/raid1/www/Hosts/bankrupt/TCRLA

/raid1/www/Hosts/bankrupt/TCRLA_Public/171205.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 Tuesday, December 5, 2017, Vol. 18, No. 241 Headlines A R G E N T I N A ALBANESI SA: Notes Re-issue No Impact on B3 Rating, Moody's Says B O L I V I A BOLIVIA: Holds Judicial Elections TECHO SA: Fitch Assigns B- First-Time IDR; Outlook Stable B R A Z I L BANCO BS2: Fitch Affirms B+ Long-Term IDR; Outlook Stable BANCO BMG: Fitch Lowers IDRs Rating to B+, Outlook Negative BANCO PINE: Fitch Affirms B+ Long-Term IDR; Outlook Negative BRAZIL: Growth Slowed in 3Q Amid Political Upheaval OI SA: Shareholder Requests Aurelius be barred From Restructuring D O M I N I C A N R E P U B L I C DOMINICAN REP: Lawmakers Oppose Mining in Major River's Watershed H O N D U R A S HONDURAS: Protesters Block Roads, Clash With Police M E X I C O BAILEY'S EXPRESS: Court OK's Second Amended Disclosure Statement P U E R T O R I C O AES PUERTO RICO: Fitch Keeps Sr. Bonds Rating on Watch Negative MAC ACQUISITION: Committee Taps Bayard as Co-Counsel MAC ACQUISITION: Committee Taps Kelley Drye as Lead Counsel SPANISH BROADCASTING: Asks Pref. Investors to Reveal Identities - - - - - ================= A R G E N T I N A ================= ALBANESI SA: Notes Re-issue No Impact on B3 Rating, Moody's Says ---------------------------------------------------------------- Moody's Investor Services comments that Albanesi S.A.'s B3 global scale rating and Baa2.ar national scale rating of the Senior Unsecured Global Notes due 2023 will remain unchanged after the issuance of new senior unsecured notes of up to USD86 million notes. The outlook for the ratings remains positive. The co-issuers under the Albanesi's notes are two Argentine corporations: (1) Generacion Mediterranea S.A. (GEMSA), 800 MW of installed capacity and annual revenues of approximately ARS 2.3 billion for the last twelve months (LTM) ending September 2017, operates six power plants located in five different Argentine provinces; and (2) Central Termica Roca S.A., a 130 MW power plant located in Rio Negro, with annual revenues in 2017 (LTM) of ARS 340 million. These companies are jointly and severally liable for all obligations under the notes that in addition are fully and unconditionally guaranteed by Albanesi S.A., the parent company. On November 29, 2017 Albanesi announced that it would issue additional USD86 million Senior unsecured 2023 Notes. The new notes will be an add-on to the co-issuance of USD250 million Senior Unsecured Global Notes due in 2023 issued by the co-issuers back in June 2016. Proceeds from the reopening will be used for debt refinancing and for general corporate purposes. While the proposed additional debt amount will not increase currently outstanding debt levels, leverage for Albanesi is high and will continue elevated during the full year 2018. As a consequence, credit metrics will remain weak, because the company's projects currently under construction (160MW) will begin operating gradually over the next year and therefore cash flows will also increase gradually. Nevertheless, credit metrics will improve towards the end of 2018. Moody's also note that the issuance of additional notes will improve the company's liquidity, given final maturity in 2023. ============= B O L I V I A ============= BOLIVIA: Holds Judicial Elections --------------------------------- EFE News reports that Bolivia is holding judicial elections, with seats on the Andean nation's highest courts up for grabs. "I know there's going to be a high turnout because the only way to change the Bolivian justice system is by participating in this election of judges," President Evo Morales said, according to EFE News. As reported in the Troubled Company Reporter-Latin America on Aug. 3, 2017, Moody's Investors Service has changed the outlook on Bolivia's issuer and senior unsecured bond ratings to stable from negative, and has affirmed the ratings at Ba3. TECHO SA: Fitch Assigns B- First-Time IDR; Outlook Stable --------------------------------------------------------- Fitch Ratings has assigned initial Long-Term Local and Foreign Currency Issuer Default Ratings (IDRs) of 'B-' to Techo S.A., Techo en el Urubo S.R.L. and El Pahuichi S.R.L. The Rating Outlook is Stable. These companies are organized under Bolivian laws, and each one of these companies has the same controlling shareholder, Julio Novillo Lafuente. Fitch refers to these three companies as Grupo Lafuente (GL) and analyzes them on a combined basis. The ratings factor in GL's business position, very intensive working capital requirements, high to moderate leverage, expected manageable liquidity and limited business/geographic diversification. KEY RATING DRIVERS Leading Land Developer in Bolivia: Fitch views GL's business position as strong based on its market positioning, scale, land reserves, and track-record. GL has over 22 years of experience and a footprint across the industry which has resulted in the completion of 20 residential real estate development projects, totalling over 12,000 hectares. The ratings factor in GL's market position as the largest land developer in Bolivia as measured by its combined total land size of projects developed, consisting of 20,759, 58,675, and 17,247 land lots during the first six months of 2017(1H17), 2016, and 2015, respectively. GL reported total revenues of BOL776.4 million (USD112 million) in 2016. GL's primary focus is on the residential real estate development in Santa Cruz de la Sierra, the largest city in Bolivia in terms of population. Business with High Working Capital Requirements: GL's sales of land lots are primarily oriented to the lower-income segment. The company needs to maintain high inventory levels, as each project cycle takes three to four years for the land development and commercialization. GL uses two types of sales models: (i) a fixed- term sales agreement with reservation of title, whereby customers finance their purchase through a plan of fixed monthly instalments, financed up to a five-year term (a fixed-term sales agreement), or (ii) a sales agreement with up-front payment in full. GL's operations are primarily carried out through the fixed- term sales agreement model, which represents approximately 79% of GL's total transactions per year. The land sales agreements are in USD, which partially mitigates GL's foreign exchange risk exposure. Deterioration in Customer Receivables Portfolio Negatively Incorporated: GL maintained a customer receivables portfolio of approximately BOL2.0 billion (USD280 million) as of Dec. 31, 2016. Fitch expects GL's portfolio value to average USD300 million during 2017-2018. This customer receivables portfolio has an average collection period of three years as of the end of 2016. Historically, GL's customer receivables portfolio saw an over-60- day average payment delay of 7%. Due to its aggressive business growth during 2016, GL's customer receivables portfolio over-60- day average payment delay increased to 13.7% during the first nine months of 2017. The ratings incorporate expectations for GL's over-60-day-late customer receivables portfolio to return to 10% by the end of 2017 and return to historical levels of 7% during 2018 -2019. Weak Liquidity Position and Negative Recent Cash Flow Generation: GL has historically maintained minimum levels of liquidity. The company had a cash position of BOL4 million (USD577 thousand) as of June 30, 2017, while its short-term debt was BOL119 million (USD17 million). Fitch expects GL to increase its liquidity position during 2018-2019 as a result of a combination of improved cash flow generation and incremental debt. GL's cash flow generation was negative in 2016 at BOL1.3 billion (USD182 million) as a result of a material increase in its working capital needs (for an increase in inventory levels). The increase in GL's working capital in 2016 was of BOL1.3 billion (USD187 million). Fitch expects GL to improve its cash flow generation during 2018- 2019 on the back of targeting for slower business growth and limited future land acquisitions. High Gross Adjusted Leverage: GL maintains low gross financial leverage, which is expected to increase as a result of incremental debt during the next months. GL's 2016 gross adjusted