/raid1/www/Hosts/bankrupt/TCRLA

/raid1/www/Hosts/bankrupt/TCRLA_Public/170915.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 15, 2017, Vol. 18, No. 184 Headlines A R G E N T I N A EMPRESA DISTRIBUIDORA: S&P Upgrades CCR to 'B-', Outlook Stable METROGAS SA: S&P Upgrades Global Scale CCR to 'B-', Outlook Stable B R A Z I L ANDRADE GUTIERREZ: Fitch Affirms B- Long-Term IDR; Outlook Neg. COSAN LIMITED: Fitch Rates New US$500MM Global Notes 'BB' (EXP) KLABIN FINANCE: S&P Rates New $500MM Senior Unsecured Notes 'BB+' RIO DE JANEIRO: Fitch Affirms C Long-Term Issuer Default Ratings D O M I N I C A N R E P U B L I C DOMINICAN REPUBLIC: Failed Electricity System Hobbles Development DOMINICAN REPUBLIC: Pension Fund 'Running a Huge Risk' J A M A I C A JAMAICA: World Bank Executives to Visit Country This Week M E X I C O MEXICO: Hurricane Max Nears Country's Pacific Coast P U E R T O R I C O PILGRIM'S PRIDE: Moody's Affirms Ba3 CFR; Outlook Stable PUERTO RICAN PARADE: Needs Until Sept. 29 to File Chapter 11 Plan V I R G I N I S L A N D S VIRGIN ISLANDS: CARICOM Stunned After 1st-Hand Look at Irma Damage X X X X X X X X X PRINCESS JULIANA: Moody's Cuts USD142.6MM Sr. Notes Rating to Ba1 - - - - - ================= A R G E N T I N A ================= EMPRESA DISTRIBUIDORA: S&P Upgrades CCR to 'B-', Outlook Stable --------------------------------------------------------------- S&P Global Ratings raised its corporate credit and issue-level ratings on Empresa Distribuidora y Comercializadora Norte S.A. (Edenor) to 'B-' from 'CCC+'. The outlook is stable. The rating action follows the improvement in Edenor's capital structure since the announcement of the Integral Tariff Review (ITR) on Jan. 31, 2017. The ITR has established a rates mechanism and an investment plan for the electricity sector for the next five years. The new regulatory framework eliminates Edenor's dependence on discretionary disbursements from the government and improves its cash flow predictability in the short to medium term, as well as its liquidity and capital structure. METROGAS SA: S&P Upgrades Global Scale CCR to 'B-', Outlook Stable ------------------------------------------------------------------ S&P Global Ratings raised its global scale corporate credit and issue-level ratings on Metrogas S.A. (Metrogas) to 'B-' from 'CCC+'. The outlook is stable. The rating action follows the improvement in Metrogas' capital structure since the Argentinean government announced the Integral Tariff Review (ITR) in April 2017. The ITR sets a mechanism for predictable tariffs, a budget for operating expenses, and capital expenditure (capex) needs for the next five years. The new regulatory framework eliminates Metrogas' dependence on discretionary tariff adjustments and improves its cash flow predictability in the short to medium term, as well as its liquidity and capital structure. =========== B R A Z I L =========== ANDRADE GUTIERREZ: Fitch Affirms B- Long-Term IDR; Outlook Neg. --------------------------------------------------------------- Fitch Ratings has affirmed Andrade Gutierrez Engenharia's (AGE) Foreign and Local Currency Long-Term Issuer Default Ratings (IDRs) at 'B-' and its national scale long-term rating at 'BB-(bra)'. These actions affect approximately USD500 million of issued debt by Andrade Gutierrez International S.A. (AGI) due 2018, which AGE unconditionally and irrevocably guarantees. The Corporate Ratings Outlooks remain Negative. A complete list of ratings follows at the end of this press release. The Negative Outlook incorporates several issues the company faces over the next 12 months mainly related with its strong debt concentration in the short term linked with AGI's USD500 million bond due April 30, 2018. In Fitch's view, this payment relies on the company and/or Andrade Gutierrez (AG) group's ability to sell assets and/or refinance this material financial obligation. The company remains challenged to collect relevant past due receivables, stop operating cash burn, reduce indebtedness and resume its revenues and cash flow generation. Positively, AGE has demonstrated recently some capacity to add projects to its backlog and collect past due receivables, which partially mitigate concerns over its operating recovery. AGE's ratings are supported by its scale as one of the largest contractors in Latin America. The ratings also benefit from the market value of the AG group investments in Companhia Energetica de Minas Gerais (Cemig; Foreign and Local Currency IDRs 'B+'/Outlook Negative) and CCR S.A. ('AA(bra)'/Outlook Stable) are also positive considerations as add to financial flexibility, and are estimated at around BRL6.4 billion from which an estimated of BRL3 billion unencumbered. KEY RATING DRIVERS Relevant Short-Term Maturity: Fitch's base case scenario considers that AGE's capacity to fully amortize the USD500 million bonds maturing in April 2018 depends on its parent support or its ability to issue new debt. The company strategy also pursues the sale of assets such as the stake in the Sao Lourenco project and minority stake in road concessions abroad to mitigate its current liquidity pressure. However, timing and conditions of potential sale are yet uncertain. At the same time, AGE faces the challenge to reduce indebtedness given its lower level of operations as noted on its total adjusted debt of BRL2.1 billion as of March 2017 and latest 12 month (LTM) EBITDA and cash flow from operations (CFFO) of only BRL42 million and negative BRL235 million, respectively. At the same time, free cash flow (FCF) was negative BRL466 million. Parent Support: The agency estimates the level of support from Andrade Gutierrez S.A. (AGSA) will be a key issue for AGE's credit profile. Historically, AGSA has injected cash in AGE when necessary. There was BRL430 million boost