/raid1/www/Hosts/bankrupt/TCRLA_Public/170901.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
L A T I N A M E R I C A
Friday, September 1, 2017, Vol. 18, No. 174
Headlines
A R G E N T I N A
PROVINCE OF CORDOBA: S&P Affirms B Foreign/Local Currency Ratings
B R A Z I L
BRAZIL: Indians Protest Drastic Cut to Their Reserve
BRAZIL: Judge Suspends Decree Opening Vast Reserve to Mining
TK HOLDINGS: 6 Automakers Try to Block $3.5M Fee to Moelis & Co.
D O M I N I C A N R E P U B L I C
DOMINICAN REP: Economy at 1H Up 4%; Inflation 1.02%; Jobless 5.4%
DOMINICAN REP: Only Minimum Wage Hike Can Halt Economic Slowdown
M E X I C O
EMPRESAS ICA: Moody's Lowers CFR and Sr. Unsec. Notes Rating to C
ICA: Files Pre-Packaged Bankruptcy Plan
P U E R T O R I C O
BOBALU INC: Case Summary & 12 Unsecured Creditors
ONCOLOGY INSTITUTE: Unsecureds to Get $13,124 Over 48 Months
PUERTO RICO: Panel Appeals Ruling Barring it From Insurer Suit
U R U G U A Y
BANCO PATAGONIA: Moody's Extends Ba3 Rating Review for Downgrade
V E N E Z U E L A
VENEZUELA: Fitch Lowers Long-Term IDR to CC on Probable Default
- - - - -
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A R G E N T I N A
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PROVINCE OF CORDOBA: S&P Affirms B Foreign/Local Currency Ratings
-----------------------------------------------------------------
S&P Global Ratings affirmed its 'B' foreign and local currency
ratings on the province of Cordoba. The outlook remains stable.
OUTLOOK
S&P said, "The stable outlook reflects our view of an increasing
dialogue between Argentina's local and regional governments (LRGs)
and the federal government to address short- and medium-term
fiscal and economic challenges. In addition, we consider that
Cordoba will continue to post operating surpluses above 10% of
operating revenue and surpluses after capital expenditures
(capex), while investments will gradually increase amid ongoing
access to international and domestic markets."
Downside scenario
S&P said, "We could lower our ratings on Cordoba during the next
12 months if we lower the sovereign ratings, if we perceive less
commitment to maintain prudent fiscal policies, or if we assess
the risks stemming from the province's contingent liabilities are
increasing."
Upside scenario
S&P said, "Given that we don't believe Cordoba meets the
conditions to have a rating higher than that on the sovereign, we
would only raise our rating on the province over the next 12
months if we raise our foreign and local currency sovereign
ratings on Argentina."
RATIONALE
S&P said, "Our 'B' ratings on Cordoba is now one notch below its
'b+' stand-alone credit profile (SACP). The ratings reflect our
view of the province's improved fiscal policies, given that
they're clearer and have longer timeframes, and greater track
record in managing debt's exposure to foreign currency risk. The
ratings also reflect our view of lower contingent liabilities of
Cordoba's government-related entities (GREs), and which are not
consolidated into its budget. Since April 4, 2017, when we raised
our ratings on Cordoba following the same rating action on the
sovereign, the province continued to tap local and international
markets to fund its capex projects, while fiscal results remain
robust and cash levels solid.
"Cordoba, like all LRGs in Argentina, still operates under a very
volatile and underfunded institutional framework, in our view. Our
assessment reflects our perception of Argentina's very weak
institutional predictability and volatile intergovernmental
system, even if improving, because of ongoing modifications to
fiscal regulations, which jeopardize the LRGs' financial planning,
and consequently, their credit quality. We also believe that the
system has been vulnerable to political risk, resulting in revenue
and expenditure uncertainties, and increasing fiscal pressure at
the LRG level. Our positive trend on Argentina's institutional
framework draws from our expectation of greater predictability
that, together with macroeconomic stability, could result in more
balanced revenue and expenditure results. One of the Macri
administration's priorities is to rebuild the relations between
provinces and the federal government. After more than a decade,
the federal government has put on the legislative agenda the
discussion on amending the coparticipation criteria. Still, aside
from the government's willingness, it has yet to demonstrate its
capacity to diminish large economic imbalances while gaining
support among all provinces."
Cordoba made progress on its long-term capital and financial
planning, with policies that are more visible, and planning that
encompasses a medium-to-long-term timeframe. At the same time,
Cordoba has continued to issue in international markets thus
increasing its exposure to foreign currency risk. S&P said,
"Nevertheless, we believe the province's use of financial
instruments such as government bonds mitigate this risk.
Argentina's macroeconomic volatility is taking a toll on the
province's revenue and expenditure management. However, we expect
this to diminish as inflation declines and economic conditions are
more certain. The provincial economy continues to be somewhat
diversified, although its performance is still very much linked to
that of Argentina. We project Cordoba's three-year average GDP per
capita between 2014 and 2016 of $8,890 and to reach $9,102 in
2017."
The SACP is not a rating but a means of assessing the intrinsic
creditworthiness of an LRG under the assumption that there is no
sovereign rating cap. The SACP results from the combination of our
assessment of an LRG's individual credit profile and the
institutional framework in which it operates. S&P said, "Given
that we don't believe that Cordoba meets the criteria to have a
higher rating than the one on the sovereign, we cap its ratings at
the level of the 'B' foreign currency long-term rating on
Argentina."
