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/raid1/www/Hosts/bankrupt/TCRLA_Public/171212.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 12, 2017, Vol. 18, No. 246 Headlines A R G E N T I N A YPF SA: Fitch to Rate Proposed Sr. Unsecured Notes Due 2017 'B' B R A Z I L RIO OIL: Fitch Affirms CCC Rating on USD1.1BB Series 2014-3 Notes C U B A CUBA: Moody's Says Credit Profile Reflects Significant Challenges D O M I N I C A N R E P U B L I C DOMINICAN REPUBLIC: IDB OKs US$1.95 Billion Strategy to 2020 G R E N A D A GRENADA: Asks European Union to Take it Off Tax Haven Blacklist J A M A I C A DIGICEL GROUP: Alexander Greiffenclau is New Group Chief Executive JAMAICA: Banking Sector Sees Decline in Non-Performing Loans M E X I C O ALPHA HOLDINGS: Moody's Assigns B1 Issuer and Corp. Family Rating P U E R T O R I C O PUERTO RICO: Judge R. Colton Appointed as Judicial Mediator PUERTO RICO AQUEDUCT: Fitch Keeps C Rev Bonds Rating on Watch Neg. PJ ROSALY: Court Grants Bid to Reject Union de Tronquistas CBA PROPERTY RENTAL: Taps Charles A. Cuprill as Legal Counsel PROPERTY RENTAL: Taps Luis R. Carrasquillo as Financial Consultant TAMARA HOME: Taps Rivera-Velez as New Legal Counsel T R I N I D A D & T O B A G O TRINIDAD & TOBAGO: No Mass Lay-Offs in 2018 - - - - - ================= A R G E N T I N A ================= YPF SA: Fitch to Rate Proposed Sr. Unsecured Notes Due 2017 'B' --------------------------------------------------------------- Fitch Ratings expects to assign a long-term rating of 'B(EXP)/RR4' to YPF S.A.'s proposed 2047 issuance and the reopening to its 6.950% senior unsecured notes due 2027. The company expects to raise up to USD1.0 billion with these proposed issuances with the possibility to issue jointly up to 1.5 billion. The company expects to use the proceeds to refinance its debt, which may include a cash tender offer to repurchase any and all of its outstanding 8.875% senior notes due 2018, for investments in fixed assets and working capital located in Argentina. The proposed notes will rank pari passu in priority of payment with all other YPF's senior unsecured debt and will be rated the same as all of the company's senior unsecured obligations. YPF S.A.'s ratings reflect its strong linkage with the credit quality of the Republic of Argentina and the company's relatively low reserve life. YPF's 'B' long-term ratings are linked to Argentina's sovereign rating, which has long-term local currency (LC) and foreign currency (FC) Issuer Default Rating (IDRs) of 'B'/Positive Outlook. Fitch has assigned a country ceiling of 'B' to the Republic of Argentina, which limits the foreign currency rating of most Argentine corporates. Country Ceilings are designed to reflect the risks associated with sovereigns placing restrictions on private sector corporates, which may prevent them from converting LC to any FC under a stress scenario, and/or may not allow the transfer of FC abroad to service FC debt obligations. The 'RR4' Recovery Rating for the company's senior unsecured notes outstanding reflects an average expected recovery given default and is in line with the RR soft cap established for Argentine corporates. Fitch has recently revised the Rating Outlook to Positive from Stable for several Argentine corporates, including YPF. The revisions reflect an improving backdrop for government policies that could support a stronger and more stable macroeconomic outlook, after a decade of weak and volatile performance. Recent midterm elections have improved confidence in the durability of the ongoing policy shift, which augurs well for investment and the sovereign's ability to maintain favorable financing access. The build-up in international reserves and a more flexible exchange rate confer greater policy flexibility to manage shocks. KEY RATING DRIVERS Linkage to Sovereign: YPF's ratings reflect the close linkage with the Republic of Argentina resulting from the company's ownership structure as well as recent government interventions. The Republic of Argentina controls the company through its 51% participation after it nationalized the company on April 2012. Following this action, the company's strategy and business decisions are governed by the Republic. The Argentine government has a history of significant interference in the oil and gas sector. Historically, government regulations maintained domestic crude oil prices significantly below world prices. These same regulations kept Argentine crude oil prices above global prices during the global oil price decline observed during the last two years. Fitch expects oil domestic prices to converge to international prices by year-end 2018. Favorable Environment for Vaca Muerta: Fitch believes the price environment for natural gas (NG) in Argentina is favorable as subsidies will remain through 2021. In November 2017, the Argentine government agreed to extend existing natural gas (NG) subsidies for new and incremental