leverage, measured as total debt to adjusted EBITDA, was 1.5x. GL reached a total adjusted EBITDA level of BOL401 million (USD58 million), while total debt was BOL603 million (USD86 million). GL's total debt consists entirely of unsecured loans with local banks. Fitch expects GL's gross adjusted leverage to reach 5.8x by the end of 2017 and to be in the 4x-3x range during 2018-2019. GL's annual revenues and adjusted EBITDA margins are anticipated to average BOL740 million (USD106 million) and 35%, respectively, during 2017-2019. Positively factored in the ratings is the company's residual value in available inventory, land reserves and customer receivables portfolio, which are expected to be of BOL1.3 billion (USD186 million), BOL1.4 billion (USD205 million); and BOL2 billion (USD293 million) by Dec. 31, 2017. Fitch estimates GL's total loan to value at 30% by Dec. 31, 2017. DERIVATION SUMMARY GL's ratings reflect an experienced and well-positioned land developer in the Bolivian industry with high working capital requirements, important market position in the local market and relatively smaller scale when compared to regional/global players. Fitch's portfolio of rated issuers in Latin America in the single B rating category reached the following average credit metrics during 2014-2016: (1) interest coverage 2.8x, (2) total gross leverage 5.2x, (3) FCF margin -2.7%; EBITDA margin +23.9%; and, capital intensity (capex/LTM revenues ratio) 9.6%. GL's ratings are well positioned in the 'B' rating category relative to regional peers in terms of profitability and gross leverage. GL's recent track record does not fit well in the 'B' rating category relative to regional peers in terms of liquidity and capacity to generate positive FCF, while the company maintains a weaker position in terms of scale. GL's gross adjusted leverage is expected to increase during 2017-2019 and the sustainability of its capital structure is viewed as dependent on GL's capacity to reach neutral to positive FCF and/or receive continued equity injections during 2017-2019. The Stable Outlook reflects Fitch expectations that GL will generate positive FCF and materially improve its liquidity while keeping its adjusted gross leverage at 3x-4x during 2018-2019. KEY ASSUMPTIONS Fitch's key assumptions within Fitch rating case for the issuer include: - Revenue growth rates of approximately -15%, 8.2%, and 17%, respectively, during 2018-2019 - EBITDA margin of around 35% during 2017-2019 - Negative FCF generation in 2017 and positive in 2018-2019 - Gross adjusted leverage, measured as total debt to adjusted EBITDA, in the 3x-4x range during 2018-2019 - Interest coverage ratio around 3x during 2017-2019 - Cash position consistently above BOL100 million during 2018- 2019 RATING SENSITIVITIES Future Developments That May, Individually or Collectively, Lead to Positive Rating Action -- Fitch could consider a positive rating action if GL generates operational and FCF margins consistently above those levels incorporated in the ratings, resulting in material liquidity improvement and lower gross adjusted financial leverage. -- Adjusted gross financial leverage, measured as total debt/adjusted EBITDA, consistently below 3x. -- Interest coverage consistently above 4x. Future Developments That May, Individually or Collectively, Lead to Negative Rating Action -- Fitch could consider a negative rating action if GL continues to generate negative FCF margins in 2018, resulting in material liquidity deterioration and higher than expected gross adjusted financial leverage. -- Adjusted gross financial leverage, measured as total debt/adjusted EBITDA, consistently above 5x. -- Interest coverage consistently below 2x. LIQUIDITY Fitch views GL's liquidity as very sensitive to its capacity to maintain neutral to positive FCF generation during 2018-2019. GL has historically maintained minimum levels of liquidity. Fitch expects GL to increase its liquidity position during 2018-2019 as a result of a combination of improved cash flow generation and incremental debt and Fitch estimate GL's interest coverage ratio at around 3x during 2017-2019. Fitch expects GL's cash flow generation to trend neutral to positive during 2018-2019, as GL does not plan to increase its current levels of available inventory. As of June 30, 2017, GL maintained t4,543 lots in available inventory, which are expected to cover the company's sales levels during 2017-2020 period. FULL LIST OF RATING ACTIONS Techo S.A. (Techo) - Long-Term Foreign Currency Issuer Default Rating (IDR) 'B-' - Long-Term Local Currency IDR 'B-' Techo en el Urubo S.R.L. - Long-Term Foreign Currency Issuer Default Rating (IDR) 'B-' - Long-Term Local Currency IDR 'B-' El Pahuichi S.R.L. - Long-Term Foreign Currency Issuer Default Rating (IDR) 'B-' - Long-Term Local Currency IDR 'B-' The Rating Outlook is Stable. =========== B R A Z I L =========== BANCO BS2: Fitch Affirms B+ Long-Term IDR; Outlook Stable --------------------------------------------------------- Fitch Ratings has affirmed Banco BS2 S.A.'s (BS2; formerly Banco Bonsucesso S.A.) Long-Term Foreign- and Local-Currency Issuer Default Ratings (IDRs) at 'B+'. The Rating Outlook is Stable. BS2's IDRs are driven by its Viability Rating (VR), affirmed at 'b+'. Fitch also affirmed BS2's National Long-Term Rating at 'BBB(bra)' with a Stable Outlook. KEY RATING DRIVERS - VR, IDRS, NATIONAL RATINGS The affirmation of BS2's VR, IDRs and National Ratings reflects the bank's recent, but so far successful efforts toward the repositioning of its franchise following the sale of its payroll business in 2015, while maintaining a solid liquidity position, low credit costs, and adequate recurring profitability. On the other hand, those positive drivers are partially offset by BS2's still narrow and nascent business model, the concentrations in its loan portfolio that exposes its capital position to potential asset quality swings, and weaker regulatory capital ratios when compared to its peers. BS2 is concentrating its efforts to become a digital service- oriented bank. It also strengthened its foreign exchange department during 2016 and has recently announced a partnership with Adyen in 2017, a global payment company, which allowed it to enter merchant-acquiring operations. However, Fitch believes it may take some time until these efforts contribute to earnings in a more meaningful way. Meanwhile, BS2 has been leveraging its "precatorio" platform (judicial securities issued by Brazil's states) while it continues to explore new credit opportunities with its SME clients. These platforms have grown 77% and 73%, respectively, on a yearly basis ended on June 2017. With this, BS2's total credit risk exposure reached 1.4x of its total equity in June 2017, from 0.8x a year ago. While the precatorio business has historically enjoyed very low delinquency, Fitch notes that the maintenance of rapid credit growth may put additional pressure on BS2's regulatory capital buffers, should asset quality deteriorate. The 10 largest loan exposures reached 96% of the bank's Core Equity Tier 1 (CET1) as of June 2017. Regulatory capital ratios have declined with the phase-in of Basel III requirements. BS2's CET1 ratio declined to 9.0% in June 2017 from 12.0% in June 2016, while its total Basel ratio fell to 14.1% from 18.7% in the same period. This compares to an average of 16.6% and 17.8%, respectively, for its closest peers. This is mainly due to the BRL335 million deduction from its capital base, most of which related to its minority equity shareholding in its JV with Banco Santander S.A., as per the Basel III requirements. BS2's legacy tier II instruments are also subject to phased-in deductions. On the other hand, Fitch recognizes BS2's recent but so far successful move toward its new business initiatives, based on fee products. Net income for the first six months of 2017 reached BRL24 million, with an operating profit/risk-weighted assets ratio of 3.1%, reflecting mainly low credit costs as a consequence of improved non-performing loan ratios (to 2.8% in June 2017 from 6.2% in June 2016). Yet, while nascent businesses shows positive and growing trends, Fitch highlights the important contribution from of the equity income from its JV, which represented 50% of the bank's