S&P said, "We expect Cordoba to continue posting high operating
surpluses during 2017 and 2019, at above 15% of operating revenue.
That stems from tight cost control measures and greater revenue
from federal transfers-mainly from the previously 15% of
coparticipation funds that the national government withheld from
the province, and additional resources to fund the annual pension
deficit.
"We believe the province has a rigid budget structure, because the
majority of its spending is concentrated in payroll, pensions, and
interest payments. At the same time, we deem Cordoba has limited
ability to further increase revenue, given that it has in the past
overhauled the tax structure and currently doesn't have the
political willingness to implement further tax hikes. As such,
own-source revenues will remain at around 52% during 2017-2019. At
the same time, Cordoba's wide operating surpluses, coupled with
ongoing access to external financing, will support its ambitious
capex program in the next three years. We expect capex to increase
gradually over the forecasted period, to 14% of total expenditure
by 2019 from 10% in 2016. Our base-case scenario assumes that
Cordoba will continue to post surpluses after capex, averaging
4.5% of total revenue during 2017 and 2019. Meanwhile, we believe
Argentina's macroeconomic volatility will continue to hurt the
province's budgetary performance because persistent double-digit
inflation will continue pressuring spending and revenue."
Since 2016, Cordoba has returned to international markets and has
issued nearly $1.7 billion in debt. The province used the proceeds
to fund mainly capex projects and the remainder to amortize debt.
Cordoba's issuances both in domestic and international markets
haven't harmed its debt profile, although its exposure to foreign
currency risk increased to 94% as of June 2017 and is a source of
potential volatility if the Argentine peso slides. S&P's base-case
scenario assumes that Cordoba's direct debt will average 23% of
operating revenue during 2017 and 2019; interest should represent
around 1.4% of operating revenue.
The province's liquidity position has improved following greater
access to the markets and sustained operating surpluses. S&P said,
"According to our calculations, Cordoba has net free cash and
liquid assets to cover 75% of its projected debt service of ARP5.4
billion for 2017. We assess Cordoba's access to external liquidity
as uncertain, largely due to our evaluation of the development of
Argentina's capital markets and banking system. However, the
province's very robust internal cash flow generation due to its
sustained operating balances compared with those of its peers
lessens its dependency on external sources to fund its
investments.
"Cordoba guarantees the liabilities of its two GREs that are
outside its budget, and which we consider as self-supporting.
These are an electricity company, Empresa Provincial de Energia de
Cordoba (EPEC; not rated) and a bank, Banco de la Provincia de
Cordoba S.A. According to our assessment, in an event of financial
stress, the estimated financial support would be of 14% of
Cordoba's estimated operating revenue in 2017."
In accordance with S&P's relevant policies and procedures, the
Rating Committee was composed of analysts that are qualified to
vote in the committee, with sufficient experience to convey the
appropriate level of knowledge and understanding of the
methodology applicable (see 'Related Criteria And Research'). At
the onset of the committee, the chair confirmed that the
information provided to the Rating Committee by the primary
analyst had been distributed in a timely manner and was sufficient
for Committee members to make an informed decision.
After the primary analyst gave opening remarks and explained the
recommendation, the Committee discussed key rating factors and
critical issues in accordance with the relevant criteria.
Qualitative and quantitative risk factors were considered and
discussed, looking at track-record and forecasts.
The committee's assessment of the key rating factors is reflected
in the Ratings Score Snapshot above.
The chair ensured every voting member was given the opportunity to
articulate his/her opinion. The chair or designee reviewed the
draft report to ensure consistency with the Committee decision.
The views and the decision of the rating committee are summarized
in the above rationale and outlook. The weighting of all rating
factors is described in the methodology used in this rating action
(see 'Related Criteria And Research').
RATINGS LIST
Ratings Affirmed
Cordoba (Province of)
Issuer Credit Rating B/Stable/--
Senior Unsecured B
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B R A Z I L
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BRAZIL: Indians Protest Drastic Cut to Their Reserve
----------------------------------------------------
EFE News reports that some 50 Guarani Indians gathered in front of
Brazil's justice ministry to protest a recent government move to
shrink the size of their reserve by more by than 90 percent.
In an executive order, the right-wing administration of President
Michel Temer amended a 2015 decision establishing a reserve for
the group inside Pico de Jaragua National Park, located on the
outskirts of Sao Paulo, Brazil's largest city, according to EFE
News.
As reported in the Troubled Company Reporter-Latin America on
Aug. 17, 2017, S&P Global Ratings removed its 'BB' long-term
foreign and local currency sovereign credit ratings on the
Federative Republic of Brazil from CreditWatch, where it had
placed them with negative implications on May 22, 2017. S&P said,
"At the same time, we affirmed the 'BB' long-term ratings, and the
outlook is negative. We also affirmed our 'B' short-term foreign
and local currency ratings on Brazil. The transfer and
convertibility assessment is unchanged at 'BBB-'. In addition, we
removed the 'brAA-' national scale rating from CreditWatch with
negative implications and affirmed the rating with a negative
outlook. This incorporates the revision of the mapping table for
Brazil national scale ratings, published Aug. 14, 2017."
BRAZIL: Judge Suspends Decree Opening Vast Reserve to Mining
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EFE News reports that a Brazilian judge suspended a presidential
decree that opened a vast Amazon reserve to mining, a
precautionary ruling issued on a day in which a non-governmental
organization announced the discovery of 381 new species of flora
and fauna in the Amazon region.
