corporate credit rating on LATAM, reflecting the subordination of
the senior unsecured notes to the group's secured debt, which
includes financial and operating leases. S&P's current base-case
scenario on LATAM already incorporates the need to access the debt
market for refinancing purposes. Therefore, S&P don't expect the
issue to have an impact on the company's forecasted leverage
metrics.
RATINGS LIST
Latam Airlines Group S.A.
Corporate credit rating BB-/Stable/--
Rating Assigned
LATAM Finance Ltd.
Senior unsecured B+
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D O M I N I C A N R E P U B L I C
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DOMINICAN REPUBLIC: Labor, Gov. Set US$329 Top Minimum Wage
-----------------------------------------------------------
Dominican Today reports that business leaders scurried out of the
meeting with frowns, after labor and government representatives
decided to raise the non-sectorized minimum wage by 20%.
The Labor Ministry's National Wage Committee announced the
decision after the meeting where the three parts sought to agree
on a salary increase for workers in the non-sectorized private
sector, according to Dominican Today.
As a result of the agreement, the highest minimum monthly wage
will now be RD$15,447.60 (US$329.0); the medium RD$10,620 and
RD$9,411.60 the lowest, the report notes.
As reported in the Troubled Company Reporter-Latin America on
Nov. 22, 2016, Fitch Ratings has taken the following rating
actions on the Dominican Republic:
-- Long-Term Foreign Currency Issuer Default Rating (IDR)
upgraded to 'BB-' from 'B+'; assigned Stable Outlook;
-- Long-Term Local Currency IDR upgraded to 'BB-' from 'B+';
assigned Stable Outlook;
-- Senior unsecured Foreign and Local Currency bonds upgraded
to 'BB-' from 'B+';
-- Short-Term Foreign Currency IDR affirmed at 'B';
-- Short-Term Local Currency IDR affirmed at 'B'.
===========
M E X I C O
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AXTEL SAB: Moody's Revises Outlook to Negative; Affirms Ba3 CFR
----------------------------------------------------------------
Moody's Investors Service affirmed Axtel, S.A.B. de C.V.'s Ba3
corporate family rating and changed the rating outlook to negative
from stable.
RATINGS RATIONALE
The change in Axtel's rating outlook to negative reflects the
company's exposure to external macroeconomic pressures combined
with tight cash generation and high leverage weakening Axtel's
position within the Ba3 rating category. The negative outlook
incorporates Moody's expectations for ongoing negative to flat
free cash flow and a challenging long-term debt amortization
profile.
Axtel's Ba3 corporate family rating is supported by its stable and
solid margins, its strong customer base in the enterprise segment
and long-term organic growth opportunities amid rising corporate
and residential demand for increased data speed and capacity and
related value-added services. The rating also reflects the
company's strong corporate governance under Alfa's financial
policies and oversight. On the other hand, the rating incorporates
the company's comparatively small size and limited market shares
in Mexico's highly competitive and fragmented telecom industry.
The rating also considers execution risk as the merger integration
of Alestra continues to unfold, although this risk is partially
mitigated by Alfa's management's track record integrating
acquisitions.
Despite the benefits arising from the merger with Alestra and the
generation of important synergies, altered economic conditions
will delay the recovery of Axtel's credit profile toward original
post-merger expectations. Moody's forecasts for negative to flat
free cash flow through 2019 reflects the prolonged effect of
federal budget cuts in 2016 in Mexico leading to a loss of
government-related revenues. Free cash flow is also pressured by
higher capital intensity given the depreciation of the Mexican
peso affecting its dollar-denominated capex.
Although Axtel plans to reduce leverage in the upcoming years,
Moody's adjusted debt/EBITDA will remain above 3.5x through 2019
due to a combination of lower EBITDA generation and exposure to US
dollar denominated debt. At the same time, EBITDA margins will be
lower than initially forecasted; however, Moody's expects adjusted
margins to remain stable at close to 40%, which is a solid
position for the rating category.
Axtel's liquidity is adequate. Axtel's cash on hand of MXN1.5
billion as of December 31, 2016 can cover 1.4x its short term
debt. However, refinancing risk exists as Axtel's long-term debt
amortization profile includes large maturities of MXN10.5 billion
in 2019 and MXN5.6 billion in 2020. Axtel plans to refinance in
2017 the majority of these debt maturities. To support its cash
requirements in 2017-2018, the company plans to sell close to 140
cell towers before year-end 2017. Axtel does not have committed
credit facilities and relies on advised lines of credits for its
working capital requirements.