operating profit. This will continue challenging BS2 to maintain a disciplined growth approach, through existing and new business, to compensate for the upcoming sale of its minority participation to Banco Santander Brasil S.A., expected to occur up to 2019. Liquidity remains solid and mitigates potential risks related to the wholesale funding nature of the bank. Cash of BRL737 million in June 2017 was sufficient to cover all of its liabilities maturing in the short term. The bank also improved diversification by growing its agreements with local brokers, who in turn distribute BS2's funding instruments to a more diversified base of retail clients. KEY RATING DRIVERS - SUPPORT RATING AND SUPPORT RATING FLOOR BS2's Support Rating and Support Rating Floor are affirmed at '5' and 'NF', respectively, reflecting the bank's low systemic importance. In Fitch's view, external support cannot be relied upon. RATING SENSITIVITIES NATIONAL RATINGS Upside on the National Scale ratings could arise in the medium term if the positive trend of the implementation of the bank's relatively new plan continues and results in further consolidation of the bank's franchise and financial metrics with respect to its local peers. IDRs AND VR Although unlikely in the short term, BS2, and its IDR, could benefit from sustained improvement in recurring operating profitability, diversification of its funding base, and from the improvement of capitalization characterized by a CET1 of 12%. An upgrade will also depend on the bank's ability to post adequate asset-quality ratios and keep credit costs under control. SUPPORT RATING AND SUPPORT RATING FLOOR A potential upgrade of BS2's Support Rating and Support Rating Floor is unlikely in the foreseeable future, since this would only arise from a material gain in systemic importance. Fitch has affirmed the following ratings: -- Long-Term Foreign Currency (FC) and Local Currency (LC) Issuer Default Rating (IDR) at 'B+'; Outlook Stable; -- Short-Term LC and FC IDR at 'B' -- National Long-Term ratings at 'BBB(bra)'; Outlook Stable; -- National Short-Term rating at 'F3(bra)'; -- Viability Rating at 'b+'; -- Support Rating at '5'; -- Support Rating Floor as 'No Floor'. BANCO BMG: Fitch Lowers IDRs Rating to B+, Outlook Negative ----------------------------------------------------------- Fitch Ratings has downgraded Banco BMG S.A.'s Viability Rating (VR) to 'b+' from 'bb-', which in turn drives the downgrade of its Long-Term Foreign and Local Currency Issuer Default Ratings (IDRs) to 'B+' from 'BB-'; the Rating Outlook remains Negative. At the same time, the National Long-Term Rating was downgraded to 'A- (bra)' from 'A(bra)', Outlook Negative. KEY RATING DRIVERS IDRS, VR AND NATIONAL RATINGS The downgrade of BMG reflects Fitch's assessment of the bank's relatively weaker company profile and concentrated credit portfolio along with its continued poor profitability and weak but improving asset quality; all factors that are affected by the still challenging operating environment. The downgrade partially reflects BMG's weaker competitive position of its commercial lending segment when compared to its local competitors, which may have been more conservative in the management of their credit portfolios. The uncertain political and operating environment had reduced the bank's risk appetite for growing its commercial lending segment. That segment saw a 29% reduction in earning assets during the LTM (ended Sept. 30, 2017), which depressed revenue generation and offset the favorable growth of BMG's payroll-backed credit card portfolio. BMG's total credit portfolio also became more concentrated during the LTM as the bank sold off its legacy payroll lending (Consignado) and its vehicle- finance portfolios. BMG's other businesses are still in the early stages of growth and thus are not yet relevant revenue generators. BMG's VR and IDR take into account the bank's good liquidity and funding strengths and also the recent growth of its principal line of business, the payroll-backed credit card segment, which now accounts for over 72% of the total credit portfolio. Fitch also notes the recent improvement in BMG's capitalization ratios. However, improvement in the Fitch Core Capital ratio to 13.5% at the end of the third quarter 2017 (3Q17) from 12% at year-end (YE) 2016 was mostly the result of a reduction of risk assets rather than through an increase in internal capital generation via sustainable operating profits. While BMG's asset quality metrics improved in the last nine months in terms of the impaired loan and coverage ratios, BMG still has the challenge of improving the asset quality of its wholesale segment, especially in view of the still challenging macroeconomic scenario that limits operational profitability. Fitch expect increased GDP growth of 2.5% in 2018, which may enable a return to growth in BMG's wholesale portfolio. BMG's NPL over 90 days ratio reached 4.2% at Sept. 30, 2017. BMG has been operating with a more comfortable liquidity position, which was enhanced in part by the sale of its vehicle-finance business and the downsizing of its commercial credit portfolio. Using its excess liquidity, the bank continues to reduce the amount of its more expensive liabilities, and to diversify its sources of funding. Stable deposits now represent 63% of total funding and funding gaps are positive. The Negative Outlook on the IDR was maintained, as it reflects Fitch's view that many of the key credit metrics of this mid-sized wholesale bank are highly influenced by the still difficult operating environment. BMG's National ratings are an assessment of BMG's credit quality relative only to local peers. The Outlook for the National rating remains Negative, reflecting Fitch's view that BMG's profitability and asset quality metrics relative to its peers need to improve further, and that both still show downside risk. Fitch believes management will conservatively manage the continued expansion of its payroll-backed credit card segment, where BMG has a competitive advantage given its considerable expertise and relevant market share, estimated to be over 50%. The payroll- backed credit card portfolio already saw solid growth of 22% over the LTM. Management is aware that increased competition in the segment will impact its market share but is confident that there will be sufficient demand - especially with the expected improvement in the economy and the relevant number of unbanked retirees and federal employees. However, the bank's goal to resume loan growth highlights the need to substantially improve internally generated capital. BMG's profitability continues to remain weak, due in part to lower revenue from its wholesale and discontinued business segments and due to specific impairments and one-off provisions taken during the 9M17. BMG continues to carefully monitor its cost controls and expects to see a positive trend in profits for 2018 aided by the growth of its earning assets, especially in its core retail segments. Fitch believes that improved profitability will take a few quarters to become relevant; however, this partially depends on continued improvements in the operating environment, aided by improvements in the asset quality of both the wholesale and retail portfolios. SUPPORT RATING AND SUPPORT RATING FLOOR BMG's Support Rating and Support Rating Floor are based on Fitch's view that BMG is not considered to be a domestically important financial institution, due to the size of its deposit and loan market share. As such it is unlikely to receive external support from the Brazilian sovereign. SUBORDINATED DEBT BMG's subordinated debt is rated two notches below its VR to reflect its subordinated status. As the VR rating of the issuer is now 'B+' Fitch has newly-assigned a Recovery Rating of 'RR6' as per the agency's rating criteria. RATING SENSITIVITIES IDRS, VR, AND NATIONAL RATINGS BMG's ratings could be downgraded in the case of further sustained deterioration in its asset quality (non-performing loans over 90 days remaining above 4%) and weak performance (such as continued negative operating profit-to-risk-weighted assets, and/or a deterioration in capitalization (Fitch Core Capital [FCC] falling below 12%). A revision in the Outlook to Stable is unlikely in the