production of unconventional gas production. Domestic prices for NG will remain high at USD7.50 per million Btu (MMBtu) for new production, more than twice the NG prices in the U.S. and then decrease by USD0.50 per MMBtu over the next three years and stabilize at USD6.00 per MMBtu in 2021. The Argentine government appears to remain committed to attracting major oil and gas companies to invest in exploration and production in Argentina's prolific Vaca Muerta shale basin. Low Hydrocarbon Reserve Life: The ratings consider the company's relatively weak operating metrics characterized by a low reserve life. As of year-end 2016, YPF reported proved reserves (1P) of 1,113 million barrels of oil equivalent (boe) and average production of 578,500boe per day (boe/d) with 57% of the production related to liquids. In 2016, proved developed reserves totaled 815mmboe, representing 73% of total reserves, in the upper range of the 60%-80% that Fitch considers adequate. In 2016 and after three years of reserve replacement ratios (RRR) above 100%, 1P reserves decreased 9%. The decline in domestic prices led YPF to reduce capex during this year resulting in a RRR of 46%. Based on production trends the company's reserve life is low at 5.3 years, well below Fitch's ideal range of 10 years. Fitch believes the favorable environment for NG prices in Argentina would incentivize investments in the Neuquen basin that could result in an increase in reserves, which would allow the company to maintain a five-to-six-year reserve life. Fitch believes YPF's low reserve life could create significant operational challenges in the medium to long term and gives the company limited flexibility to reduce capex in order to increase upstream reserves/production. YPF's ability to develop mature fields and non-conventional resources will be key to the success of its long term investment plan to maintain reserves and increase production. Stable Operating Metrics: As expected, output as of September 2017 was slightly down at an average of 558,800 per day (boe/d) from 2016 with an average production of 578,500boe/d. YPF continues its drilling program with a focus on non-conventional formations, and the company's lifting cost remain near 2016 levels of USD11/bbl down from USD16/bbl observed in 2015 due to the depreciation of the Argentine peso and better terms with suppliers. As oil prices converge to international prices, Fitch expects the company to focus on reducing costs to remain competitive. Strong Financial Profile: YPF maintains a strong financial profile, which Fitch views as in line with a 'BB' IDR on a stand- alone basis. YPF has relatively solid credit protection metrics, characterized by moderate leverage and a manageable debt- amortization schedule. The company reported as of LTM ended September 2017 approximately USD4,200 million of adjusted EBITDA and USD9,900 million of debt. This translates into a Fitch calculated financial leverage ratio of approximately 2.4x. YPF's leverage as measured by total proven reserves (1P) to total debt is high at USD8.9 of debt per barrel of 1P. Manageable Capex Plan: YPF remains committed to reducing its capex investments to an average of USD4,000 - 4,500 million per year from 2018 through 2022 while incrementally increasing production focusing on unconventional. As of September 2017, the company spent USD2,500 million in Capex for 2017. This is slightly less than the same period for 2016. Nevertheless, despite the reductions in capex, Fitch expects the company to continue with its program aimed to maintain stable production and increase production in the following years. DERIVATION SUMMARY YPF's ratings are supported by its leading position in the Argentine energy market and its strategic importance for the country. The company's ratings are constrained by the credit quality of the Republic of Argentina given that the government controls the company through its 51% participation and its strategy and business decisions are governed by the Republic. YPF's 'B' ratings are linked to the sovereign rating of Argentina, which has long-term LC and FC IDRs of 'B' with a Stable Outlook. To a lesser degree, the ratings also reflect the company's weak operating metrics reflected in a low reserve life of approximately five years. KEY ASSUMPTIONS Fitch's key assumptions within the rating case for YPF include: -- Production remains flat during the rating period; -- Realized oil prices of USD60/bbl for 2017, decreasing to mid-USD50's by the end of 2017 as domestic prices converge to international prices. -- Fitch's oil price assumptions per barrel of Brent of USD52.5/bbl for 2018, USD55/bbl for 2019 and USD57.5/bbl in the long-term; -- Natural gas prices subsidies remain until 2021; -- Capex slightly decreasing in 2017 and then increasing during 2018 - 2020 RATING SENSITIVITIES Developments that May, Individually or Collectively, Lead to Positive Rating Action -- A positive rating action