in 2014 and another capital increase of BRL291.5 million in the first half of 2017. Fitch observes that the strength of the AGSA's liquid assets provide a certain financial flexibility. AGSA or other intermediate holding company could raise debt using unencumbered shares of its assets as guarantee or even sell those shares in order to inject cash in AGE. Nevertheless, this is a shareholders' decision and there is limited time left before the bonds mature. Challenges to Collect Receivables: AGE remains challenged to collect past due receivables of estimated BRL500 million. The company has implemented a series of actions to monetize past-due account receivables and continue executing halted projects. AGE has obtained a USD82 million credit line for an airport in Angola from a pool of banks, which partially mitigates pressures over its working capital needs. BNDES has recently agreed to disburse USD37 million of past due receivables for a project in Ghana and will fund the rest worth USD60 million. Nevertheless, the bulk of receivables remain in Venezuela, which still represents an important part of the backlog. New Contracts are Positive: Fitch sees new contracts as accretive to AGE's credit quality after the challenges that came with the Lava-Jato scandal. Since June 2016, the company has won almost BRL4.4 billion in contracts. Most of these contracts are with private clients, which tend to have a more predictable flow of payments than public ones. The company is likely to report backlog stabilization in 2017, albeit at a lower revenue compared to historical levels. Projects have delayed the debut, which will affect 2017 results, though will add momentum to the 2018 performance. At the end of March 2017, AGE's backlog was BRL17.9 billion, from BRL18.1 billion at the end of 2016. DERIVATION SUMMARY AGE's 'B-' rating is stronger than its local peers Odebrecht Engenharia e Construcao S.A. [OEC; 'CC' / 'CC(bra)'] and Construtora Queiroz Galvao S.A. [CQG; 'C(bra)']. Whilst AGE has signed the leniency agreement and is in process of stabilizing its backlog, OEC is yet to know how much it will pay in fines in nine countries in Latin America and is likely to report net consumption of backlog over the next two years. AGE's credit profile is also stronger than CQG's, who has formally entered in a debt- restructuring process with banks. KEY ASSUMPTIONS Fitch's key assumptions within Fitch ratings case for the issuer include: -- Backlog of BRL18.2 billion in 2017 and BRL18.9 billion in 2018, from BRL18.1 billion in 2016; -- Revenues of BRL2.2 billion in 2017 and BRL3.6 billion in 2018, from BRL3.9 billion in 2016; -- EBITDA of BRL90 million in 2017 and BRL224 million in 2018, with margins of 4.0% and 6.3%, respectively. EBITDA and margins were BRL180 million and 4.6% in 2016; -- Capex of 1.5% of sales in 2017 and 2018; -- Dividends of BRL96 million in 2017 and BRL98 million in 2018, enough to cover the fines that are booked at an intermediate holding level. KEY RECOVERY RATING ASSUMPTIONS The recovery analysis assumes that AGE would be considered a going concern (GC) in bankruptcy and that the company would be reorganized rather than liquidated. Fitch has assumed a 10% administrative claim. Going-Concern Approach -- AGE's going concern EBITDA of BRL202 million is based on the average EBITDA of 2017 and 2018, plus dividends from non- consolidated assets. The agency chose the average as it understands 2017 EBITDA will be temporarily impaired by the delay in project launches, and would not reflect the company's post-reorganization EBITDA level; -- Post-organization EBITDA is already materially lower than the BRL589 million reported prior to the Lava-Jato scandal. -- An EV multiple of 5x is used to calculate a post- reorganization valuation and reflects a mid-cycle multiple for the sector. Liquidation Value Fitch excluded the liquidation value (LV) approach because Brazilian bankruptcy legislation tends to favor the maintenance of the business in order to preserve direct and indirect job positions. Moreover, in extreme cases where LV was necessary, the recovery of the assets has been proved very difficult for creditors. RATING SENSITIVITIES Future Developments That May, Individually or Collectively, Lead to Positive Rating Action -- An upgrade is unlikely in the short term. In order to stabilize the rating the company needs to address AGI's bond maturity in April 2018, as well as progress with the monetization of past due receivables and stop the cash burn. Future Developments That May, Individually or Collectively, Lead to Negative Rating Action -- Delays or worst conditions to previously address the payment of AGI's USD500 million bonds; -- Failure to sustain its backlog and improve cash flow generation. LIQUIDITY Weak Liquidity: Fitch believes AGE's liquidity will continue weak until it addresses the bond maturity. In March 31, 2017, its readily available cash of BRL260 million covered 0.7x the short- term debt of BRL371 million, being the total adjusted debt in the amount of BRL2.1 billion. At the same time, the company had BRL218 million, which Fitch considered restricted cash. Liquidity will deteriorate as of the second quarter of 2017, as AGI's USD500 million bond falls in the short term. A pro forma cash coverage ratio would fall to 0.2x. Some of the restricted cash will be released over the next 12 months as the company resume the execution of projects in Angola. In addition, the asset sale program could provide liquidity to help the company amortize the bonds. At the end of March 2017, AGE's leverage metrics were very high due to its low LTM EBITDA. Total adjusted debt/EBITDA and net adjusted debt/EBITDA were 21.7x and 19.0x, respectively. Fitch's base case scenario considers an EBITDA of BRL90 million in 2017 and BRL224 million in 