The decision by a federal judge in Brasilia to suspend "any and
all administrative acts" that would bring about the dissolution of
the National Reserve of Copper and Associates (Renca) is a further
setback for Brazil's government, which had already modified the
decree amid a wave of criticism, according to EFE News.
As reported in the Troubled Company Reporter-Latin America on
Aug. 17, 2017 S&P Global Ratings removed its 'BB' long-term
foreign and local currency sovereign credit ratings on the
Federative Republic of Brazil from CreditWatch, where it had
placed them with negative implications on May 22, 2017. S&P said,
"At the same time, we affirmed the 'BB' long-term ratings, and the
outlook is negative. We also affirmed our 'B' short-term foreign
and local currency ratings on Brazil. The transfer and
convertibility assessment is unchanged at 'BBB-'. In addition, we
removed the 'brAA-' national scale rating from CreditWatch with
negative implications and affirmed the rating with a negative
outlook. This incorporates the revision of the mapping table for
Brazil national scale ratings, published Aug. 14, 2017."
TK HOLDINGS: 6 Automakers Try to Block $3.5M Fee to Moelis & Co.
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Jeff Montgomery, writing for Bankruptcy Law360, reports that
General Motors, along with Volkswagen, Fiat-Chrysler, Honda, Ford
and Toyota, objected to the proposal by the Official Committee of
Unsecured Creditors of Takata to pay a $3.5 million restructuring
fee to Moelis & Co. LLC as part of its retention as the
Committee's investment banker.
The six automakers, Law360 relates, jointly argued against
pre-approval of the Moelis fee provision sought by the Committee.
According to the report, the automakers ask Judge Brendan L.
Shannon to require linkage for any restructuring payout to Moelis
actions.
Nathan Hale of Law360 shares that Toyota Motor Corp. urged a
Florida federal judge to deny a request from three car owners to
be named as class plaintiffs and to form a new subclass in
multidistrict litigation over the Debtor's dangerously defective
air bags. Toyota and its affiliates told the court that the
proposed intervenors, Ryan and Tara Majors and David Ginden, fail
to establish that intervention is necessary and said that
approving their request at this point would prejudice the parties,
the report states.
Judge Brendan L. Shannon's decision to freeze much of the
litigation surrounding the Debtor's defective air-bag inflators
takes automakers off the hook for liability for 90 days, but
experts say a move that absolves the carmakers permanently could
be a real possibility if certain chips fall into place, Matt
Chiappardi of Law360 reports. The decision provides a short
"breathing spell" so that the Debtor is able to focus its
attention on a global restructuring, the report says.
The Debtor and its unsecured creditors sounded off over a move by
product liability lawyers group the Attorneys Information Exchange
Group to install one of its own as the representative for future
personal injury claimants in the Court, with the air bag maker
citing conflicts of interest and creditors citing conflicts over
cash, Law360 relates. The report shares that both groups objected
to the Attorneys Information Exchange Group's call to appoint one
of the attorney organization's founding members, Larry Coben, to
future claims duties during and after the Debtor's Chapter 11.
Citing consumers, Christopher Crosby of Law360 states that Nissan
settled allegations in multidistrict litigation over defective
Takata Corp. air bags, agreeing to a $97.7 million payout. The
report says that under the preliminary settlement, consumers will
receive $87 million in a settlement fund and will be allowed to
apply for reimbursement for everything from child care payments
and towing.
Matt Chiappardi of Law360 recalls that Judge Shanonn gave the
Debtor's Japanese parent temporary protection from collection
efforts and lawsuits in the U.S., with a larger fight over whether
that shield should become permanent set for September. The report
states that Judge Shannon granted the provisional relief requested
by Chapter 15 debtors Takata Corp. and affiliates Takata Kyushu
Corp. and Takata Service Corp. According to Law360, the Debtor's
corporate parent in Japan, already under a form of bankruptcy
protection in its home country, had sought Chapter 15 recognition.
Law360 reports that a fleet of objections rolled into the Debtor's
Chapter 11, with attorneys for unsecured creditors, tort
claimants, multidistrict litigation parties and the Office of the
U.S. Trustee contesting proposals to manage claims and limit car
company liability.
Battle lines also sharpened over costs and terms for the tens of
millions of notifications that will be required in the case, and
over competing nominees for the attorney who will preside over
claims filed by those injured after the Debtor's bankruptcy start
date, Law360 relates.
About Takata Corp
Japan-based Takata Corporation (TYO:7312) --
http://www.takata.com/en/-- develops, manufactures and sells
safety products for automobiles. The Company offers seatbelts,
airbags, steering wheels, child seats and trim parts.
Headquartered in Tokyo, Japan, Takata operates 56 plants in 20
countries with approximately 46,000 global employees worldwide.
The Company has subsidiaries located in Japan, the United States,
Brazil, Germany, Thailand, Philippines, Romania, Singapore, Korea,
China and other countries.
Takata Corp. filed for bankruptcy protection in Tokyo and the
U.S., amid recall costs and lawsuits over its defective airbags.
Takata and its Japanese subsidiaries commenced proceedings under
the Civil Rehabilitation Act in Japan in the Tokyo District Court
on June 25, 2017.
Takata's main U.S. subsidiary TK Holdings Inc. and 11 of its U.S.
and Mexican affiliates each filed voluntary petitions under
Chapter 11 of the U.S. Bankruptcy Code (Bankr. D. Del. Lead Case
No. 17-11375) on June 25, 2017.