could occur as the result of an upgrade of the sovereign rating. Developments that May, Individually or Collectively, Lead to Negative Rating Action -- YPF's ratings could be negatively affected by a combination of the following: a downgrade of the Republic of Argentina's ratings; a significant deterioration of credit metrics; and/or the adoption of adverse public policies that can affect the company's business performance in any of its business segments. LIQUIDITY YPF's cash and cash equivalents totaled USD1,350 million as of September 2017 comparing favorably with its debt maturities of USD1.2 billion due in 2018. The company's liquidity position is further strengthened by the USD816 million government bonds related to the Plan Gas receivables. The company's liquidity position is considered adequate to cover its short-term debt. The company has been successful accessing the local and international markets, and given that the company is controlled by the Argentine government, Fitch does not anticipate any difficulties for the company to tap the local or international debt markets in order to refinance short-term debt. FULL LIST OF RATING ACTIONS Fitch currently rates YPF S.A.: -- Long-Term Foreign Currency IDR 'B'; Outlook Positive; -- Long-Term Local Currency IDR 'B'; Outlook Positive; -- Senior unsecured notes 'B'/'RR4'. =========== B R A Z I L =========== RIO OIL: Fitch Affirms CCC Rating on USD1.1BB Series 2014-3 Notes ----------------------------------------------------------------- Fitch Ratings has affirmed the series 2014 notes issued by Rio Oil Finance Trust: -- USD2 billion series 2014-1 notes at 'CCC'; -- BRL 2.4 billion series 2014-2 special indebtedness at 'CCCsf(bra)'; -- USD1.1 billion series 2014-3 notes at 'CCC'. Fitch's ratings on the notes address timely payment of interest and principal. Interest payments reflect the amended cash flow distributions and principal payments consider all monthly early principal amortization payments received during a given quarter. The issuances are backed by royalty flows and special participations owed by oil concessionaires, predominantly operated by Petroleo Brasileiro S.A. (Petrobras), to the government of the State of Rio de Janeiro (RJS). The State of Rio de Janeiro assigned 100% of these flows to RioPrevidencia (RP), the state's pension fund, and RP sold these rights to Rio Oil Finance Trust, the issuer. KEY RATING DRIVERS Increased Exposure to Liquidity Risk: In Fitch's opinion adjustments in the cash flow distributions during the early amortization period which include a change in the interest payment schedule to monthly from quarterly and the monthly release of the debt service reserve account increase the transaction's exposure to liquidity risk. With this change the structure does not benefit from the existing liquidity reserve account and short-term variations in cash flows ahead of a large federal debt payment stress near-term liquidity and may cause total collections to be insufficient to cover debt service on the notes. Faster Than Expected Deleveraging: Given the monthly release of the debt service reserve account the transaction has benefited from a faster pace of amortization than originally expected, reducing overall debt service. However, this accelerated amortization has reduced excess cash flows returned to the state and, in turn, increased the transaction's exposure to potential political risk. In addition, the state's liquidity constraints, evidenced by various delays in commercial and other payments, have heightened this political risk. Oil Prices Impact Performance: The reduction in oil prices depleted oil royalty flows such that Annualized Average DSCR (AADSCR) reached a low of 1.1x in Q4 2016. Although a recent uptick in oil prices benefits royalty flows, which coupled with the deleveraging of the transaction has translated into higher AADSCRs, a sustained low oil price environment may limit royalty flows used to pay debt service. Future Expected Production Increases at Risk: The transaction benefits from growth in production levels as it increases the total royalty flows. Depressed oil prices have led Petrobras to reduce production targets on multiple occasions. Therefore, sustained low oil prices could translate into further capital expenditure cuts by Petrobras. RATING SENSITIVITIES Fitch will continue to monitor the potential for ongoing set-offs and their potential impact on the transaction's ability to meet timely debt service. The ratings are capped by the credit quality of Petrobras, the main obligor generating cash flows to support the transaction, and to the sovereign rating and country ceiling assigned to Brazil. The transaction is exposed to oil price and production volume risks. Declines in prices or production levels significantly below expectations may trigger downgrades. Additionally, the ratings are sensitive to the rating of Banco do Brasil as a direct counterparty to the