Axtel's rating could be downgraded if the company fails to timely
refinance its large long-term debt maturities or if its leverage
does not show improvement. . The rating could also be downgraded
if adj. debt/EBITDA remains above 3.5x, if adjusted EBITDA margin
fall below 35%, if revenue growth is flat or declines or if
retained cash flow relative to debt falls below 10%. A
deterioration of the company's liquidity could also lead to a
downgrade.
The rating could be upgraded if Axtel is able to bring adjusted
EBITDA margin above 40% while keeping leverage around 2.5 times
and maintaining retained cash flow generation above 20% of total
debt.
Based in Monterrey, Mexico, Axtel is an integrated
telecommunications company providing bundled and information
technology services to Mexico's enterprise, government,
residential and small business sectors. The company is fully
consolidated by Alfa, S.A.B. de C.V. (Baa3, stable), which holds
51% of the subsidiary. Pro-forma for the Alestra merger completed
in February 2016, the combined entity generated revenues totaling
USD789 million during the twelve months ended December 31, 2016.
Outlook Actions:
Issuer: Axtel, S.A.B. de C.V.
-- Outlook, Changed To Negative From Stable
Affirmations:
Issuer: Axtel, S.A.B. de C.V.
-- Corporate Family Rating, Affirmed Ba3
The principal methodology used in this rating was
Telecommunications Service Providers published in January 2017.
COMISION ESTATAL: Moody's Withdraws Ba2 Issuer and Debt Ratings
---------------------------------------------------------------
Moody's de Mexico has withdrawn the issuer ratings of the Comision
Estatal de Servicios Publicos de Tijuana at Ba2 (Global Scale,
local currency) and A2.mx (Mexico's National Scale). Moody's has
also withdrawn the negative outlook.
At the same time, Moody's withdrew debt ratings of Ba2/A2.mx of
the MXN280 million enhanced loan from Banorte.
RATINGS RATIONALE
Moody's has withdrawn the ratings for its own business reasons.
Please refer to the Moody's Investors Service's Policy for
Withdrawal of Credit Ratings, available on its website,
www.moodys.com.mx
GRUPO KALTEX: Fitch Assigns B+ Long-term Issuer Default Rating
--------------------------------------------------------------
Fitch Ratings has assigned Grupo Kaltex, S.A. de C.V. a Long-term
Issuer Default Rating (IDR) of 'B+' and a Long-term Local Currency
IDR of 'B+'. The Rating Outlook is Stable.
Fitch has also assigned 'B+'/'RR4' rating to Grupo Kaltex's
proposed USD320 million senior secured notes issuance. The
proceeds coming from the issuance will be used to repay
approximately USD143 million of short-term debt and to repay
approximately USD160 million of long-term debt. The remaining
proceeds will be used for general corporate purposes.
Grupo Kaltex's ratings reflect the company's exposure to the
cyclicality of the textile industry, level of consumer demand,
cotton prices volatility, absence of long-term customer contracts,
and high adjusted leverage levels compared to peers. Also, the
ratings take into account Grupo Kaltex's revenues diversification,
ability to control certain costs through its operating vertical
integration, good commercial relations with top quality customers
and its position as the fourth global largest denim player in
terms of installed capacity. In addition, the ratings reflect the
company's low currency risk exposure, good liquidity position and
positive free cash flow generation.
KEY RATING DRIVERS
Exposure to General Economic Conditions, Input Prices Volatility
and Customer Concentration
The company's operations depend on several variables impacting
discretionary consumer spending, including general economic
conditions, consumer confidence, wages and unemployment, consumer
debt, interest rates, taxation and political conditions. A decline
in the discretionary consumer spending may cause volatility in its
sales volume. During 2014, the company's sales volume decreased
due to the implementation of a tax reform in Mexico that caused an
economic slowdown and reduction in retail stores.
The entity is exposed to cotton prices volatility due to the
timing differences between the payment for cotton and the
collection from customers, which is approximately six months.
Grupo Kaltex has 180 day revolving credit lines for cotton
purchases. The company passes along significant changes in cotton
prices to its customers with a 90 day lag. Fitch believes that as
Grupo Kaltex manages to mitigate cotton price volatility, its
financial position could be strengthened.
The company has revenue concentration with one customer, who
represents above 8% of total revenues in average, which increases
Grupo Kaltex's operational risk should the customer experience
weak performance or decides to shift to a different supplier.
Grupo Kaltex operates on an order by order basis and is exposed to
the risk that customers could rapidly shift to other suppliers.
Textile companies usually do not have long-term contracts with
their customers.