Together with the bankruptcy filings, Takata announced it has
reached a deal to sell all its global assets and operations to Key
Safety Systems (KSS) for US$1.588 billion.
Nagashima Ohno & Tsunematsu is Takata's counsel in the Japanese
proceedings. Weil, Gotshal & Manges LLP and Richards, Layton &
Finger, P.A., are serving as counsel in the U.S. cases.
PricewaterhouseCoopers is serving as financial advisor, and Lazard
is serving as investment banker to Takata. Ernst & Young LLP is
tax advisor. Prime Clerk is the claims and noticing agent.
Skadden, Arps, Slate, Meagher & Flom LLP is serving as legal
counsel, KPMG is serving as financial advisor, Jefferies LLC is
acting as lead financial advisor. UBS Investment Bank also
provides financial advice to KSS.
On June 28, 2017, TK Holdings, as the foreign representative of
the Chapter 11 Debtors, obtained an order of the Ontario Superior
Court of Justice (Commercial List) granting, among other things, a
stay of proceedings against the Chapter 11 Debtors pursuant to
Part IV of the Companies' Creditors Arrangement Act. The Canadian
Court appointed FTI Consulting Canada Inc. as information officer.
TK Holdings, as the foreign representative, is represented by
McCarthy Tetrault LLP.
The U.S. Trustee has appointed an Official Committee of Unsecured
Trade Creditors and a separate Official Committee of Tort
Claimants.
The Official Committee of Unsecured Creditors has selected
Christopher M. Samis, Esq., L. Katherine Good, Esq., and Kevin F.
Shaw, Esq., at Whiteford, Taylor & Preston LLC, in Wilmington,
Delaware; Dennis F. Dunne, Esq., Abhilash M. Raval, Esq., and
Tyson Lomazow, Esq., at Milbank Tweed Hadley & McCloy LLP, in New
York; and Andrew M. Leblanc, Esq., at Milbank, Tweed, Hadley &
McCloy LLP, in Washington, D.C., as its bankruptcy counsel.
Chapter 15 Cases
Takata Corporation ("TKJP") and affiliates Takata Kyushu
Corporation and Takata Services Corporation commenced Chapter 15
cases (Bankr. D. Del. Case Nos. 17-11713 to 17-11715) on Aug. 9,
2017, to seek U.S. recognition of the civil rehabilitation
proceedings in Japan. The Hon. Brendan Linehan Shannon oversees
the Chapter 15 cases. Young, Conaway, Stargatt & Taylor, LLP,
serves as Takata's counsel in the Chapter 15 cases.
===================================
D O M I N I C A N R E P U B L I C
===================================
DOMINICAN REP: Economy at 1H Up 4%; Inflation 1.02%; Jobless 5.4%
-----------------------------------------------------------------
Dominican Today reports that Dominican Republic Central Banker
Hector Valdez Albizu said the economy grew 4% in the first half,
with inflation of 1.02%, while annualized inflation stood at
2.55%.
The official said the jobless rate stood at 5.4% from April to
June, or two percentage points lower compared to the same period
of 2016, according to Dominican Today.
In a press conference, Valdez said preliminary figures show that
economic activities performed positively at the end of the first
half, especially real estate (3.7%), mining (3.7%), retail (3.1%)
and education (2.6%), the report notes.
As reported in Troubled Company Reporter-Latin America on July 24,
2017, Moody's Investors Service has upgraded the Dominican
Republic's long term issuer and debt ratings to Ba3 from B1 and
changed the outlook to stable from positive, based on the
following key drivers:
(1) The Dominican Republic's continued robust growth outlook
compared to rating peers, coupled with a reduction in
external risks as current account deficits have declined and
international reserves have increased.
(2) The reduction in fiscal deficits over the last four years and
Moody's expectation that fiscal deficits will remain shy of
3% of GDP, supported by fiscal restraint and reduced
transfers to the electricity sector.
DOMINICAN REP: Only Minimum Wage Hike Can Halt Economic Slowdown
----------------------------------------------------------------
Dominican Today reports that the Santo Domingo Institute of
Technology (INTEC) School of Economics urged the Government to
submit a bill which raises the minimum wage, to recover the
economy in the short term, noting that the slowdown has affected
GDP growth, which fell from 5.3% in the first quarter to 2.7% in
2Q.
In the second Analysis of the Dominican Economy (IAED), Intec's
Economy and Business Faculty stressed the need to recover sales so
that the business sector can regain confidence for new
investments, according to Dominican Today. "It is necessary to
stimulate aggregate demand by increasing the purchasing power of
salaried workers and informal employment," the document said, the
report notes.
"Low interest rates alone don't guarantee the exit from the growth
slowdown or the stagnation of revenue. If the product grows
substantially, but employment doesn't grow as much, this means
that productivity per worker is increasing and should have
compensation in terms of wages, that however doesn't occur in the
Dominican economy," the economists said in the document, the
report relays.
The report was presented by Economy and Business Faculty dean
Franklin Vasquez, and Economics Career coordinator, Rafael
Espinal, during a press conference at INTEC, the report adds.
As reported in Troubled Company Reporter-Latin America on July 24,
2017, Moody's Investors Service has upgraded the Dominican
Republic's long term issuer and debt ratings to Ba3 from B1 and
changed the outlook to stable from positive, based on the
following key drivers:
(1) The Dominican Republic's continued robust growth outlook
compared to rating peers, coupled with a reduction in
external risks as current account deficits have declined and
international reserves have increased.