transaction. ======= C U B A ======= CUBA: Moody's Says Credit Profile Reflects Significant Challenges ----------------------------------------------------------------- The credit profile of Cuba (Caa2 stable) reflects significant credit challenges due to diminished growth prospects as rapprochement with the United States (Aaa stable) stalls, Moody's Investors Service says in a new report. Other credit weaknesses constraining Cuba's creditworthiness include limited access to external financing, a high dependence on imported goods and, most importantly, a lack of data transparency. Structural inefficiencies directly hinder economic growth. Conversely, a recent history of low, but steady growth and an expanding tourism sector support the credit profile. The report, an annual credit analysis, includes an overview of Cuba's economic standing, its institutional and fiscal strength, as well as its susceptibility to event risk. =================================== D O M I N I C A N R E P U B L I C =================================== DOMINICAN REPUBLIC: IDB OKs US$1.95 Billion Strategy to 2020 ------------------------------------------------------------- Dominican Today reports that the Inter-American Development Bank (IDB) approved the Country Strategy for the Dominican Republic with US$1.95 billion, for the 2017-2020 period. The IDB Executive Board established the financial program estimated at US$1.95 billion and disbursements of around US$1.94 billion, according to Dominican Today. "To guarantee an agile execution, the Bank will work on strengthening the executing units and will explore innovative mechanisms for execution," the IDB said, the report notes. It said the main objective of the 2017-2020 Country Strategy is to promote inclusive and sustainable growth, compatible with the creation of quality jobs that allow the reduction of poverty and inequality levels, the report relays. "The IDB Group intends to deepen the interventions of the previous strategy that are in line with the medium and long-term challenges of the country: improvement of the quality and coverage of basic services; expansion of productive opportunities; and improvement in the management of public finances, institutional strengthening and transparency," the multilateral bank said, the report discloses. It also cited the actions that promote gender equality, protection of the environment and adaptation to climate change, and innovation and will incorporate and utilize ICTs, the report says. "During 2013-2016, the IDB Strategy focused on three pillars: macroeconomic stability and fiscal management; investment in human capital; and productive development policies," the report adds. 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. ============= G R E N A D A ============= GRENADA: Asks European Union to Take it Off Tax Haven Blacklist --------------------------------------------------------------- Caribbean360.com reports that Grenada is asking the European Union (EU) to remove it from the global tax haven blacklist released earlier. Grenada was one of four Caribbean countries on the list of 17 non- cooperative jurisdictions in taxation matters, prepared by the European Council's Code of Conduct Group after months of investigation, according to Caribbean360.com. The other Caribbean nations were St Lucia, Trinidad and Tobago and Barbados, the report notes. A statement from the Ministry of Finance said the minister has requested that the Eastern Caribbean nation "be de-listed soonest considering that we adequately and formally indicated our commitment to comply with all the stipulations of the Code of Conduct Group going forward, and therefore should not have been included on the published blacklist," the report relays. The reason put forward for Grenada being included in the list was that it has not signed and ratified the Organization for Economic Co-operation and Development (OECD) Multilateral Convention on Mutual Administrative Assistance as amended, and did not clearly commit to addressing these issues by December 31, 2018, the report notes. However, the Finance Ministry said it is important to note that Grenada made high level commitments, complete with timelines, to the EU Code of Conduct group by way of letters on November 17 and 28, 2017, "to action concerns raised by the group regarding meeting all the criteria set up by the EU Council for Transparency and Fairness in Taxation," the report relays. "And we are well on track to doing so," it said, the report discloses. "Grenada has enacted and signed into force both the primary and secondary legislation which are required for implementing the OECD Multilateral Convention on Mutual Administrative Assistance. In addition, Grenada has expended a significant amount of resources to put in place structures and processes to facilitate exchange of information on taxation with countries in the European Union," Finance Ministry said, the report notes. The