Continued Deleveraging Process
Grupo Kaltex's adjusted by leases leverage has been historically
high, partly due to Grupo Milano's acquisition in 2012, cotton
price volatility and lower sales volume. With the fully
operational cogeneration plant and the implementation of several
initiatives to control expenses and modernized production
processes, the company has reported adjusted leverage levels of
around 4.5x in terms of Mexican pesos.
At December 2016, Grupo Kaltex reported a total debt of MXN8,379
million of which more than 70% is secured by assets. Approximately
60% of the credit facilities require the maintenance of certain
financial covenants, some of which have not been complied with
since 2012. However, the company has received waivers from its
creditors.
The company's financial strategy is to issue USD320 million senior
secured notes with five-year maturities; the proceeds will go
towards debt refinancing and for general corporate purposes.
The senior secured notes will be unconditionally guaranteed by:
Manufacturas Kaltex, S.A. de C.V., Kaltex Fibers, S.A. de C.V.,
Milano lnmobiliaria, S.A. de C.V., Kaltex Energia, S.A. de C.V.,
Energia MK KF, S.A. de C.V., Kaltex Textiles, S.A. de C.V., Kaltex
Comercial, S.A. de C.V., Grupo Milano, S.A. de C.V., Milano
Operadora, S.A. de C.V., Milano Representaciones e lmportaciones,
S.A. de C.V., Milano Servicios Corporativos, S.A. de C.V., Kaltex
Internacional, S.A. de C.V., Kaltex America, Inc. and Revman
International, Inc.
As of Dec. 31, 2016, the Issuer and the Subsidiary Guarantors
collectively account for about 72% of Grupo Kaltex's consolidated
assets, 89.5% of the consolidated EBITDA and 91.5% of consolidated
sales.
In addition, the notes will be secured by (i) mortgages comprising
a plant located in Tepeji del Rio, Hidalgo, Mexico, (ii) mortgages
comprising a plant located in Altamira, Tamaulipas, Mexico, (iii)
a non-possessory pledge agreement comprising machinery and
equipment owned by Manufacturas Kaltex, S.A. de C.V., and (iv) a
non-possessory pledge agreement covering machinery and equipment
owned by Kaltex Fibers, S.A. de C.V. Based upon appraisals
conducted in March of 2016, the approximate value of the
collateral was MXN1,917 million.
After the debt refinancing, Grupo Kaltex's debt maturity profile
will improve. In its Base Case Projections, Fitch estimates that
the company's adjusted leverage levels will be around 4.3x in
average during the next three years. Fitch estimates that
consistent lower leverage levels obtained through robust operating
generation and lower debt levels could strengthen Grupo Kaltex's
credit profile.
Business Diversification
Grupo Kaltex's cash flow and profitability are supported by a
diversified revenue base, operating vertical integration and
product offerings. The company has diversified revenue by product
type and geographic market, which reduces the risk of
concentration in one segment of the textile industry, and to
partially mitigate for adverse economic cycles in a particular
region.
The entity produces synthetic fibers, yarn, piece dye, denim,
garments, apparel and textile home products that are used in
different segments of the textile industry. As part of its
production process, Grupo Kaltex sells products to third parties
and for self-consumption in each point of the supply chain. During
2016, 52% of Grupo Kaltex's total revenues were generated in
Mexican pesos, 41% in U.S. dollars, and 7% in Colombian pesos.
Operating Vertical Integration
As stated earlier, Grupo Kaltex's operating vertical integration,
from cogeneration of energy to retail, supports its profitability
because of margin capture opportunities and the company's ability
to control costs; mainly energy, transportation and distribution
at several points of the supply chain. The company's integral
production process includes: design, cutting, tailoring, laundry,
finishing and packing services.
Kaltex Comercial has its own retail outlet network. The company's
apparel retailer has 418 stores in all 32 states of Mexico
catering the low and middle income sectors. To support its
extensive point of sale network, the company has one distribution
center (capable of serving up to 600 stores) and two transfer
centers. Kaltex Comercial anticipates significant growth due to
the opportunity to sell fabric to Milano and Melody's suppliers.
Fourth Global Largest Denim Player
The company is the fourth global largest denim player in terms of
installed capacity, which gives the company the ability to fulfil
volume requirements from important customers. However, the entity
faces intense competition from domestic and foreign yarn
producers, and importers of textile and apparel products. Grupo
Kaltex's competitive advantages from foreign producers and
importers include the geographical proximity to main markets in
North America, responsiveness and service (make-to-make order
products), besides the tariffs in place intended to protect
illegal imports of textiles into Mexico.