short to medium term, as it is contingent on significant improvements in operational profitability and a sustained improvement in the impaired loan ratio (D-H) to below 6% of total loans along with BMG's FCC ratio remaining above 13%. An operating profit-to-risk- weighted assets ratio above 2% could trigger a positive rating review by Fitch. SUBORDINATED DEBT Subordinated Tier II debt ratings would generally move together with the bank's IDR. However, Fitch's criteria factor in the compression issue where the VR is 'bb+' or lower, providing some room for a narrower notching. Therefore, the overall notching for these securities is -2, given that BMG's VR rating is non- investment grade. The rating actions are: -- Long-Term Foreign Currency IDR downgraded to 'B+' from 'BB-'; Outlook Negative; -- Short-Term Foreign Currency IDR affirmed at 'B'; -- Long-Term Local Currency IDR downgraded to 'B+' from 'BB-'; Outlook Negative; -- Short-Term Local Currency IDR affirmed at 'B'; -- Viability Rating downgraded to 'b+' from 'bb-'; -- Support Rating at '5'; -- Support Rating Floor 'No Floor'; -- National long-term rating downgraded to 'A-(bra)' from 'A(bra)'; Outlook Negative; -- National short-term rating affirmed at 'F2(bra)'; -- Subordinated notes due 2019 & 2020 long-term foreign currency rating affirmed at 'B-'/RR6. BANCO PINE: Fitch Affirms B+ Long-Term IDR; Outlook Negative ------------------------------------------------------------ Fitch Ratings has affirmed Banco Pine S.A.'s (Pine) Viability Rating (VR) at 'b+', which in turn drives the affirmation of its Long-Term Foreign and Local Currency Issuer Default Ratings (IDRs) at 'B+'. The Rating Outlook remains Negative. At the same time, Fitch affirmed the Long-Term and Short-Term National Ratings at 'BBB+(bra)'/'F2(bra)'. KEY RATING DRIVERS IDRS, VR, NATIONAL AND SENIOR DEBT RATINGS The affirmation of Pine's ratings reflects Fitch's assessment of the bank's continued weak profitability and challenges to improving its asset quality, both of which are still being impacted by the challenging operating environment. Pine's VR and IDR also take into account the bank's strong liquidity and relatively good capitalization. Also reflected is Pine's improved funding profile as it addresses challenges to stabilize asset quality and improve its weak profitability while maintaining a low risk appetite. The bank made a significant loan loss provision during the third quarter that resulted in a nearly BRL265 million net loss. This reduced the bank's Fitch Core Capital ratio (FCC) to 11.9% from 13.6% at FYE 2016. Pine continues to face challenges to stabilize asset quality and improve its weak profitability. Management decided to increase provisions to better balance the inherent risk of its credit portfolio, which seems now to be adequate. Thus, Fitch expects that future provisioning, if needed, will no longer significantly impact its profitability. In August 2017 Fitch downgraded the bank's VR and in turn the IDRs and National Ratings as these actions were driven by the bank's continued weak profitability and deteriorating asset quality relative to its peers. The Outlooks on both the IDR and National ratings remain Negative as they reflect Fitch's view that Pine's key credit metrics still show downside risk under the current operating environment. Pine still has a relatively large but improving asset concentration. The bank's impaired loans (BACEN D-H)-to-total loans saw a material deterioration during the past two years and especially in the third quarter as the ratio rose to 21.7% at Sept. 30, 2017 from the 13.7% at June 30, 2017. However, with the more adequate provisioning, the level of reserves improved to nearly 70% from 43% at December 2016. The more relevant Non- performing Loans Over 90 days to Total Loans ratio rose to 4.2% from 3.7% in the previous quarter. Fitch expects that this level of reserves combined with the underlying collateral adequately covers the risk. Fitch expects the higher provisioning along with the repositioning of Pine's lending activities towards less concentrated, lower-risk segments, combined with their preference for shorter tenors and smaller disbursements, should result in lower credit costs in the medium term. The bank has limited its sector exposures so that no sector currently accounts for more than 12% of the expanded loan portfolio. In addition, the average credit ticket amount has reduced to BRL17 million at 3Q17 down from BRL26 million just a few years earlier. Despite the expected reduction of credit provisions and other costs, profitability is expected to remain weak in the medium term in view of management's continued low risk appetite and continued lower demand from credit -- worthy borrowers. The bank's guidance for expanded credit portfolio growth in 2018 is between 2% and 5%. Pine's management expects to continue its focus on cost controls in order to increase efficiencies and position the bank for renewed credit portfolio expansion 2018 when the economy is expected to improve. The bank has also been focusing on lowering its funding costs in order to offset lower margins earned from lower risk borrowers. Pine's ROAE guidance for 2018 ranges between 2% and 5%. Pine has been successful in increasing and diversifying funding from via time deposits from individuals whose representation as a percentage of total funding rose to 79% at the end of 3Q17 from 64% a year earlier (with nearly 80% of the deposit amounts at or below BRL100,000. The bank has reported a highly liquid asset position (Caixa) position of BRL1.6 billion at the end of 3Q17, which represents nearly 174% of the bank's equity. This is the highest of the past several years. During 2017 management has tightened its ALM models and expanded the frequency of internal reviews and reporting to minimize funding gaps, create greater funding efficiencies and reduce funding costs. Other main sources of funding come from institutional time deposits, corporate time deposits and multilateral development agencies. In the recent past, the bank used its excess liquidity to significantly reduce the levels of its higher cost funding. SUPPORT RATING AND SUPPORT RATING FLOOR Pine's Support Rating and Support Rating Floor are based on Fitch's view that Pine is not considered to be a domestically important financial institution, due to the size of its deposit and loan market share. As such it is unlikely to receive external support from the Brazilian sovereign. RATING SENSITIVITIES IDRS, VR, AND NATIONAL RATINGS Pine's ratings could be downgraded in case of further sustained deterioration in its performance, such as a continued negative operating profit, weak asset quality (non-performing loans over 90 days consistently remaining above 3%) and/or capitalization (Fitch Core Capital Ratio) falling below 11%). A revision of the Outlook to Stable is contingent on significant improvements in operational profitability and the impaired loan ratio, which largely depends on a more stable operating environment. Fitch has affirmed the following ratings: Banco Pine S.A. -- Long-Term Foreign and Local Currency IDRs at 'B+'; Outlook Negative; -- Short-Term Foreign and Local Currency IDRs at 'B'; -- Viability Rating at 'b+'; -- Support Rating at '5'; -- Support Rating Floor at 'NF'; -- Long-Term National rating at 'BBB+(bra)'; Outlook Negative; -- Short-Term National rating at 'F2(bra)'; -- Long-Term National Rating of Senior Unsecured Huaso Bond Program and Notes at ' BBB-(cl) '; Outlook Negative. BRAZIL: Growth Slowed in 3Q Amid Political Upheaval --------------------------------------------------- Paul Kiernan at The Wall Street Journal reports that Brazil's economy slowed in the third quarter amid heightened political turmoil, though increases in private consumption and investment suggested that a recovery from the country's longest recession on record is strengthening. Gross domestic product expanded 0.1% in the July-September period from the previous three months in seasonally adjusted terms, the Brazilian Institute of Geography and Statistics, or IBGE, said, according to The Wall Street Journal. That was a far cry from the 1.3% and 0.7% growth registered in the first and second quarters, respectively, and fell short of the 0.2% median estimate in a