(2) The reduction in fiscal deficits over the last four years and
Moody's expectation that fiscal deficits will remain shy of
3% of GDP, supported by fiscal restraint and reduced
transfers to the electricity sector.
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M E X I C O
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EMPRESAS ICA: Moody's Lowers CFR and Sr. Unsec. Notes Rating to C
-----------------------------------------------------------------
Moody's Investors Service downgraded Empresas ICA, S.A.B. de
C.V.'s (ICA) Corporate Family Rating and senior unsecured ratings
on its rated guaranteed global notes to C from Caa3 as a result of
ICA's filing of a judicial restructuring request.
Issuer: Empresas ICA, S.A.B. de C.V.
Downgrades:
-- Corporate Family Rating, Downgraded to C from Caa3
-- US$700M 8.875% Gtd. Global Notes, Downgraded to C from Caa3
-- US$500M 8.900% Gtd. Global Notes, Downgraded to C from Caa3
RATINGS RATIONALE
Following the aforementioned rating actions, Moody's will withdraw
all ratings and the rating outlook of ICA consistent with Moody's
practice for companies operating under the purview of the
bankruptcy courts wherein information flow typically becomes very
limited (refer to Moody's ratings withdrawal policy available on
its website, www.moodys.com).
The rating downgrade follows the company's announcement on
Aug. 25, 2017 that it filed a judicial restructuring request with
a pre-packaged restructuring plan approved by the majority of its
debt holders under the Mexican law of Concursos Mercantiles.
ICA's C rating reflects that the recovery rate on the senior
unsecured debt is expected to be less than 35% (for more
information see Credit Ratings for Defaulted Debt in Moody's
Rating Symbols and Definitions).
In the restructuring plan documents, ICA recognizes MXN64 billion
claims, including MXN 28.4 billion related with global unsecured
notes denominated in USD. Other relevant claims include MXN7.8
billion guaranteed debt, both treated as unsecured claims and
MXN19.8 billion intercompany loans treated as subordinated debt.
Additionally, ICA secured capital required to execute new
construction contracts with a convertible loan of USD215 million
(USD108 million disbursed) from Fintech Europe.
The pre-packaged restructure plan considers that ICA's unsecured
creditors capitalize their claims into 99.99% of ICA Tenedora, and
pro forma for the conversion of the Fintech's loan, the most
likely ownership will be 40% at Fintech, 39.99% at current
bondholders, 11.3% at other common creditors, and 6% will be
related to an incentive plan for senior management.
The principal methodology used in this rating was the Construction
Industry published in March 2017.
Headquartered in Mexico City, ICA is the largest infrastructure
company in Mexico. The company offers construction services to
both public and private-sector clients and operates.
ICA: Files Pre-Packaged Bankruptcy Plan
---------------------------------------
Michael O'Boyle at Reuters reports that Mexican construction
company ICA said it and its subsidiaries had filed a pre-packaged
bankruptcy plan that had been subscribed to by the majority of its
creditors.
ICA, which has been struggling under a high dollar-denominated
debt load, said the plan had been filed in accordance with the
statutes of Mexican bankruptcy law, according to Reuters.
"The restructuring process seeks to preserve the operations and
business in progress of the entities that make up the ICA Group,"
the company said in a statement to the Mexican stock exchange, the
report notes.
======================
P U E R T O R I C O
======================
BOBALU INC: Case Summary & 12 Unsecured Creditors
-------------------------------------------------
Debtor: Bobalu Inc.
Urb. Villas Del Sol
203 Calle Marbella
Carolina, PR 00985-5101
Type of Business: Bobalu Inc. is a small business debtor as
defined in 11 U.S.C. Section 101(51D). It
previously sought bankruptcy protection on
May 6, 2016 (Bankr. D.P.R. Case No. 16-
03662).
Chapter 11 Petition Date: August 29, 2017
Case No.: 17-06083
Court: United States Bankruptcy Court
District of Puerto Rico (Old San Juan)
Judge: Hon. Mildred Caban Flores
Debtor's Counsel: Enrique M Almeida Bernal, Esq.
Zelma Davila, Esq.
ALMEIDA & DAVILA, PSC
PO Box 191757
San Juan, PR 00919-1757
Tel: (787) 722-2500
Fax: (787)777-1376
E-mail: info@almeidadavila.com
Total Assets: $45,275
Total Liabilities: $1.37 million
The petition was signed by Lourdes Milagros Santiago Torres,
president.
The Debtor's list of 12 unsecured creditors is available for free
at http://bankrupt.com/misc/prb17-06083.pdf
ONCOLOGY INSTITUTE: Unsecureds to Get $13,124 Over 48 Months
------------------------------------------------------------
Oncology Institute of Puerto Rico P.S.C. filed with the U.S.
Bankruptcy Court in Puerto Rico a first amended disclosure
statement dated Aug. 16, 2017, referring to the Debtor's plan of
reorganization dated Aug. 16, 2017.
Class 1 General Unsecured Claims are impaired by the Plan. The
Debtor will make 48 monthly payments of $273.42 each until year
2021. The total payout amount is $13,124. Payments and
distributions under the Plan will be funded by the continued
operation of the business of the Debtor.