2018, which may lead to a net adjusted leverage of 3.6x at the end of 2018. FULL LIST OF RATING ACTIONS Fitch has affirmed the following ratings: Andrade Gutierrez Engenharia S.A. -- Long-Term Foreign and Local Currency IDRs at 'B-'; -- National long-term rating at 'BB-(bra)'. Andrade Gutierrez International S.A. -- USD500 million senior unsecured bonds due April 2018 at 'B- /RR4'. The Rating Outlook remains Negative. COSAN LIMITED: Fitch Rates New US$500MM Global Notes 'BB' (EXP) --------------------------------------------------------------- Fitch Ratings has assigned a 'BB(EXP)' rating to Cosan Limited's (Cosan Limited) proposed senior unsecured global notes issuance of US$500 million due 2024. The company will use the proceeds to repay existing indebtedness of USD230 million and to inject up to US$270 million into its subsidiary Cosan Logistica S.A's (Cosan Logistica) capital. Fitch's current Long-Term Foreign and Local Currency Issuer Default Ratings (IDR) for Cosan Limited are 'BB' with a Stable Rating Outlook. KEY RATING DRIVERS Cosan Limited's ratings reflect its low leverage and robust liquidity position on a standalone basis, as well as the expected comfortable debt service coverage through the dividends coming from its main subsidiary, Cosan S.A Industria e Comercio (Cosan; Foreign and Local Currency IDRs BB+ and Long-Term National Scale Rating AA+(bra)). Cosan and its subsidiaries accounted for around 90% of Cosan Limited's consolidated pro forma revenues, 75% of pro forma EBITDA and 100% of dividends received in the latest-12- months (LTM) ended June 30 2017. The one-notch difference compared to Cosan's ratings continues to incorporate the holding company nature and inherent structural subordination of Cosan Limited's debt to dividends received from Cosan. Cosan Limited's credit profile is also supported by a diversified asset portfolio. The company's investments include operations in energy generation from biomass, distribution of natural gas, fuel and lubricants. These businesses enjoy predictable cash flow that partly softens the inherent volatilities of its sugar and ethanol business. The company also operates in the logistic industry, which is not expected to distribute dividends over the next four years though it presents strong growth potential. Robust Asset Portfolio Cosan Limited is a non-operating holding company that carries a robust and diversified asset portfolio that reduces sector concentration risks. The company holds a 62% interest in Cosan, the holding company that is engaged in sugar, ethanol and energy production, and distribution of natural gas, lubricants and fuel. Its three main assets and source of dividends are companies with robust credit quality. Raizen Combustiveis S.A. (Raizen Combustiveis; Foreign and Local Currency IDRs BBB, National Scale Rating AAA(bra)) is the second largest fuel distributor in Brazil, with predictable operational cash generation. Despite its more volatile results, Raizen Energia S.A. (Raizen Energia; rated the same as Raizen Combustiveis) is the largest sugar and ethanol company in Brazil and as such it benefits from business scale, which somewhat mitigates the frequent challenging scenario for the sector. Companhia de Gas de Sao Paulo (Comgas; Foreign Currency IDR BB+, Local Currency IDR BBB-, National Scale Rating AAA(bra)) is the largest natural gas distributor in Brazil, with high growth potential and robust financial profile. The other asset that Cosan invests in is Cosan Lubrificantes S.A., which adds to business diversification. All of Cosan's businesses managed to report strong credit profiles in LTM ended June 2017, despite the challenging macroeconomic scenario in Brazil. During the LTM ended June 2017, Comgas's normalized EBITDA was BRL1.6 billion, which positively compares with BRL1.4 billion reported in 2015. In the same period, Raizen Combustiveis and Raizen Energia reported consolidated revenues and EBITDAR of BRL80 billion and BRL6.3 billion, respectively, 7% and 9% higher than previous year. Cosan Limited also holds 72% interest in Cosan Logistica, which owns 28% of Rumo (Foreign and Local Currency IDRs BB-, National Scale Rating A(bra)). While still highly levered, Fitch expects Rumo to embark on a fast deleverage trend following the company's ongoing gains of scale, improving operating profitability and the planned capital injection. Fitch does not expect Rumo to pay dividends over the next four years due to the massive capex necessary to improve operations. The presence of Rumo contributes to broader business diversification and helps the group to further lessen the cash flow volatility derived from the sugar and ethanol business. Still Low Leverage at Holding Level Fitch forecasts a pro forma leverage ratio of net debt-to- dividends received at 2x for Cosan Limited assuming the bonds issuance will amount to USD500 million. As of June 30 2017, this ratio was 0.6x as per Fitch's calculations, in line with 0.8x as of Dec. 31, 2016. The one-notch difference from Cosan's incorporates the structural subordination of Cosan Limited's debt. Its main dividends provider, Cosan, receives dividends from Raizen Energia, Raizen Combustiveis and Comgas and must serve or manage its own debt before paying dividends to its shareholders. On a consolidated basis, Cosan Limited's leverage is also adequate for the rating category even with the consolidation of Rumo. The net adjusted debt-to-EBITDAR was at 2.8x when dividends received from non-consolidated subsidiaries are factored into EBITDAR figures. Fitch expects the logistics division to slow down the deleveraging process of the group, and for Cosan Limited's consolidated net debt-to-EBITDAR plus dividends received to stay at current levels in 2017 and 2018. DERIVATION SUMMARY Cosan Limited's business portfolio compares