survey of analysts by the local Agencia Estado newswire, the report notes. The period in question was marked by a resurgence in political uncertainty as President Michel Temer battled a series of corruption-related charges that have damaged his popularity and undermined his ability to pass needed overhauls, the report relays. Despite the turmoil, most of the economy was resilient, the report discloses. Noting that data from the first and second quarters were revised higher, London-based Capital Economics said in a note that the headline GDP figure "is not as bad as it looks," the report notes. Gross fixed-capital formation -- a key measure of investment -- expanded 1.6% in the third quarter from the second after 15 consecutive quarters of decline, the report relays. Private consumption grew 1.2% for a second straight quarter, the report says. On the supply side of the economy, industrial output and services expanded by 0.8% and 0.6% from the second quarter, offsetting a 3% decline in the volatile agriculture sector, the report notes. "The underlying growth dynamics of the economy improved and broadened" in the third quarter, Goldman Sachs economist Alberto Ramos said in a note, raising his forecast for 2017 GDP growth to 1.1% from 0.9%, the report discloses. "The last three years were extraordinarily challenging, but the recession now seems to have moved into the rear-view mirror," he added. The question now is how long it will take for Brazil to dig out of a downturn that knocked a cumulative 7% off GDP in 2015 and 2016, the report relays. According to a weekly survey by the central bank, private economists expect GDP to increase 0.7% in 2017 and 2.6% next year, the report notes. But with a fiscal deficit of 9.25% of GDP, the government has little capacity to stimulate faster growth, let alone counter any unforeseen shocks the economy may face in the future, the report relays. At the same time, analysts say Mr. Temer's marquee overhaul, tackling Brazil's unsustainable social-security system, is unlikely to pass Congress before next year's general election, the report says. That means Brazil's hopes of narrowing the government's deficit and restoring investor confidence may hinge on a market-friendly presidential candidate who has yet to emerge from the pack of mostly unpopular career politicians currently positioning themselves to run, the report notes. "The risk we face is not continuing to advance" with further overhauls, said Flavio Serrano, senior economist at Haitong investment bank in Sao Paulo. "Consumption is growing, investment is growing, so that's a sign that we may keep growing. But whether that actually happens will depend on further reforms," Mr. Serrano added. As reported in the Troubled Company Reporter-Latin America on Nov. 14, 2017, Fitch Ratings has affirmed Brazil's Long-Term Foreign-Currency Issuer Default Rating (IDR) at 'BB' with a Negative Outlook. OI SA: Shareholder Requests Aurelius be barred From Restructuring ----------------------------------------------------------------- Leonardo Goy at Reuters report that Societe Mondiale, a shareholder in Brazilian telecoms company Oi SA (OIBR4.SA) affiliated with Brazilian investor Nelson Tanure, filed a complaint with the nation's telecoms regulator seeking to limit the actions of a key bondholder. In the complaint, seen by Reuters, Societe Mondiale asks the competition unit of telecoms regulator Anatel to prohibit the company from signing any contract or engaging in negotiations that "may give legal substance to a deal implying transfer of control to any fund" related to Aurelius Capital Management LP. The move represents the first attempt by Oi's board to regain power after a judge effectively removed it from ongoing negotiations to restructure the carrier's debt, according to Reuters. Representatives for Anatel and Aurelius did not immediately respond to requests for comment. Oi, which filed for bankruptcy protection a year and a half ago, is riven by divisions between creditors, the board, and management, the report recalls. Aurelius is spearheading a group of creditors known as the International Bondholders Committee, which is in turn part of an alliance of funds and banks holding about BRL22 billion ($6.75 billion) on Oi's debt, the report notes. Those bondholders have been working for several weeks with Oi's management to bang out a restructuring accord that would take the carrier out of bankruptcy protection, the report relays. However, the board of the company -- over which Tanure holds sway -- has held firm against bondholder proposals, and has promoted a plan that would be more favorable to equity holders, the report notes. In the complaint, Societe Mondiale says that under the restructuring proposal pushed by bondholders, Aurelius would become a co-controller of Oi. The complaint also said that Aurelius holds almost 17 percent of competing telecoms operator Nextel Communications Inc through intermediaries, the report says. According to the complaint, Aurelius - due to its indirect stake in Nextel - would break Brazilian anti-trust rules if its debt restructuring proposal for Oi were to go into effect, the report notes. The judge overseeing the Oi bankruptcy case gave Chief Executive Eurico Teles power to draft the restructuring plan and submit it to the bankruptcy court without board approval, effectively removing power from the Tanure-led body, the report adds. About Oi SA Headquartered in Rio de Janeiro, and operating almost exclusively within Brazil, the Oi Group provides services like fixed-line data transmission and network usage for phones, internet, and cable, Wi-Fi hot-spots in public areas, and mobile phone and data services, and employs approximately 142,000 direct and indirect employees. As reported in the Troubled Company Reporter-Latin America on Nov. 9, 2017, Gram Slattery and Leonardo Goy at Reuters report that the head of Brazil's telecommunications watchdog, Anatel, demanded that debt-laden carrier Oi SA submit its latest restructuring proposal to the regulator before officially filing it with a bankruptcy court. Anatel head Juarez Quadros told reporters in Brasilia that the regulator, an Oi creditor due to billions of dollars in unpaid regulatory fines, would wait for the country's solicitor-general to give an opinion on the company's proposal before deciding whether or not to vote for it, according to Reuters. On June 20, 2016, pursuant to Brazilian Law No. 11.101/05 (the 'Brazilian Bankruptcy Law'), Oi S.A. and certain of its subsidiaries filed for recuperao judicial (judicial reorganization) in Brazil. On June 21, 2016, OI SA and its affiliates Telemar Norte Leste S.A. and Oi Brasil Holdings Cooperatief U.A. commenced Chapter 15 proceedings (Bankr. S.D.N.Y. Lead Case No. 16-11791). Ojas N. Shah, as foreign representative, signed the petitions. Coop and PTIF are also subject to proceedings in the Netherlands. The Chapter 15 cases are assigned to Judge Sean H. Lane. In the Chapter 15 cases, the Debtors are represented by John K. Cunningham, Esq., and Mark P. Franke, Esq., at White & Case LLP, in New York; and Jason N. Zakia, Esq., Richard S. Kebrdle, Esq., and Laura L. Femino, Esq., at White & Case LLP, in Miami, Florida. On July 22, 2016, the New York Court recognized the Brazilian Proceedings as foreign main proceedings with respect to the Chapter 15 Debtors, and granted certain additional related relief. =================================== D O M I N I C A N R E P U B L I C =================================== DOMINICAN REP: Lawmakers Oppose Mining in Major River's Watershed ----------------------------------------------------------------- Dominican Today reports that 19 lawmakers from the South region said they're opposed to any type of mining in the south Yaque river's watershed, for which the Chamber of Deputies met to discuss a resolution to establish the Yaque del Sur Hydrographic Region. National deputy Fidelio Despradel, who authored the piece, said metal mining would harm the soil, the availability of water and its quality in the arid western region, according to Dominican Today. Deputy David Herrera (PRD-San Juan), co-author of the resolution, said 19 South region legislators support their initiative, based on the damage it would cause to an eminently