Finance Ministry said Grenada had inadvertently not provided a timeline for signing the OECD Multilateral Convention on Mutual Administrative Assistance, given that no timeline was in the Code of Conduct Group request, the report says. "It must be noted though, that Grenada fully stated its commitment to sign in aforementioned correspondences. Now that the blacklisting for that reason has been brought to our attention, the Minister of Finance has written to the code of conduct group, specifying our commitment to sign the OECD Multilateral Convention on Mutual Administrative Assistance by 31st December, 2018," the statement added, the report relays. ============= J A M A I C A ============= DIGICEL GROUP: Alexander Greiffenclau is New Group Chief Executive ------------------------------------------------------------------ RJR News reports that Digicel Group Limited disclosed the appointment of Mr. Alexander Matuschka Greiffenclau as Group Chief Executive with effect from February 2018. He will succeed Mr. Colm Delves who had signaled to the Board some time ago his intention to step down from his executive role for personal and family reasons, according to RJR News. Mr. Delves will remain as a non-executive director of Digicel and will also provide advisory services to the Group, the report notes. As reported in the Troubled Company Reporter-Latin America on May 26, 2017, Fitch Ratings has affirmed at 'B' the Long-term Foreign-currency Issuer Default Ratings (IDR) of Digicel Group Limited (DGL) and its subsidiaries, Digicel Limited (DL) and Digicel International Finance Limited (DIFL), collectively referred to as Digicel. The Rating Outlook is Stable. Fitch has also affirmed all existing issue ratings of Digicel's debt instruments. JAMAICA: Banking Sector Sees Decline in Non-Performing Loans ------------------------------------------------------------ RJR News reports that Jamaica's banking sector has recorded a decline in non-performing loans. According to the Bank of Jamaica's quarterly monetary policy report for July to September, with the increase in demand for credit during the period, there was an improvement in the quality of commercial banks' loan portfolio, RJR News relates. The ratio of non-performing loans to private sector loans at the end of August was 2.83 per cent, according to RJR News. This represented a fall of 1.19 percentage points, relative to the end of August in the previous year, the report relays. The report shows that the decline in the non-performing loan ratio reflected a fall of 7.5 percent or J$14.9 billion in total past due loans, the report notes. As reported in the Troubled Company Reporter-Latin America, S&P Global Ratings affirmed on Sept. 25, 2017, its 'B' long- and short-term foreign and local currency sovereign credit ratings on Jamaica. The outlook on the long-term rating remains stable. At the same time, S&P Global Ratings affirmed its 'B+' transfer and convertibility assessment on the country. =========== M E X I C O =========== ALPHA HOLDINGS: Moody's Assigns B1 Issuer and Corp. Family Rating ----------------------------------------------------------------- Moody's Investors Service has assigned B1 issuer and Corporate Family Ratings to Alpha Holdings, S.A. de C.V., Sociedad Financiera de Objeto Multiple, Entidad No Regulada (AlphaCredit). Moody's also assigned a B1 foreign currency debt rating to AlphaCredit's proposed fixed rate five-year cross-border 144a/RegS senior unsecured debt issuance of between USD300 million and USD400 million. The outlook on all ratings is stable. The following ratings were assigned to AlphaCredit: Long-term global local currency issuer rating of B1, Stable Short-term global local currency issuer rating of Not Prime Long-term foreign currency issuer rating of B1, Stable Short-term foreign currency issuer rating of Not Prime Long-term global local currency Corporate Family rating of B1 The following rating was assigned to AlphaCredit's proposed fixed rate five-year cross-border 144a/RegS senior unsecured debt issuance of between USD300 million and USD400 million: Long-term foreign currency senior unsecured debt rating B1, Stable Outlook is stable RATINGS RATIONALE AlphaCredit's B1 ratings reflect the company's good risk management and ample growth prospects for a business focused on secured consumer lending mainly in the form of payroll-deducted loans (PDLs) with public sector employees and retirees in Mexico, as well as in Colombia. As the company consolidates its various recent acquisitions, Moody's expects the business to generate stable cash flows, with rising interest income to cover high interest, credit and operating costs, and support an adequate level of core profitability relative to the company's high indebtedness. The rating agency also incorporated the company's track record in accessing a wide range of institutional funding sources, as well as its strong loan loss reserves, which cover