similarly with Votorantim S.A's (VSA, IDR BBB-/Negative) in terms of industry diversification, though VSA's subsidiaries hold a clearer competitive global position due to strong market positions and cost structures that are among the lowest in their respective industries. VSA's portfolio of assets includes subsidiaries operating in cement, zinc & by-products, orange juice and pulp (29.4% stake in Fibria S.A.). VSA's cement business remains a drag on credit quality for the Group due to a weak Brazilian economy, but its liquidity is stronger than Cosan Limited's and a key ratings consideration. VSA's cash on hand of BRL10.2 billion reported for Dec. 31, 2016 was sufficient to support debt amortization up to mid-2021. KEY ASSUMPTIONS -- Increased flow of dividends coming from Comgas, Raizen Combustiveis and Raizen Energia to Cosan, over the next two years, reaching around BRL1.5 billion per year. -- Cosan Logistica not to pay meaningful dividends over the next four years. -- No additional investments coming from Cosan Limited. RATING SENSITIVITIES Future developments that may, individually or collectively, lead to a negative rating action include: -- Expectation of debt service coverage ratio at Cosan Limited level below 0.5x when the debt matures in 2018, based on reduced dividends to be received and no success in the proposed Global Notes issuance; -- Cosan Limited entrance in new investments financed by debt; and -- Deterioration of the credit profile of either Cosan or Cosan Logistica. Future developments that may, individually or collectively, lead to a positive rating action include: -- Improvement of the credit profile of either Cosan or Cosan Logistica; -- Expectation of stronger than anticipated debt service coverage ratio at Cosan Limited based on more robust dividends received. LIQUIDITY Fitch expects Cosan Limited's liquidity profile to improve following the proposed issuance of USD500 million in Global Notes due 2024, as the company will use USD230 million to prepay existing indebtedness maturing in December 2018. Cosan Limited's total debt consists of only this bank debt taken on to finance the acquisition of Cosan Logistica's shares. Cosan Limited posted healthy debt service coverage ratios on a standalone basis as of June 30, 2017, with cash plus dividends received-to-short-term debt ratio at 103x. At the same date, the company reported a cash position of BRL336 million and total debt of BRL678 million, of which short-term debt was BRL9 million. Dividends received amounted to BRL598 million in the LTM ended June 30, 2017. The group's strong financial flexibility relative to its access to the debt and capital markets, in combination with dividends received from Comgas, Raizen Energia and Raizen Combustiveis, ensures strong refinancing capacity for Cosan Limited. Fitch believes Cosan Limited also has the flexibility to reduce the payouts to its shareholders if necessary. FULL LIST OF RATING ACTIONS Fitch has assigned the following rating to Cosan Limited: -- USD500 million proposed senior unsecured Global Notes due 2024 at 'BB'. Fitch currently rates Cosan Limited as follows: -- Long-Term Foreign and Local Currency IDRs 'BB'. The Rating Outlook is Stable. KLABIN FINANCE: S&P Rates New $500MM Senior Unsecured Notes 'BB+' ----------------------------------------------------------------- S&P Global Ratings assigned its 'BB+' issue-level rating to Klabin Finance S.A.'s proposed senior unsecured notes for $500 million due 2027. S&P said, "We assigned a '3' recovery rating on these notes, indicating our expectation for meaningful (65%) recovery in a hypothetical default scenario. Klabin Finance S.A. is the financing vehicle of Brazilian forest products company Klabin S.A. (BB+/Stable/--), which unconditionally and irrevocably guarantees the notes. Klabin will use the proceeds to finance and refinance eligible green projects. We expect the company to use most of the proceeds for refinancing purposes. Therefore, the proceeds won't significantly affect net leverage, given that the company continues to pay more expensive debt, and will strengthen Klabin's capital structure by extending maturities." For the latest credit rationale on Klabin, please see "Klabin S.A. 'BB+'/'brAA' Ratings Affirmed On Expected Deleveraging; Outlook Remains Stable," published on June 26, 2017. Recovery Analysis Key analytical factors -- The issue-level rating on Klabin Finance's senior unsecured notes is 'BB+'. -- The '3' recovery rating indicates that we expect a recovery of about 65% for unsecured lenders under a hypothetical default scenario. -- In S&P's default scenario, EBITDA would decline by about 35%. -- S&P has valued the company on a going-concern basis, using a 5.0x multiple applied to our projected emergence-level EBITDA, which results in an estimated gross emergence value of about R$13.8 billion. -- S&P's recovery analysis assumes that under a hypothetical default scenario, the senior unsecured notes would rank pari passu to the company's existing and future senior unsecured debt, which is also subject to statutory priorities as tax and labor obligations. Simulated default assumptions -- Simulated year of default: 2022 -- EBITDA at emergence: R$1.7 billion -- Implied enterprise value (EV) multiple: 5.0x -- Estimated gross EV at emergence: R$13.8 billion Simplified waterfall -- Net EV after 5% administrative costs: R$13.1 billion -- Priority claims: R$870 million -- Senior secured debt: R$3.2 billion -- Unsecured debt: R$13.7 billion -- Recovery expectation: 65% RATINGS LIST Klabin S.A. Corporate Credit Rating Global Scale BB+/Stable/-- Brazil National Scale brAAA/Stable/-- Ratings Assigned Klabin Finance S.A. Senior Unsecured BB+ Recovery Rating 3 (65%) RIO DE JANEIRO: Fitch Affirms C Long-Term Issuer Default Ratings ---------------------------------------------------------------- Fitch Ratings has affirmed the Brazilian state of Rio de Janeiro's Long-Term Foreign and Local Currency Issuer Default Ratings (IDRs) at 'C'. In addition, Fitch has also affirmed the national rating at 'C(bra)'. KEY RATING DRIVERS The rating affirmation indicates that the state of Rio de Janeiro (ERio) still suffers from exceptionally high levels of credit risk, despite the recent fiscal recovery agreement with the Federal Government. The state has had recurrent financial pressures that prevent the timely payment of financial obligations also with private creditors. ERio has recently signed a fiscal recovery agreement with the Federal Government. Upon the signature, the state must adopt several corrective measures so as to receive authorization to raise BRL3.5 billion worth of credit operations with private creditors fully guaranteed by the Federal Government. Credit proceeds are likely to be channelled to pay delayed salaries. Additionally, ERio will be able to postpone debt service related to the prevalent federal portion until 2020. Fitch recognizes that to date no financial obligations have experienced a default, because the National Treasury of Brazil has covered ERio's debt service during the grace period as per each individual loan contract. Following the non-payment, the Treasury is able to access the collateral agreed upon in each individual contract with ERio such as the collection of proprietary taxes, in addition to other federal transfers. As corrective fiscal measures, Erio should resume the previously proposed closing some departments (secretarias), putting government enterprises up for sale, withdrawing fiscal incentives granted to private companies, laying off public employees and increasing contributions to the pension system. According to Fitch's calculation, its operating margins are negative at 19.6% in 2016, and should remain negative until 2019, one reason why the administration had to resort to nonrecurring revenues to partially cover operating expenditures. The liquidity position of the State of Rio de Janeiro has mildly improved recently but is still incompatible with its short-term obligations. As of April 2017, gross cash positions improved to BRL5.6 billion from BRL4.4 billion in December 2016. Fitch conducted its analysis of the state solely based on public information available. As a result, Fitch has not had access to fiscal forecasts and fiscal initiatives; state's strategies to manage debt and the potential financial relief for the state upon the fiscal recovery agreement signed with the Federal Government. RATING SENSITIVITIES Guaranteed Debt: Fitch does not expect ERio to enter into default, since virtually all debt is guaranteed by the Federal Government. The small amount of unsecured debt is against Federal Institutions and could be renegotiated under more favorable conditions. Recovery in Financial Performance: Once ERio's fiscal and financial performance recovers and it is able to honor its committed financial obligations in due time with no external aid, then Fitch will revise its ratings. KEY ASSUMPTIONS The ratings are sensitive to: -- The high level of sovereign support for ERio, given that the state's most relevant creditor is the Federal Government who also guarantees all external debt and most domestic debt. Fitch has affirmed the following ratings: State of Rio de Janeiro: -- Long-Term Foreign Currency IDR at 'C'; -- Short-Term Foreign Currency IDR at 'C'; -- Long-Term Local Currency IDR at 'C'; -- Short-Term Local Currency IDR at 'C'; -- Long-Term National at 'C(bra)'; -- Short-Term National rating at 'C(bra)'. =================================== D O M I N I C A N R E P U B L I C =================================== DOMINICAN REPUBLIC: Failed Electricity System Hobbles Development ----------------------------------------------------------------- Dominican Today reports that the Dominican Republic will never be able to surmount the underdevelopment gap if it fails to achieve a sustainable and competitive electrical system. That's how Dominican Republic Industry Association (AIRD) president Campos De Moya sees the decades-long crisis, according to Dominican Today. The report notes that Mr. De Moya said he expects the Electricity Pact will be signed in the next few days and. "It's the first step towards a comprehensive solution to the problem of electric energy, which has had serious implications in the nation's social and economic life," the report quoted Mr. De Moya as saying. "A key element of the competitiveness of our national productive sector is a reliable, competitive and financially sustainable national electricity service," Mr. De Moya said, quoted by diariolibre.com, the report relays. 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 REPUBLIC: Pension Fund 'Running a Huge Risk' ------------------------------------------------------ "Pension fund running a huge risk in the Dominican Republic," former National Business Council (CONEP), president Rafael Blanco warned, noting that the danger lies in the fact that the sum is expressed only in Dominican pesos, according to Dominican Today. "Any devaluation of the peso will depress the volume of the fund. The fund must be invested in real resources and resources that maintain their value regardless of whether the currency is devalued or not," said Mr. Blanco, whose holdings include hotels, the report notes. Mr. Blanco said the Dominican pension system needs a revamp aimed at increasing quotas, increasing the retirement age and diversifying investments to increase profitability, notes the report. "Undoubtedly, without a bigger contribution the size of the pensions that we who are contributing will receive, will not have the necessary volume to cover living needs," he added. Wage Increase