agricultural region, the report notes. "Why the study if the region isn't going to be exploited?" asked Bahoruco deputy Edward Gomez, the report relays. "We ask the President to eliminate that project ipso facto. In Bahoruco we're afraid that it will happen like in Cotui (central). Ban the studies and mining will not be allowed in the upper part of the Yaque," he added, notes the report. As reported in the Troubled Company Reporter-Latin America on Nov. 20, 2017, Fitch Ratings has affirmed Dominican Republic's Long-Term Foreign-Currency Issuer Default Rating (IDR) at 'BB-' with a Stable Outlook. =============== H O N D U R A S =============== HONDURAS: Protesters Block Roads, Clash With Police --------------------------------------------------- Jose de Cordoba at The Wall Street Journal reports that protesters burned tires, blocked roads and clashed with police in Honduras as the country entered the fifth day without a declared winner from the tightly contested presidential election, fueling a deepening political crisis. With 94% of the vote counted, incumbent President Juan Orlando Hernandez, a conservative, law and order candidate, had a lead of some 46,000 votes, or 1.5%, over his leftist opponent Salvador Nasralla, according to Jose de Cordoba. The government said it would give police and army more powers to quell the unrest, according to the Associated Press, the report notes. An official with the Council of Ministers, Ebal Diaz, said the measures would suspend some constitutional guarantees, but he declined to specify which ones, the AP reported, the report relays. Many of Mr. Nasralla's supporters are suspicious of the official count after a nearly two-day delay in the vote tally earlier, the report says. Hours after the vote, Mr. Nasrallah jumped out to a surprising five-percentage point lead with more than half the vote counted, the report says. But then the country's electoral authorities didn't release any more poll results for 36 hours, fueling widespread suspicions that the country's Supreme Electoral Council was delaying results to steal the election, the report notes. When the count resumed, Mr. Hernandez made up the lost ground. David Matamoros, the head of Honduras' electoral authority, denied that the delay in counting the vote masked an attempt at manipulating vote results, the report relays. He has blamed the delay on the difficulty in getting ballots from remote parts of the country, the report notes. Fearing violence, the Organization of American States and the European Union, both of which have large observer missions in the country, have urged Honduras' electoral authorities not to declare a winner until 100% of the ballots have been counted, including those in dispute, the report discloses. Both organizations said the off-again, on-again vote count had sown deep doubts across the nation about the election, the report notes. "People are very scared," said Moises Starkman, an economic and political analyst, the report relays. "There have been many blockades of roads and streets, and some stores have been burned and looted. Things are getting worse," Mr. Starkman added. The country's electoral authorities said they would begin the count of as many as 300,000 disputed ballots, a process that could delay a final count, analysts said, the report says. At this stage, there could be unrest no matter the eventual winner, said Eric Olson, a Honduras expert at Washington's Woodrow Wilson Center, the report notes. If Mr. Hernandez wins, as seems probable, the delay in releasing results will convince many of Mr. Nasralla's followers that the election was stolen, the report relays. A Nasralla win will anger supporters of Mr. Hernandez, whom pre-election polls had given a big lead, Mr. Olson said, the report says. Mr. Olson blamed the tensions and the outbreak of violence on the country's electoral authorities handling of the poll count, the report notes. "I think the process should have been more regular and transparent," he said. "I feel they mishandled the situation," he added. A conservative, Mr. Hernandez had been tough on crime, slashing Honduras homicide rate to 59 per 100,000 from a high of 91.6 per 100,000 in 2011, the report relays. He has also extradited a number of important Honduran drug dealers to the U.S., although corruption and drug-trafficking allegations have dogged some officials in his government, the report says. Critics say he has authoritarian tendencies and has gained control over key institutions like the Supreme Court, the report notes. Educated as an engineer, Mr. Nasralla is a longtime sportscaster and television personality in Honduras, the report notes. He founded the anticorruption party and was its unsuccessful presidential candidate in Honduras' 2013 election, the report adds. As reported in the Troubled Company Reporter-Latin America on Sept. 27, 2017, Moody's Investors Service has upgraded the Government of Honduras' foreign currency and local currency issuer and senior unsecured ratings to B1 from B2. The rating outlook was moved to stable from positive. =========== M E X I C O =========== BAILEY'S EXPRESS: Court OK's Second Amended Disclosure Statement ---------------------------------------------------------------- Judge Ann M. Nevins of the U.S. Bankruptcy Court for the District of Connecticut approved Bailey's Express, Inc.'s second amended disclosure statement to accompany its plan of reorganization dated Nov. 9, 2017. Dec. 20, 2017, is fixed as the last day for returning written ballots of acceptance or rejection of the Plan. Jan. 10, 2018, at 2:00 PM is fixed as the date of the hearing to consider confirmation of the Plan in the United States Bankruptcy Court, 157 Church Street, 18th Floor, New Haven, CT 06510. Written objections to the Plan must be filed with the court no later than Dec. 20, 2017. About Bailey's Express Headquartered in Middletown, Connecticut, Bailey's Express -- http://www.baileysxpress.com/-- is a Connecticut-based less than truckload carrier. It provides service across the nation and is dedicated in helping Connecticut, Massachusetts and Rhode Island companies market their products throughout the U.S. including Hawaii and Alaska. It has distribution points in Charlotte, Dallas, Denver, Easton, Fontana, Indianapolis, Jacksonville, Memphis, Neenah, Phoenix, Salt Lake City and Toledo. It also provides service to Mexico, Puerto Rico & Canada. Bailey's Express filed for Chapter 11 bankruptcy protection (Bankr. D. Conn. Case No. 17-31042) on July 13, 2017, estimating its assets and liabilities at between $1 million and $10 million. The petition was signed by David Allen, chief financial officer. Judge Ann M. Nevins presides over the case. Elizabeth J. Austin, Esq., and Jessica Grossarth Kennedy, Esq., at Pullman & Comley, LLC, serves as the Debtor's bankruptcy counsel. No creditors' committee has yet been appointed in the case. ====================== P U E R T O R I C O ====================== AES PUERTO RICO: Fitch Keeps Sr. Bonds Rating on Watch Negative --------------------------------------------------------------- Fitch Ratings has maintained the Rating Watch Negative on the following AES Puerto Rico L.P. (AES PR) securities issued through the Puerto Rico Industrial, Tourist, Educational, Medical & Environmental Control Facilities Financing Authority: -- $161.87 million ($160.57 million) cogeneration facility revenue bonds series A (tax-exempt bonds) due June 2026 'C'; -- $33.1 million ($32.83 million) cogeneration facility revenue bonds, series B (taxable bonds) due June 2022 'C'. KEY RATING DRIVERS Summary: AES PR's 'C' rating reflects Fitch's view of the credit quality of the Puerto Rico Electric Power Authority (PREPA), which Fitch rates 'D'. AES PR's payment default and rating action by Fitch is likely if PREPA fails to make payments under the power purchase agreement (PPA) by the end of January 2018 and is a real possibility if PREPA tries to renegotiate the PPA under bankruptcy proceedings. Revenue Risk: Weaker Contracted Revenue Profile: The 25-year tolling-style PPA with a non-investment-grade counterparty mitigates some risk of exposure to capacity price, energy margin, and dispatch risks throughout the debt term, subject to project availability and heat rates. However, there are