A full-text copy of the First Amended Disclosure Statement is
available at:
http://bankrupt.com/misc/prb17-00212-75.pdf
As reported by the Troubled Company Reporter on July 28, 2017, the
Debtor filed with the Court a small business disclosure statement
dated July 17, 2017, referring to the Debtor's plan of
reorganization, which proposed that Class 1 General Unsecured
Class receive 48 monthly payments of $286.44 each until year
2021. Total payout amount would be $13,749.
About Oncology Institute of Puerto Rico
Oncology Institute of Puerto Rico, P.S.C., a health care business.
It is a corporation organized and registered in Puerto Rico on
Jan. 7, 2015. The Debtor provides health services, specialized on
hematology and oncology, through Dr. Sylvia Garcia Ortiz, MD, who
is the Debtor's president and sole shareholder. The health
services are provided in Metro Medical Center in Bayamon, Puerto
Rico.
The Debtor sought protection under Chapter 11 of the Bankruptcy
Code (Bankr. D. P.R. Case No. 17-00212) on Jan. 18, 2017. Nilda
Gonzalez-Cordero, Esq., serves as the Debtor's bankruptcy counsel.
At the time of the filing, the Debtor estimated assets and
liabilities of less than $500,000.
PUERTO RICO: Panel Appeals Ruling Barring it From Insurer Suit
--------------------------------------------------------------
Ryan Boysen, writing for Bankruptcy Law360, reports that the
committee of unsecured creditors of Puerto Rico has criticized
U.S. District Judge Laura T. Swain's decision that prevents it
from appearing in a bond insurer lawsuit over the island's fiscal
plan.
According to Law360, the Committee told the First Circuit on
appeal that Judge Swain erred by boxing them out of the crucial
adversary proceeding.
Judge Swain confused the meaning of Bankruptcy Code Section
1109(b), which gives official committees the right to "appear",
the Committee said in its appellate brief.
Alex Wolf of Law360 shares that the U.S. government was asked if
it would like to respond to a Wall Street investor's court effort
to unravel Puerto Rico's insolvency proceedings, in which the
creditor hedge fund argues that the members of the federal board
representing the commonwealth were unconstitutionally appointed.
The report says that in an order issued by the judge overseeing
Puerto Rico's restructuring cases, U.S. Attorney General Jeff
Sessions was asked to weigh in on the legal briefing.
Bradley Wendt of Law360 relates that Puerto Rico has embarked on
the first phase of restructuring over $74 billion of debt.
According to the report, the Puerto Rico Oversight, Management,
and Economic Stability Act (PROMESA) governs the U.S.'s largest
municipal restructuring. The report recalls that the U.S.
Congress enacted PROMESA in 2016, providing Puerto Rico broad in-
court restructuring methods modeled on Chapter 9 of the U.S.
Bankruptcy Code. PROMESA, the report states, empowers a seven-
member board (oversight board) with ultimate discretion and final
authority over Puerto Rico's fiscal plans and budgets.
Law360 shares that the Financial Oversight and Management Board
for Puerto Rico said it planned to implement public employee
furloughs to meet an $880 million savings benchmark for the 2018
fiscal year, in what amounts to a direct affront to the
territory's governing leadership. Law360 recalls that the
Financial Oversight said it opposed a bid from a group of
creditors for a probe into the territory's debt, saying that it
was the party best able to investigate the debt and its
"relationship to the fiscal crisis."
About Puerto Rico
Puerto Rico is a self-governing commonwealth in association with
the United States that's facing a massive bond debt of $70
billion, a 68% debt-to-GDP ratio and negative economic growth in
nine of the last 10 years.
The Commonwealth of Puerto Rico has sought bankruptcy protection,
aiming to restructure its massive $74 billion debt-load and $49
billion in pension obligations.
The debt restructuring petition was filed by Puerto Rico's
financial oversight board in U.S. District Court in Puerto Rico
(Case No. 17-01578) on May 3, 2017, and was made under Title III
of 2016's U.S. Congressional rescue law known as the Puerto Rico
Oversight, Management, and Economic Stability Act ("PROMESA").
The Financial Oversight and Management Board later commenced Title
III cases for the Puerto Rico Sales Tax Financing Corporation
(COFINA) on May 5, 2017, and the Employees Retirement System (ERS)
and the Puerto Rico Highways and Transportation Authority (HTA) on
May 21, 2017. On July 2, 2017, a Title III case was commenced for
the Puerto Rico Electric Power Authority ("PREPA").
U.S. Chief Justice John Roberts has appointed U.S. District Judge
Laura Taylor Swain to oversee the Title III cases. The Honorable
Judith Dein, a United States Magistrate Judge for the District of
Massachusetts, has been designated to preside over matters that
may be referred to her by Judge Swain, including discovery
disputes, and management of other pretrial proceedings.
Joint administration of the Title III cases, under Lead Case No.
17-3283, was granted on June 29, 2017.
The Oversight Board has hired as advisors, Proskauer Rose LLP and
O'Neill & Borges LLC as legal counsel, McKinsey & Co. as strategic
consultant, Citigroup Global Markets as municipal investment
banker, and Ernst & Young, as financial advisor.
Martin J. Bienenstock, Esq., Scott K. Rutsky, Esq., and Philip M.
Abelson, Esq., of Proskauer Rose; and Hermann D. Bauer, Esq., at
O'Neill & Borges are on-board as attorneys.
McKinsey & Co. is the Board's strategic consultant, Ernst & Young
is the Board's financial advisor, and Citigroup Global Markets
Inc. is the Board's municipal investment banker.