Grupo Kaltex is strategically positioned to supply the North and
South American regions. The company has a competitive advantage
compared to Asian manufacturers in terms of time-to- market and
cost of freight to sell its products in Mexico and U.S. markets.
Time-to-market has become critical to retailers as fashion trends
have become more dynamic (fast fashion).
Improved Financial Position
During the last four years, Grupo Kaltex has been developing its
operating vertical integration, which has benefited the company's
profitability due to the ability to control costs, mainly energy
by the cogeneration plant, and transportation and distribution
expenses through the operation of several businesses in few
manufacturing facilities. Since the start of operations of the
cogeneration plant (2H14), coupled with lower administrative
expenses, efficiencies in the production process, high sales
volume, relatively stable cotton prices and exchange rate
fluctuations, the company reported double-digit operating margins
and positive FCF generation.
At the end of 2016 and 2015, the company reported EBITDAR margins
of 14.5% and 14.7%, respectively. Grupo Kaltex reported FCF margin
of 2.7% and 3.1%, respectively. In its Base Case projections,
Fitch estimates that the entity's EBITDAR margin would be 14.0% in
average in the next three years due to the continued operation of
the cogeneration plant, increase in sales volume and stable cotton
prices. Fitch also estimates that Grupo Kaltex's FCF margin will
be 2.6% in average in the next three years.
Grupo Kaltex has low currency risk exposure. Approximately 41% of
the company's revenues, 34% of costs, 33% of expenses, and 83% of
total debt are linked to the U.S. dollar. A depreciation of the
Mexican peso will likely benefit Grupo Kaltex's financial results.
A 10% devaluation of the Mexican peso can translate into a
decrease of 0.4x in the company's leverage.
KEY ASSUMPTIONS
Fitch Base Case forecasts assumptions include:
-- Revenue growth of around 2.1% average over the next three
years;
-- EBITDAR margin around 14.0% in average;
-- Capex of around MXN420 million per year;
-- Capex funded with cash flow from operations;
-- Debt issuance in 2017 to refinance current indebtedness;
-- Adjusted Debt/EBITDAR levels around 4.3x.
RATING SENSITIVITIES
Positive rating actions could be driven by the following: higher
product diversification increasing non-commoditized product,
reduction of customer concentration, a strengthening of Grupo
Kaltex's market share, revenues and EBITDA generation in hard
currencies, funds from operations and EBIT margins above 8%,
expansion of positive free cash flow generation, and stable
operating results through industry and economic cycles resulting
in adjusted leverage levels of total adjusted debt/EBITDAR below
3.5x.
Negative factors that could affect the company's credit profile
include: increase in commoditized product concentration, higher
single customer concentration or loss of an important client,
declining market shares along business lines and loss of
competitive position, funds from operations and EBIT margins at 5%
or lower, and reduced liquidity. Expectations of total adjusted
debt/EBITDAR above 4.5x would likely result in negative rating
actions.
LIQUIDITY
Grupo Kaltex's liquidity position is supported by robust Cash Flow
from Operations (CFFO), moderate cash balances and no significant
debt maturities until 2018. At the end of 2016 the company
reported MXN3,753 million maturing in short-term, of which
MXN1,216 million are revolving credits and MXN664 million are
factoring facilities, compared to MXN733 million in cash and
MXN474 million in positive FCF. The company's liquidity is further
supported by about USD57 million of undrawn uncommitted credit
lines. With the debt refinancing, Fitch expects the entity would
improve its liquidity position with significant debt maturities
until 2022.
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V E N E Z U E L A
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VENEZUELA: Supreme Court Assumes Powers of Congress
---------------------------------------------------
Anatoly Kurmanaev and Mayela Armas at The Wall Street Journal
report that Venezuela's Supreme Court has assumed all powers of
the opposition-controlled congress, a move lawyers and rights
activists said amounted to the effective dissolution of the
legislature in Latin America's largest oil producer.
"This ruling marks the point of no return for the dictatorship,"
National Assembly Vice President Freddy Guevara said, according to
The WSJ. Assembly President Julio Borges called the act a coup
and urged Venezuelans to rally to defend the country's democracy,
the report notes.
The Supreme Court, which is packed with allies of President
Nicolas Maduro, ruled that the congress was in contempt of court
for having sworn in three lawmakers from the remote Amazonas state
whom the ruling party had accused of electoral fraud, the report
relays. The court said it takes over all "parliamentary
capacities" until the conflict is resolved.
"Maduro now has all powers in his hands, without any checks and
balances," Mr. Borges said, notes WSJ. "This is the action of a
desperate man who knows the whole world is turning against him."