To increase the percentage of contributions, as proposed by the Pensions Superintendence (SIPEN), wages would need to increase, said Blanco Canto, the report notes. "We agree 100 percent that there must be a significant wage increase here. But the only way to achieve it is that we once and for all dismantle the issue of the severance pay, which is an onerous burden that is doubled with the contributions that companies make to Social Security," Mr. Blanco, as quoted by listin.com.do, said. He said if there's a 30% increase in wages, pensions would improve at the same rate, the report says. As for the retirement age, the business leader said raising the age from 60 to 65 could increase the volume of the pension amount as much as 40%, the report relays. "A 60-year-old is still a child to retire," Mr. Blanco said during the presentation of the economic development program "Honduras 2020," 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. ============= J A M A I C A ============= JAMAICA: World Bank Executives to Visit Country This Week --------------------------------------------------------- RJR News reports that eleven members of the World Bank Group Board of Executive Directors will visit Jamaica this week. The members of the delegation, who are scheduled to arrive between Sept. 14 and Saturday, Sept. 16 will discuss Jamaica's development priorities, emerging opportunities and challenges, according to RJR News. They will also examine the World Bank Group's support of the country's efforts to reduce poverty and enhance prosperity, the report notes. The World Bank officials will meet with the Prime Minister, Finance Minister as well as other members of the Cabinet; key representatives from the private sector, civil society and female entrepreneurs, the report adds. As reported in the Troubled Company Reporter-Latin America on Feb. 9, 2017, Fitch Ratings affirmed Jamaica's Long-Term Foreign and Local Currency Issuer Default Ratings (IDRs) at 'B' with a Stable Outlook. The issue ratings on Jamaica's senior unsecured Foreign and Local Currency bonds are also affirmed at 'B'. The Outlooks on the Long-Term IDRs are Stable. The Country Ceiling is affirmed at 'B' and the Short-Term Foreign Currency and Local Currency IDRs at 'B'. =========== M E X I C O =========== MEXICO: Hurricane Max Nears Country's Pacific Coast --------------------------------------------------- Anthony Harrup at The Wall Street Journal reports that Max strengthened into a hurricane as it approached Mexico's Pacific coast state of Guerrero, threatening to bring torrential rain and flooding to the area. The storm was located about 55 miles from the resort of Acapulco, with maximum sustained winds near 75 miles an hour around 8 a.m. ET, the U.S. National Hurricane Center said, according to The Wall Street Journal. The Mexican government issued a hurricane warning for the length of Guerrero state, from the resort of Zihuatanejo to Punta Maldonado, the report notes. The storm is expected to weaken after it hits land later, the hurricane center said, the report relays. The main impact of Max is expected in Guerrero state, although heavy rainfall is also expected in Michoacan, Colima and parts of Oaxaca, the Mexican Meteorological Service said, notes the report. The storm comes as Mexico continues recovery work in the southern states of Oaxaca and Chiapas, where an 8.1 magnitude earthquake struck, the report discloses. It was the strongest quake in decades, leaving more than 90 people dead and damaging hundreds of houses, schools and churches, the report relays. The states have largely indigenous populations and are among Mexico's poorest, the report notes. Mexican President Enrique Pena Nieto, in a visit to the region, said around 1.2 million people had been affected by the earthquake, which the Mexican seismological service measured at magnitude 8.2, the report relays. The government said a damage assessment is well advanced, and that reconstruction work is expected to start soon, says the report. Hours after the quake rocked southern and central Mexico, Hurricane Katia made landfall in the Gulf Coast state of Veracruz, leaving two people dead in the state capital Xalapa, the report adds. ====================== P U E R T O R I C O ====================== PILGRIM'S PRIDE: Moody's Affirms Ba3 CFR; Outlook Stable -------------------------------------------------------- Moody's Investors Service has affirmed Pilgrim's Pride Corporation's Ba3 Corporate Family Rating, Ba3-PD Probability of Default Rating, and SGL-1 Speculative Grade Liquidity Rating. This follows the company's announcement that it has acquired UK-based poultry company Moy Park for approximately $1.3 billion. Moody's rating action is subject to review of final financing arrangements. The ratings outlook is stable. In addition, to reflect anticipated changes to Pilgrim's capital structure, Moody's has upgraded the company's senior secured debt instrument ratings to Ba2 from Ba3 and its senior unsecured debt instrument ratings to B1 from B2. On September 11, 2017, Pilgrim's Pride announced that it had acquired Moy Park (B1, stable), a leading poultry and prepared foods supplier with operations in the United Kingdom and Continental Europe for $1.3 billion. Moy Park is a wholly-owned subsidiary of JBS S.A., which also controls Pilgrims with a 78.5% equity stake. The related party acquisition was funded through an $800 million subordinated unsecured seller note, existing $420 million 6.25% senior unsecured notes due 2021 at Moy Park, and approximately $80 million of cash balances. The Moy Park noteholders are protected by a 101% change of control put option that based on recent market prices is not likely to be exercised. Thus, the Moy Park 6.25% notes (rated B1) , may remain in place. However, Moody's expects that