Prime Clerk LLC is the claims and noticing agent. Prime Clerk
maintains a case web site at:
https://cases.primeclerk.com/puertorico
Epiq Bankruptcy Solutions LLC is the service agent for ERS, HTA,
and PREPA.
O'Melveny & Myers LLP is counsel to the Commonwealth's Puerto Rico
Fiscal Agency and Financial Advisory Authority (AAFAF), the agency
responsible for negotiations with bondholders.
The Oversight Board named Professor Nancy B. Rapoport as fee
examiner and to chair a committee to review professionals' fees.
Bondholders' Attorneys
Toro, Colon, Mullet, Rivera & Sifre, P.S.C., and Kramer Levin
Naftalis & Frankel LLP serve as counsel to the Mutual Fund Group,
comprised of mutual funds managed by Oppenheimer Funds, Inc.,
Franklin Advisers, Inc., and the First Puerto Rico Family of
Funds, which collectively hold over $3.5 billion in COFINA Bonds
and over $2.9 billion in other bonds issued by Puerto Rico and
other instrumentalities, including over $1.8 billion of Puerto
Rico general obligation bonds ("GO Bonds").
White & Case LLP and Lopez Sanchez & Pirillo LLC represent the UBS
Family of Funds and the Puerto Rico Family of Funds, which hold
$613.3 million in COFINA bonds.
Paul, Weiss, Rifkind, Wharton & Garrison LLP, Robbins, Russell,
Englert, Orseck, Untereiner & Sauber LLP, and Jimenez, Graffam &
Lausell are co-counsel to the ad hoc group of General Obligation
Bondholders, comprised of Aurelius Capital Management, LP,
Autonomy Capital (Jersey) LP, FCO Advisors LP, Franklin Mutual
Advisers LLC, Monarch Alternative Capital LP, Senator Investment
Group LP, and Stone Lion Capital Partners L.P.
Quinn Emanuel Urquhart & Sullivan, LLP and Reichard & Escalera are
co-counsel to the ad hoc coalition of holders of senior bonds
issued by COFINA, comprised of at least 30 institutional holders,
including Canyon Capital Advisors LLC and Varde Investment
Partners, L.P.
Correa Acevedo & Abesada Law Offices, P.S.C., is counsel to Canyon
Capital Advisors, LLC, River Canyon Fund Management, LLC, Davidson
Kempner Capital Management LP, OZ Management, LP, and OZ
Management II LP (the QTCB Noteholder Group).
Committees
The U.S. Trustee formed a nine-member Official Committee of
Retirees and a seven-member Official Committee of Unsecured
Creditors of the Commonwealth. The Retiree Committee tapped
Jenner & Block LLP and Bennazar, Garcia & Milian, C.S.P., as its
attorneys. The Creditors Committee tapped Paul Hastings LLP and
O'Neill & Gilmore LLC as counsel.
=============
U R U G U A Y
=============
BANCO PATAGONIA: Moody's Extends Ba3 Rating Review for Downgrade
----------------------------------------------------------------
Moody's Investors Service continues its review for downgrade of
the Ba3 long-term global local and foreign currency deposit
ratings assigned to Banco Patagonia (Uruguay) S.A. I.F.E.
(Patagonia Uruguay). The Baa3.uy long-term national scale local
and foreign currency deposit ratings remain under review down as
well, as do the bank's adjusted baseline credit assessment (BCA)
of ba3 and long-term counterparty risk assessment (CRA) of
Ba2(cr). The short-term global local and foreign currency deposit
ratings of Not Prime, the short-term CRA of Not Prime(cr), and the
standalone BCA of b1 are not on review.
The rating review was initiated on August 23, 2016 in conjunction
with a review of the bank's parent, Banco Patagonia S.A.'s
(Patagonia Argentina), following the announcement by Patagonia
Argentina's controlling shareholder Banco do Brasil S.A. (BB, LC
deposit Ba2 negative, ba2) that BB together with the other
shareholders was considering a public offer of its equity
participation.
RATINGS RATIONALE
The continuation of the rating review process will consider the
ongoing negotiations between the shareholders of Patagonia
Argentina about the potential sale of their stakes. Moody's
expects to conclude the review on Patagonia Uruguay's ratings once
there is greater visibility about the potential for changes to the
ownership structure and the extent of any new shareholders'
willingness and ability to provide support to the bank, if
necessary. Currently, Patagonia Uruguay's Ba3 rating incorporates
one notch of uplift from the bank's standalone baseline credit
assessment of b1, reflecting a high likelihood of affiliate
support from BB, the ultimate controlling shareholder, in an event
of financial stress. BB holds a 58.97% stake in Patagonia, which
is the sole shareholder of Patagonia Uruguay.
The announcement made in August that BB may sell its stake at
Patagonia Argentina appears to have been aligned to the Brazilian
bank's current strategy of optimizing its capital allocation in
light of the current weak macroeconomic environment in Brazil.
Although the Uruguayan bank and its Argentine parent share close
credit linkages as indicated by the Uruguayan bank's reliance on
deposits from Argentinean residents, most of whom are also
customers of Patagonia Argentina, the direct relationship between
Patagonia Uruguay and BB is very limited. The Uruguayan subsidiary
primarily focuses on reinvesting deposits from Argentine clients
in highly liquid investments, without undertaking any lending
operations.
WHAT COULD MAKE THE RATING GO DOWN
A reduction of Moody's assessment of the likelihood that Patagonia
Uruguay would receive affiliate support from BB would put downward
pressure on Patagonia's rating.