concerns regarding the offtaker's ability to make future contractual payments given its financial and operational difficulties that have only been exasperated by Hurricane Maria. Operation Risk: Weaker Uneven Operations: AES-PR has historically been susceptible to forced outages that have reduced availability and capacity payments. Further, the operating cost profile has exceeded original estimates. Management has taken a proactive approach to limit forced outages with some results, though extended scheduled outages have negatively impacted project availability in some periods. Supply Risk: Midrange Manageable Supply Risk: Fuel supply risk is mitigated by a two- year, fixed-price fuel supply agreement sufficient to meet the project's expected fuel requirements through 2019. The short-term risk of the agreement is mitigated by the historical precedence for renewal and liquid market for coal. Fuel price risk is mitigated by the tolling-style PPA, subject to heat rates. Ash inventory is actively managed by the project via the sale of its various ash products. AES-PR's efforts have helped to offset near- term ash disposal concerns, but cash flow uncertainty is heightened without a permanent solution. Debt Structure: Weaker Weak Structural Features: The project's bonds are fixed-rate and mature within the PPA term but have back-loaded amortization profiles. AES-PR does not have O&M or major maintenance reserves, which increases the importance of operational stability and heightens the project's reliance on other sources of liquidity. The equity distribution, leverage, and debt service reserve provisions are consistent with standard project finance structures. Approximately 55% of the total debt outstanding, including unrated bank loans, is variable-rate with over 80% synthetically fixed with investment-grade counterparties. RATING SENSITIVITIES Future Developments That May, Individually or Collectively, Lead to Positive Rating Action: -- An upgrade to PREPA's long-term rating. -- Sustained improvements to plant availability or heat rate. Future Developments That May, Individually or Collectively, Lead to Negative Rating Action: -- PREPA's continued failure to meet its payment obligations through January 2018 would likely impact the rating on AES Puerto Rico. -- PREPA's attempts to renegotiate the PPA under its insolvency proceedings that negatively impact the project's cash flows and ability to service debt. -- Prolonged failure to repair damaged transmission lines and resume generation would likely impact the rating on AES Puerto Rico. -- Poor plant performance could limit the project's standalone credit profile. MAC ACQUISITION: Committee Taps Bayard as Co-Counsel ---------------------------------------------------- The official committee of unsecured creditors of Mac Acquisition LLC seeks approval from the U.S. Bankruptcy Court for the District of Delaware to hire Bayard, P.A. Bayard will serve as co-counsel with Kelley Drye & Warren LLP, the firm tapped by the committee to be its lead bankruptcy counsel. The firm's hourly rates range from $500 to $1,050 for directors, $315 to $470 for associates, and $240 to $295 for paraprofessionals. The attorneys and paralegal who will be representing the committee are: Justin Alberto Attorney $500 Erin Fay Attorney $475 Gregory Flasser Attorney $350 Larry Morton Paralegal $295 Justin Alberto, Esq., disclosed in a court filing that his firm is a "disinterested person" as defined in section 101(14) of the Bankruptcy Code. The firm can be reached through: Justin R. Alberto, Esq. 600 N. King Street, Suite 400 Wilmington, DE 19801 Tel: (302) 655-5000 Fax: (302) 658-6395 Email: jalberto@bayardlaw.com About Mac Acquisition LLC Mac Acquisition LLC, et al. -- https://www.macaronigrill.com/ -- operate full-service casual dining restaurants under the trade name, "Romano's Macaroni Grill." As of Oct. 18, 2017, the company operates 93 company-owned restaurants located in 23 states, with a workforce of approximately 4,600 employees. Non-debtor affiliate RMG Development franchises an additional 23 restaurants in Florida, Hawaii, Illinois, Texas, Puerto Rico, Mexico, Bahrain, Egypt, Oman, the United Arab Emirates, Qatar, Germany, and Saudi Arabia. During 2016, Mac Acquisition and RMG generated gross revenues through restaurant sales and franchisee payments of approximately $230 million. On Oct. 18, 2017, Mac Acquisition LLC, and eight affiliates sought Chapter 11 protection (Bankr. D. Del. Lead Case No. 17-12224). Mac Acquisition's estimated assets of $10 million to $50 million and debt at $50 million to $100 million. The Hon. Mary F. Walrath is the case judge. The Debtors tapped Young Conaway Stargatt & Taylor, LLP, as Delaware bankruptcy counsel; Gibson, Dunn & Crutcher LLP, as general bankruptcy counsel; Mackinac Partners, LLC, as financial advisor; and Duff & Phelps Securities, LLC as financial advisor and investment banker. Donlin, Recano & Company, Inc., is the claims agent. On October 30, 2017, the Office of the U.S. Trustee appointed an official committee of unsecured creditors. MAC ACQUISITION: Committee Taps Kelley Drye as Lead Counsel ----------------------------------------------------------- The official committee of unsecured creditors of Mac Acquisition LLC seeks approval from the U.S. Bankruptcy Court for the District of Delaware to hire Kelley Drye & Warren LLP as its lead counsel. The firm will advise the committee regarding its duties under the Bankruptcy Code; investigate the Debtor's financial condition; analyze claims of creditors; and assist in the preparation of a plan of reorganization. The firm's hourly rates are: Partners $540 - $825 Associates $310 - $610 Paraprofessionals $185 - $270 Eric Wilson, Esq., disclosed in a court filing that his firm is a "disinterested person" as defined in section 101(14) of the Bankruptcy Code. The firm can be reached through: Eric R. Wilson, Esq. Kelley Drye & Warren LLP 101 Park Avenue New York, NY 10178 Tel: (212) 808-7800 Fax: (212) 808-7897 Email: ewilson@kelleydrye.com About Mac Acquisition LLC Mac Acquisition LLC, et al. -- https://www.macaronigrill.com/ -- operate full-service casual dining restaurants under the trade name, "Romano's Macaroni Grill." As of Oct. 18, 2017, the company operates 93 company-owned restaurants located in 23 states, with a workforce of approximately 4,600 employees. Non-debtor affiliate RMG Development franchises an additional 23 restaurants in Florida, Hawaii, Illinois, Texas, Puerto Rico, Mexico, Bahrain, Egypt, Oman, the United Arab Emirates, Qatar, Germany, and Saudi Arabia. During 2016, Mac Acquisition and RMG generated gross revenues through restaurant sales and franchisee payments of approximately $230 million. On Oct. 18, 2017, Mac Acquisition LLC, and eight affiliates sought Chapter 11 protection (Bankr. D. Del. Lead Case No. 17-12224). Mac Acquisition's estimated assets of $10 million to $50 million and debt at $50 million to $100 million. The Hon. Mary F. Walrath is the case judge. The Debtors tapped Young Conaway Stargatt & Taylor, LLP, as Delaware bankruptcy counsel; Gibson, Dunn & Crutcher LLP, as general bankruptcy counsel; Mackinac Partners, LLC, as financial advisor; and Duff & Phelps Securities, LLC as financial advisor and investment banker. Donlin, Recano & Company, Inc., is the claims agent. On October 30, 2017, the Office of the U.S. Trustee appointed an official committee of unsecured creditors. SPANISH BROADCASTING: Asks Pref. Investors to Reveal Identities --------------------------------------------------------------- Spanish Broadcasting System, Inc. notified the holders of the Company's 10 3/4% Series B Cumulative Exchangeable Redeemable Preferred Stock that the Company had suspended all of their rights, effective Nov. 28, 2017, as holders of the Series B Preferred Shares, other than their right to transfer those shares to a citizen of the United States due to the potential violation of Section 310 of the Communications Act of 1934, as amended, and the Company's Third Amended and Restated Certificate of Incorporation resulting from the current ownership of a majority of its outstanding Series B Preferred Shares by non-U.S. entities. The Company took this action in order to safeguard the Company's most important assets, its Federal