non-performing loans by two times. These credit strengths are balanced by risks related to (1) the company's high exposure to a single product, that of payroll- deducted loans, (2) the company's dependence on contracts with local government entities for the right to offer its key product, which will subject it to political risks during upcoming elections in Mexico, (3) very high loan growth, which the company expects to average almost 30% in the next years, (4) expansion into new products such as small and midsized company (SME) financing in the form of factoring and leasing and out-of-footprint expansion into Colombia, (5) high competition from both dedicated finance companies focused on secured and unsecured consumer lending as well as from much larger and more diversified banks, (6) weak capitalization, and (7) relatively high non-performing loans of around 5%. The rating is also supported by AlphaCredit's adequate liquid assets that represent 10% of the loan book and committed facilities that together cover debt maturities over the coming 24 months by nearly 120%. AlphaCredit's planned unsecured debt issuance, which will reduce the company's currently heavy reliance on short-term, secured funding will increase liquidity coverage further, even if the large bullet maturity will also expose the company to increased refinancing risk. AlphaCredit's net interest margin and hence profitability also stand to benefit from the proposed unsecured debt issuance, which is expected to charge a lower rate than the company's current cost of funds. The company's weak capitalization considers that its shareholders' equity is more than fully accounted for by the valuations the company ascribes to the non-exclusive contracts it has with various governmental entities to provide PDLs to their employees. Because of their limited loss absorption capacity, Moody's deducts the value of these contracts from its measure of tangible common equity. As the company continues to expand and to reinvest all of its earnings, however, Moody's expects that capitalization will steadily increase. WHAT COULD MAKE COULD CHANGE THE RATING UP/DOWN The company faces limited upward ratings pressure at this time. However, the ratings could potentially rise if capitalization materially improves, loan growth slows to a more sustainable level, and the company is able to halve its nonperforming loan ratio. The rating will face downward pressure if the expected improvement in earnings and capital are not met, or if liquidity or asset quality deteriorate. If AlphaCredit is unable to replace its mainly secured financing with the expected issuance of unsecured debt, it would lead to a need to differentiate between the company's Corporate Family Rating (CFR) and Issuer Ratings. CFRs represent an opinion of the consolidated credit risk of a speculative grade company, equivalent to the weighted average of all debt classes within a company's capital structure, considering the proportionality, seniority and level of asset protection associated with various debt classes, both nominally and in relation to each other, whereas the issuer rating is an assessment of the creditworthiness of the company's senior unsecured obligations. If these obligations remain subordinated to a significant amount of secured debt, there would be downward pressure on the issuer rating. Established in 2011, AlphaCredit reported USD594 million in assets and USD270 million in loans as of September 2017 and provides consumer (94% of loans) and SME (6% of loans) financing, through four products in Mexico, as well as in Colombia. The principal methodology used in these ratings was Finance Companies published in December 2016. ====================== P U E R T O R I C O ====================== PUERTO RICO: Judge R. Colton Appointed as Judicial Mediator ----------------------------------------------------------- BankruptcyData.com reported that the U.S. Bankruptcy Court issued an order appointing a new member to the Commonwealth of Puerto Rico's mediation team. The order states, "Pursuant to 11 U.S.C. Sec. 105, made applicable to these cases by section 301 of PROMESA, 48 U.S.C. section 2161, and to further the goal of the successful, consensual resolution of the issues raised in these debt adjustment proceedings, the Court hereby appoints Bankruptcy Judge Roberta A. Colton, who serves in the United States Bankruptcy Court for the Middle District of Florida, to serve as a judicial mediator as needed in these cases. Judge Colton's appointment has been authorized through the inter-circuit assignment procedures of the Judicial Conference of the United States and is effective immediately. The Court thanks Bankruptcy Judge Christopher Klein, who will be stepping back from Mediation Team duties when his current inter-circuit assignment expires, for his dedicated service in connection with these cases." About Puerto Rico Puerto Rico is a self-governing commonwealth in association