If BB sells a portion of its stake in Patagonia Argentina such
that there is no new controlling shareholder, or the new
controlling shareholder is either unrated or is not rated as
highly as BB, Patagonia Uruguay's ratings could be lowered by one
notch. A revision of Moody's assessment of BB's willingness to
provide support prior to an official announcement of the sale of
its stake or the identification of a buyer could also put downward
pressure on the rating, as would a downgrade of BB's BCA. However,
Patagonia Uruguay's ratings could be confirmed at their current
levels if BB announces the sale of its stake in Patagonia
Argentina to another entity rated at least as highly as BB that
exhibits a high willingness to support the Uruguayan subsidiary,
or if the sale is called off and BB reasserts its commitment to
the bank.
=================
V E N E Z U E L A
=================
VENEZUELA: Fitch Lowers Long-Term IDR to CC on Probable Default
---------------------------------------------------------------
Fitch Ratings has taken the following rating actions on
Venezuela's sovereign ratings:
-- Long-term foreign and local currency IDRs downgraded to 'CC'
from 'CCC';
-- Senior unsecured debt downgraded to 'CC' from 'CCC';
-- Short-term foreign and local currency IDRs affirmed at 'C';
-- Country ceiling downgraded to 'CC' from 'CCC'.
KEY RATING DRIVERS
Venezuela's downgrade reflect Fitch's view that a default is
probable given the further reduction in financing options for the
Government of Venezuela following the imposition of additional
sanctions on Venezuela by the U.S. government on Aug. 25, 2017.
The sanctions prohibit U.S. persons or entities based in the U.S.
from a series of financial transactions with the government and
PDVSA, including any dealings in new debt as well as dealings in
certain existing bonds owned by the Venezuelan public sector and
dividend payments to the government of Venezuela.
Venezuela's external liquidity was weak before the sanctions with
a liquidity ratio estimated at just 33% (the stock of central bank
international reserves plus the banking system's liquid foreign
assets relative to external debt with a residual maturity of less
than one year). Gross international reserves have declined further
in 2017, falling by nearly USD1.2 billion in the year through
August to USD9.8 billion. Venezuela has additional FX liquidity in
government-managed funds, but these have likely declined and
remain opaque in their administration and execution. The U.S.
sanctions will exacerbate the country's already weak external
liquidity.
The authorities' payment record through severe economic and
political stresses has demonstrated the sovereign's strong
willingness to service debt. However, the expected reduction in
the international reserve position in the context of sanctions
will severely test the government's capacity and willingness to
continue with timely debt service. The sovereign faces nearly
USD3.7 billion in external amortizations in 2018 (USD2 billion in
bond amortizations). External financing needs for 2018 are
expected to remain high in the context of a current account
deficit and amortization needs.
The political environment in Venezuela and relations with a number
of countries deteriorated sharply after the government called a
Constituent Assembly to rewrite the constitution. The elections
for the Assembly were held on July 30. The outcome of this process
combined with the U.S. sanctions will likely deepen the political
and policy uncertainties, aggravate the economic crisis, heighten
political polarization and increase social unrest.
Venezuela's economy is expected to contract for a fourth
consecutive year in 2017 with a 5.5% downturn after a deep
contraction of an estimated 18.6% in 2016. Venezuela's economic
recovery is likely to be further constrained by the prospect of
continued tight FX financing/liquidity conditions aggravated by
the sanctions, declines in oil production and political
uncertainty. Inflation rose to an estimated average of 360% in
2016 (Caracas Inflation Index), and Fitch expects it to end 2017
at over 600% due to FX rationing, distortions in the FX market,
monetary financing of the fiscal deficit and price adjustments to
counter scarcity. Official data for inflation, the national
accounts, and balance of payments has not been published since
end-2015.
SOVEREIGN RATING MODEL (SRM) and QUALITATIVE OVERLAY (QO)
As per its published sovereign criteria, for ratings of 'CCC' and
below, Fitch has not utilised the SRM and QO to explain the
ratings, which are instead guided by rating definitions.
Fitch's SRM is the agency's proprietary multiple regression rating
model that employs 18 variables based on three-year centred
averages, including one year of forecasts, to produce a score
equivalent to a LT FC IDR. Fitch's QO is a forward-looking
qualitative framework designed to allow for adjustment to the SRM
output to assign the final rating, reflecting factors within Fitch
criterias that are not fully quantifiable and/or not fully
reflected in the SRM.
RATING SENSITIVITIES
The main risk factors that, individually or collectively, could
trigger a rating action are:
Negative:
-- A debt restructuring exercise or payment default by the
sovereign.
Positive:
-- Easing of economic sanctions that improves prospects for FX
flows to the economy
-- A significant recovery in oil prices that eases financing
constraints for the economy or greater than expected bilateral
funding to the government and/or PDVSA;
-- A reorientation of economic policies that reduces external and
macroeconomic vulnerabilities;
KEY ASSUMPTIONS
-- Fitch expects Brent oil prices to average USD52.5/b in 2017,
USD55/b in 2018 and USD60/b in 2019.
***********
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
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equity securities trade in public market are determined by more
than a balance sheet solvency test.
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***********
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
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USA, Marites O. Claro, Joy A. Agravante, Rousel Elaine T.
Fernandez, Julie Anne L. Toledo, Ivy B. Magdadaro, and Peter A.
Chapman, Editors.
Copyright 2017. All rights reserved. ISSN 1529-2746.
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