Pilgrims will soon replace the $800 million seller note through the issuance of new multi-year senior unsecured notes. "This modest-size bolt-on transaction has strong merits for Pilgrim's, including improved diversity of sales, supply chain, products and customers," commented Brian Weddington, a Moody's Senior Credit Officer. Although mostly debt financed, the transaction's resulting leverage is modest. Pro forma debt/EBITDA is approximately 2.1x, excluding approximately $50 million of planned cost synergies. The acquisition of Moy Park was negotiated and approved on behalf of Pilgrim's by a special committee comprised of three independent members of Pilgrim's Board of Directors. "Transactions with related parties are always subject to more process scrutiny; however, it appears that the Pilgrims has taken adequate measures to address these concerns," added Weddington. RATINGS RATIONALE Pilgrim's Ba3 Corporate Family Rating is supported by the company's leading position as one of the world's largest chicken processors, low financial leverage, and solid operating performance driven by a disciplined operating strategy focused on improving profit margin and earnings stability. These strengths are balanced against the company's narrow focus in the cyclical chicken processing industry, which is characterized by volatile earnings and narrow profit margins. The rating also reflects the company's appetite for potentially large leveraged acquisitions; although overall, the company has demonstrated discipline about deal price and value. Moody's evaluates Pilgrim's credit profile on a standalone basis. Thus, the ratings are not directly affected by the ongoing legal and governance challenges currently facing owners of its indirectly controlling parent JBS S.A. (B2, review for downgrade). However, if developments at JBS related entities begin to negatively affect Pilgrims, a downgrade could occur. Pilgrim's Pride Corporation: Moody's has affirmed the following ratings: Corporate Family Rating at Ba3; Probability of Default Rating at Ba3-PD. Speculative Grade Liquidity rating at SGL-1; Moody's has upgraded the following ratings: $750 million senior secured revolving credit facility expiring May 6, 2022 to Ba2(LGD 2) from Ba3(LGD 3); $800 million senior secured term loan due May 6, 2022 to Ba2(LGD 2) from Ba3(LGD 3); $500 million senior unsecured notes due March 2025 to B1(LGD 5) from B2(LGD 5). The ratings outlook is stable. The revision to the senior secured and senior unsecured debt instrument ratings reflect Moody's anticipation that changes to Pilgrim's capital structure will result in a lower proportion of secured debt -- to 1/3 from about 1/2 previously. As a result, the senior secured debt instrument ratings are now rated one notch higher than the Ba3 Corporate Family Rating and the senior unsecured debt instrument ratings are one notch lower. Pilgrim's ratings are constrained by the company's single-protein concentration. However, the company's ratings could be upgraded if the company continues to enhance earnings stability through improvements to business and product mix. Quantitatively, Pilgrim's ratings could be upgraded if the company maintains at least 6% operating profit margin, positive free cash flow, sustains debt to EBITDA below 2.0x, and liquidity (cash and backup availability) of at least $1 billion. Conversely, Pilgrim's ratings could be downgraded in the event of a major leveraged acquisition or share buyback, deteriorating industry fundamentals that lead to prolonged negative free cash flow, or deteriorating liquidity. The ratings could also be downgraded if legal, governance or other challenges at related entities, including JBS S.A. negatively affect the risk profile of Pilgrim's. The principal methodology used in these ratings was Global Protein and Agriculture Industry published in June 2017. Corporate Profile Headquartered in Greeley, Colorado, Pilgrim's Pride Corporation (NASDAQ: PPC) is the second largest chicken producer in the world, with operations in the United States, Mexico and Puerto Rico. The company produces, processes, markets and distributes fresh, frozen and value-added chicken products to foodservice customers, distributors and retail operators worldwide. For the twelve months ended June 25, 2017, Pilgrim's revenues approximated $8.2 billion. Pilgrim's Pride is controlled by Sao Paulo, Brazil based JBS, S.A. (B2, ratings under review for downgrade), and the largest processor of protein in the world, through an indirect 78.5% equity ownership stake. Headquartered in Craigavon, Northern Ireland, Moy Park is a leading player in the UK poultry processing market, with a significant degree of vertical integration in the breeding and rearing chain. Its activities also include processing of other meat and food products, and its operations extend beyond the UK to continental Europe. It operates thirteen production facilities with a capacity of 280 million birds annually with a workforce in excess of 12,000 full-time equivalent employees. Customers include large supermarket chains as well as fast food retailers. For the last twelve months ended June 2017, the company reported revenue and EBITDA of $2 billion and $135 million, respectively. PUERTO RICAN PARADE: Needs Until Sept. 29 to File Chapter 11 Plan ----------------------------------------------------------------- Puerto Rican Parade Committee of Chicago, Inc., filed a second motion asking the U.S. Bankruptcy Court for the Northern District of Illinois to extend their exclusive period for filing a chapter 11 plan and obtaining acceptances of such plan for an additional 21 days, through and including Sept. 29, 2017. The Debtor asserts that the new requested date is well within the time limitations set by 11 USC 1121(d). The main issue of this case is the real estate commonly known as 1235, 1237 and 1241 North California, Chicago, Illinois. 