with the United States that's facing a massive bond debt of $70 billion, a 68% debt-to-GDP ratio and negative economic growth in nine of the last 10 years. The Commonwealth of Puerto Rico has sought bankruptcy protection, aiming to restructure its massive $74 billion debt-load and $49 billion in pension obligations. The debt restructuring petition was filed by Puerto Rico's financial oversight board in U.S. District Court in Puerto Rico (Case No. 17-01578) on May 3, 2017, and was made under Title III of 2016's U.S. Congressional rescue law known as the Puerto Rico Oversight, Management, and Economic Stability Act ("PROMESA"). The Financial Oversight and Management Board later commenced Title III cases for the Puerto Rico Sales Tax Financing Corporation (COFINA) on May 5, 2017, and the Employees Retirement System (ERS) and the Puerto Rico Highways and Transportation Authority (HTA) on May 21, 2017. On July 2, 2017, a Title III case was commenced for the Puerto Rico Electric Power Authority ("PREPA"). U.S. Chief Justice John Roberts has appointed U.S. District Judge Laura Taylor Swain to oversee the Title III cases. The Honorable Judith Dein, a United States Magistrate Judge for the District of Massachusetts, has been designated to preside over matters that may be referred to her by Judge Swain, including discovery disputes, and management of other pretrial proceedings. Joint administration of the Title III cases, under Lead Case No. 17-3283, was granted on June 29, 2017. The Oversight Board has hired as advisors, Proskauer Rose LLP and O'Neill & Borges LLC as legal counsel, McKinsey & Co. as strategic consultant, Citigroup Global Markets, as municipal investment banker, and Ernst & Young, as financial advisor. Martin J. Bienenstock, Esq., Scott K. Rutsky, Esq., and Philip M. Abelson, Esq., of Proskauer Rose; and Hermann D. Bauer, Esq., at O'Neill & Borges are on-board as attorneys. McKinsey & Co. is the Board's strategic consultant, Ernst & Young is the Board's financial advisor, and Citigroup Global Markets Inc.is the Board's municipal investment banker. Prime Clerk LLC is the claims and noticing agent. Prime Clerk maintains a case web site at: https://cases.primeclerk.com/puertorico Epiq Bankruptcy Solutions LLC is the service agent for ERS, HTA, and PREPA. O'Melveny & Myers LLP is counsel to the Commonwealth's Puerto Rico Fiscal Agency and Financial Advisory Authority (AAFAF), the agency responsible for negotiations with bondholders. The Oversight Board named Professor Nancy B. Rapoport as fee examiner and to chair a committee to review professionals' fees. Bondholders' Attorneys Toro, Colon, Mullet, Rivera & Sifre, P.S.C. and Kramer Levin Naftalis & Frankel LLP serve as counsel to the Mutual Fund Group, comprised of mutual funds managed by Oppenheimer Funds, Inc., Franklin Advisers, Inc., and the First Puerto Rico Family of Funds, which collectively hold over $3.5 billion in COFINA Bonds and over $2.9 billion in other bonds issued by Puerto Rico and other instrumentalities, including over $1.8 billion of Puerto Rico general obligation bonds ("GO Bonds"). White & Case LLP and Lopez Sanchez & Pirillo LLC represent the UBS Family of Funds and the Puerto Rico Family of Funds, which hold $613.3 million in COFINA bonds. Paul, Weiss, Rifkind, Wharton & Garrison LLP, Robbins, Russell, Englert, Orseck, Untereiner & Sauber LLP, and Jimenez, Graffam & Lausell are co-counsel to the ad hoc group of General Obligation Bondholders, comprised of Aurelius Capital Management, LP, Autonomy Capital (Jersey) LP, FCO Advisors LP, Franklin Mutual Advisers LLC, Monarch Alternative Capital LP, Senator Investment Group LP, and Stone Lion Capital Partners L.P. Quinn Emanuel Urquhart & Sullivan, LLP and Reichard & Escalera are co-counsel to the ad hoc coalition of holders of senior bonds issued by COFINA, comprised of at least 30 institutional holders, including Canyon Capital Advisors LLC and Varde Investment Partners, L.P. Correa Acevedo & Abesada Law Offices, P.S.C., is counsel to Canyon Capital Advisors, LLC, River Canyon Fund Management, LLC, Davidson Kempner Capital Management LP, OZ Management, LP, and OZ Management II LP (the QTCB Noteholder Group). Committees The U.S. Trustee formed a nine-member Official Committee of Retirees and a seven-member Official Committee of Unsecured Creditors of the Commonwealth. The Retiree Committee tapped Jenner & Block LLP and Bennazar, Garcia & Milian, C.S.P., as its attorneys. The Creditors Committee tapped Paul Hastings LLP and O'Neill & Gilmore LLC as counsel. PUERTO RICO AQUEDUCT: Fitch Keeps C Rev Bonds Rating on Watch Neg. ------------------------------------------------------------------ Fitch Ratings maintains the following Puerto Rico Aqueduct and Sewer Authority (PRASA) bonds on Rating Watch Negative: -- Approximately $3.3 billion in outstanding senior lien revenue bonds, series A, B, 2012A and 2012B; -- Approximately $285 million in outstanding