Several opposition lawmakers who tried to enter the Supreme Court
building were blocked by soldiers in riot gear and manhandled by
government supporters shouting "get out," the report says.
Peru's President Pedro Pablo Kuczynski called the court's action
unacceptable and recalled his country's ambassador to Venezuela,
the report notes. In Washington, the secretary-general of the
Organization of American States called for an urgent meeting of
member states to discuss "the subversion of democratic order" in
Venezuela, the report relays.
Venezuela's opposition won overwhelming control of the assembly in
December 2015, in a victory it called the first step toward ending
almost two decades of rule by a far-left movement created by the
late Hugo Ch†vez, the report recalls.
Since then, however, Mr. Maduro has marshaled allied judges and
prosecutors to jail dozens of opposition officials and activists,
torpedo a recall referendum on the president, and indefinitely
postpone all scheduled elections for posts ranging from state
governors to labor union heads, the report says.
The report notes that Mr. Maduro's ruling United Socialist Party,
or PSUV, never presented any evidence of wrongdoing by the three
opposition lawmakers, and government-appointed prosecutors still
haven't requested voting data 16 months after the start of an
investigation, according to electoral officials.
The probe's only real result to date has been to throw the
National Assembly into legal limbo, allowing Mr. Maduro to
gradually strip it of its powers, the report relays.
Meanwhile, the country's economy plunged around 15% last year
alone and inflation has reached more than 400%, worsening already
acute food and medicine shortages, recounts the report.
The ruling came a day after most OAS members criticized Venezuela
for postponing elections and holding political prisoners, says
WSJ. The body also voted to seek diplomatic solutions to the
country's deepening economic and political crisis, the report
notes.
The report relays that Mr. Maduro accused the OAS of seeking to
foment a coup and vowed to prosecute opposition supporters of his
international critics as traitors.
The ruling took away the assembly's power to draft laws,
effectively dissolving it, said Rocio San Miguel, a lawyer at
human-rights group Citizens' Control, the report notes.
The ruling marks the first time a Latin American ruler has
eliminated a government branch since Alberto Fujimori dissolved
Peru's congress in 1992, according to Michael Shifter, head of
Washington-based policy group Inter-American Dialogue, the report
notes. Mr. Fujimori is now in jail.
"This is despotic rule," Mr. Shifter said. "There is absolutely no
counterweighting [to Mr. Maduro]," he added, notes WSJ.
Until now, Venezuela's congress had at least been permitted to go
about debating, voting and approving laws, even if they were all
turned back by the Supreme Court, said Jose Miguel Vivanco, the
Americas director at Human Rights Watch, the report notes. He
called what happened "an open decision to take full control of
congress."
Hours before the OAS meeting, the Supreme Court stripped
congressmen of immunity and asked the government to prosecute
lawmakers who have backed anti-Maduro initiatives for treason in
closed courts, the report discloses.
To many Venezuelans, the ruling is the final nail to the fading
hopes that swept the country after the congressional elections
that the government could be changed and the economy stabilized,
the report relays.
Mr. Borges said the Assembly would continue to draft laws and
support international critics of Mr. Maduro, the report notes.
"Our struggle together with international solidarity will ensure
that there will be elections in Venezuela," he said.
The momentous court ruling came out unexpectedly after a regular
daily meeting of the constitutional high judges, the report
relays. The key line laying out the congressional takeover was
buried toward the end of a 20,000-word ruling interpreting a minor
point of an oil law, the report notes.
The ruling also gave Mr. Maduro powers to form joint ventures for
oil production in Venezuela without congressional approval, the
report discloses. In the past few months Venezuela's government
has been negotiating several sales of stakes in oil-and-gas
projects to Russia's state-run Rosneft and local businessmen, in a
bid to scrape together funds for about $8 billion in upcoming bond
payments, according to industry executives and opposition
politicians, the report says.
Mr. Borges said all new contracts would be null and void after Mr.
Maduro leaves power, the report adds.
As reported by The Troubled Company Reporter-Latin America
S&P Global Ratings, on Feb. 28, 2017, affirmed its 'CCC' long-term
foreign and local currency sovereign credit ratings on the
Bolivarian Republic of Venezuela. The outlook on both long-term
ratings remains negative. S&P also affirmed its 'C' short-term
foreign and local currency sovereign ratings. In addition, S&P
affirmed its 'CCC' transfer and convertibility assessment on the
sovereign.
***********
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.
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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, Ivy B.
Magdadaro, and Peter A. Chapman, Editors.
Copyright 2017. 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
202-362-8552.
* * * End of Transmission * * *