1237 is a commercial building and the other two properties are parking lots. The Debtor since the filing of this case has been discussing and planning regarding sale of the building and parking lots. However, the value of their properties combined is believed to be substantially less than the amount due of the mortgage by about $300,000. This would make a sale likely not likely. The Debtor ordered an appraisal in order to confirm this valuation which was just received. The Debtor is also finishing operating reports and expects all reports to be filed by the time this Motion is presented. About Puerto Rican Parade Committee Puerto Rican Parade Committee of Chicago, Inc., sought protection under Chapter 11 of the Bankruptcy Code (Bankr. N.D. Ill. Case No. 17-03480) on Feb. 6, 2017. The petition was signed by Angel Medina, president. The case is assigned to Judge Carol A. Doyle. At the time of the filing, the Debtor estimated assets of less than $1 million. Paul M. Bach, Esq., and Penelope N. Bach, Esq., at the Bach Law Offices, serve as the Debtor's bankruptcy counsel. =========================== V I R G I N I S L A N D S =========================== VIRGIN ISLANDS: CARICOM Stunned After 1st-Hand Look at Irma Damage ------------------------------------------------------------------ Caribbean360.com reports that Caribbean community (CARICOM) Chairman, Grenadian Prime Minister Dr. Keith Mitchell has declared that the regional grouping will undertake a major initiative to support the reconstruction efforts in the islands battered by Hurricane Irma. The commitment came after Dr. Mitchell and CARICOM Secretary General Ambassador Irwin LaRocque joined a team from the Caribbean Disaster Emergency Management Agency (CDEMA) to get a first-hand look at the havoc wreaked by the ferocious Category 5 system on Anguilla and the British Virgin Islands, according to Caribbean360.com. Stunned by the devastation he witnessed, Ambassador LaRocque endorsed the labelling of Irma as a "nuclear hurricane," the report notes. "When it shook Tortola [in the BVI] as a Category 5 and you have heard it being described as a nuclear hurricane, I now understand what they meant . . . . The damage is just overwhelming," the Dominican-born diplomat said, the report relays. "One can shore up building codes as much as possible -- and there is always room for improvement . . . but with a storm of that ferocity, that intensity and as large as it was . . . the only thing that one could do is pray," Mr. LaRocque told online newspaper Barbados TODAY, the report notes. ================= X X X X X X X X X ================= PRINCESS JULIANA: Moody's Cuts USD142.6MM Sr. Notes Rating to Ba1 ----------------------------------------------------------------- Moody's Investors Service downgraded to Ba1 from Baa2 the rating of the USD142.6 million (approximate original issuance amount) Senior Secured Notes issued by Princess Juliana International Airport Operating Company N.V. ("PJIA") due in 2027. The rating is under review for further downgrade. Issuer: Princess Juliana Intl Airport Op Company N.V. Downgrades: -- Senior Secured Regular Bond/Debenture due 2027, Downgraded to Ba1 from Baa2; Placed Under Review for further Downgrade Outlook Actions: -- Outlook, Changed To Rating Under Review From Stable RATINGS RATIONALE The rating downgrade reflects Moody's lowering of PJIA's Baseline Credit Assessment, a measure of the airport's standalone credit quality, to ba2 from baa3. The rating continues to incorporate PJIA's status as a Government Related Issuer with Moody's assessment of "High" default dependence and "Strong" likelihood of extraordinary support from the Government of St. Maarten (Baa2 stable), the sole owner of PJIA. Moody's anticipates a profound distortion to St. Maarten's economy and PJIA's commercial activity from Hurricane Irma over the next 18-24 months. Throughout the review period, Moody's will assess the implications of initial reconstruction efforts on PJIA's commercial operations. Moody's will also review any potential measure of extraordinary support from the Government of St. Maarten. Over the next 18 months, Moody's anticipates that PJIA will have enough liquidity to meet debt service payments, considering cash available and a six-month debt service reserve fund (approximately USD$7 million) in the Note's structure. In addition, Moody's acknowledges that, as of end of August 2017, PJIA had USD$ 10 million available in unexpended Note proceeds. Moody's also notes that PJIA's infrastructure is protected by insurance coverage of approximately $193 million. WHAT COULD CHANGE THE RATING UP/DOWN A rating upgrade in the near term is unlikely. Evidence of support from the government of St. Maarten and/or the sustained resumption of PJIA's commercial operations could lead to the stabilization of the rating. A further downgrade would result from reduced willingness or capacity from the Government of St. Maarten to support PJIA. The principal methodology used in this rating was Privately Managed Airports and Related Issuers published in December 2014. Other methodologies used include the Government-Related Issuers methodology published in August 2017. *********** 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. Submissions about insolvency-related conferences are encouraged. Send announcements to conferences@bankrupt.com *********** S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter-Latin America is a daily newsletter co-published by Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Washington, D.C., USA, Marites O. Claro, Joy A. Agravante, Rousel Elaine T. Fernandez, 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. 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