Communications Commission broadcast licenses, which would otherwise potentially be at risk if the Company failed to take appropriate measures to remain in compliance with the Act, according to a Form 8-K report filed with the Securities and Exchange Commission. Specifically, in the Company's letter to the holders of the Series B Preferred Shares, the Company stated the following: * On Nov. 2, 2017, a complaint was filed against the Company in the Court of Chancery for the State of Delaware by certain holders of the Series B Preferred Shares purporting to represent, in the aggregate, approximately 94.16% of the outstanding Series B Preferred Shares. The Company further noted that if the allegations set forth in the Complaint are correct, which it did not concede, and the collective ownership of the outstanding Series B Preferred Shares by non-U.S. entities exceeds 63 percent of the outstanding Series B Preferred Shares as reflected therein, then non-U.S. entities would own well in excess of 25 percent of the equity of the Company in violation of Section 310(b)(4) of the Act. In addition, the Company stated that the current ownership of the Series B Preferred Shares appears to violate the foreign ownership restrictions set forth in the Certificate of Incorporation. Article X of the Certificate of Incorporation contains provisions governing foreign ownership of the capital stock of the Company and compliance with Section 310 of the Act. Those provisions of the Certificate of Incorporation restrict foreign ownership in the Company to not more than 25% of the aggregate number of shares of the Company's capital stock outstanding in any class or series entitled to vote on any matter. * Therefore, given the new information that was recently disclosed to the Company in the Complaint regarding the ownership of a majority of the Series B Preferred Shares by non-U.S. entities, the Company was required to take immediate remedial action in order to ensure that any violations of the Act and its Certificate of Incorporation resulting from such ownership of its Series B Preferred Shares do not adversely affect its FCC broadcast licenses and ability to continue its business operations. Accordingly, consistent with its obligations and authority provided to the Company under the Act and by Article X of the Certificate of Incorporation, the Company notified holders that it was suspending all rights, effective immediately, of the holders of the Series B Preferred Shares, other than their right to transfer their shares to a citizen of the United States. The Company added that such suspension of rights will remain in place with respect to each holder of its Series B Preferred Shares until the Company has concluded that (1) the shares of such holder should be treated as not owned by aliens or their representatives, as these terms are used under the Act, or (2) the ownership by the holders of the Series B Preferred Shares (including the ownership of any shares by non-U.S. entities) complies with the requirements of the Act and the Certificate of Incorporation. * The Company stated that, consistent with the requirements of the Certificate of Incorporation, Series B Preferred Shares shall hereafter be represented by "Foreign Share Certificates," subject to the terms and provisions contained in the Certificate of Incorporation that are applicable to those shares, unless and until the Company subsequently determines that such shares are held by U.S. entities and are properly represented by "Domestic Share Certificates" (as provided in the Certificate of Incorporation), if applicable. The Company also reserved its right to declare any transfer of Series B Preferred Shares made in violation of its Certificate of Incorporation or the Act to be ineffective and thereby void in accordance with the provisions of its Certificate of Incorporation. * The Company further stated that, in order for the Company to properly determine whether to withdraw the suspension of rights or to take additional remedial actions with respect to the Series B Preferred Shares, it is directing each of the holders of such shares to provide, by no later than 12 noon EST on Dec. 4, 2017, a certification regarding the identity, address, number of Series B Preferred Shares owned and citizenship or place of incorporation of such holder and, if the holder is an entity, information sufficient to demonstrate that the entity is not considered to be an alien or a representative of an alien, as these terms are used under the Act. * The Company notified holders that it reserves the right to request any additional information and supporting documentation as necessary or appropriate in order for it to complete its review and analysis of the current ownership of its Series B Preferred Shares, and to confirm compliance with the provisions of Article X of its Certificate of Incorporation and applicable law, including Section 310 of the Act. The Company has also reserved all rights, in law and in equity, in the event of any refusal by a holder of Series B Preferred Shares to provide the requested information and certification. Simultaneously with the letter to holders of the Series B Preferred Shares, the Company has notified the FCC of the remedial actions taken by it as described in that letter. A copy of the letter to the holders of the Company's Series B Preferred Shares is available for free at https://is.gd/Wy7PNG About Spanish Broadcasting Based in Miami, Florida, Spanish Broadcasting System, Inc. (OTCMKTS:SBSAA) -- http://www.spanishbroadcasting.com/-- is a Spanish-language media and entertainment company with radio and/or television stations in the top U.S. Hispanic markets, including Puerto Rico. The Company's owned and operated radio stations serve markets representing approximately 35% of the U.S. Hispanic population, and its television operations serve markets representing over 3.5 million Hispanic households. The Company produces and distributes Spanish-language content, including radio programs, television shows, music and live entertainment through its radio stations and its television group, MegaTV, which produces over 70 hours of original programming per week. MegaTV broadcasts via its owned and operated stations in South Florida, Houston, and Puerto Rico and through programming and/or distribution agreements with other stations, as well as various cable and satellite providers. Crowe Horwath LLP, in Fort Lauderdale, Florida, issued a "going concern" qualification on the consolidated financial statements for the year ended Dec. 31, 2016, stating that the 12.5% Senior Secured Notes had a maturity date of April 15, 2017. Cash from operations or the sale of assets was not sufficient to repay the notes and other short term obligations when they became due, which resulted in significant liquidity requirements on the Company that raise substantial doubt about its ability to continue as a going concern. As of Sept. 30, 2017, Spanish Broadcasting had $434.45 million in total assets, $563.69 million in total liabilities and a total stockholders' deficit of $129.23 million. Spanish Broadcasting reported a net loss of $16.34 million for the year ended Dec. 31, 2016, compared with a net loss of $26.95 million in 2015. * * * In May 2017, S&P Global Ratings withdrew its 'D' corporate credit rating and issue-level ratings on Spanish Broadcasting System. "We withdrew the ratings because we were unlikely to raise them from 'D', based on SBS' ongoing plans to restructure its debt," said S&P Global Ratings' credit analyst Scott Zari. S&P had downgraded SBS to 'D' on April 21, 2017, following the company's announcement that it didn't repay its $275 million 12.5% senior secured notes that were due April 15, 2017. In April 2017, Moody's Investors Service downgraded SBS's corporate family rating to 'Ca' from 'Caa2'. SBS's 'Ca' corporate family rating reflects an elevated expected loss rate following the recently announced default under the company's 12.5% senior secured notes due April 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. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are US$25 each. For subscription information, contact Peter A. Chapman at 215-945-7000 or Joseph Cardillo at 856-381-8268. * * * End of Transmission * * *