revenue refunding bonds, series 2008A and 2008B (guaranteed by the Commonwealth of Puerto Rico). All bonds are currently rated 'C'. SECURITY The series A, B, 2012A and 2012B senior lien revenue bonds are secured by a gross lien of all authority revenues related to PRASA's combined water and sewer system (the system), as defined in the amended master agreement of trust (the MAT), senior to all other debt or expenses of PRASA. The series 2008A and 2008B revenue refunding bonds are payable from system revenues subordinate to all PRASA obligations except Commonwealth of Puerto Rico (the commonwealth) supported obligations and obligations payable from surplus revenues. The series 2008A and 2008B revenue refunding bonds are further secured by a guaranty of the commonwealth. Currently, the commonwealth guaranty provides no rating enhancement. KEY RATING DRIVERS NEGATIVE WATCH MAINTAINED: Maintenance of the Negative Watch continues to reflect Fitch's view that a restructuring of PRASA's debt appears imminent. PRASA was involved in negotiations with bondholders to discuss the potential of some form of debt relief in the months leading up to Hurricanes Irma and Maria but these negotiations were put on hold as PRASA dealt with the immediate ramifications of the hurricanes. The effects of the hurricanes, particularly Maria, have added considerable additional operating and financial pressures to PRASA. CASH FLOW CONCERNS INCREASING: PRASA's net cash receipts and existing funds on hand were insufficient to meet long-term working capital, debt service and other funding requirements per PRASA's latest fiscal plan. In the aftermath of Hurricane Maria cash flow concerns have exacerbated. PRASA's cash reserves were reportedly stable in the weeks immediately following Maria. But with lower receipts occurring from delayed service interruptions (around 10% of customers were still without water service at the beginning of December) coupled with increased spending in the hurricane's aftermath, PRASA's $107 million in operational cash reserves as of October 20 were expected to drop to a negative balance by December. AUDIT CONCERNS: PRASA's most recent audited performance (fiscal year ended June 30, 2016) was extremely weak, although coverage of all obligations was a minimal 1.07x. Days cash also improved slightly for the year but remained modest at 62 days. PRASA's auditor (Kevane Grant Thornton LLP) also noted that financial difficulties experienced by the authority raise substantial doubt about its ability to continue as a going concern. Results for fiscal 2017 are not available. RATING SENSITIVITIES ANNOUNCEMENT OF DEBT RESTRUCTURING: Any negotiated restructuring resolution would be evaluated for its effect on bondholders. A restructuring that does not result in full and timely payment of bonds according to the original terms promised would result in a downgrade for affected securities to 'D' upon execution. PJ ROSALY: Court Grants Bid to Reject Union de Tronquistas CBA -------------------------------------------------------------- Judge Enrique S. Lamoutte of the U.S. Bankruptcy Court for the District of Puerto Rico granted PJ Rosaly Enterprises Inc.'s motion requesting rejection of the collective bargaining agreement with Union de Tronquistas. The Debtor sustains that it cannot afford the cost of the CBA as is. It alleges that the clauses it is seeking to modify have an economic impact of approximately $582,503 per year. Moreover, the Debtor argues that it will not be able to reorganize if the court does not approve the rejection of the CBA, nor will the other two related entities. Furthermore, the Debtor concludes that it has complied with the provisions of Section 1113 and that the Union has refused to accept its proposals without just cause. The Union does not dispute that the Debtor and the Union met and tried to reach an agreement. However, it argues that the Debtor has failed to comply with the requirements of Section 1113. For example, the Union sustains that the Debtor has failed to provide sufficient financial information. Likewise, the Union argues that the Debtor failed to negotiate in good faith. The issue before the court is whether the Debtor's request to reject the CBA complies with the provisions of Section 1113. The court is cognizant of the importance and impact of its decision. Especially, in light of the economic conditions in Puerto Rico for the past decade, as amplified by the passage of Hurricanes Irma and Maria. The court is also keenly aware of the fact that the Stipulation between the Union and the Debtor was signed on August 24, 2016, one month before the bankruptcy petition was filed. This sequence of events seems to have had a severe impact on the positions and negotiations between the parties. Following the enactment of Section 1113, several courts have followed the nine-factor test first articulated in In re Am. Provision Co., to determine whether the debtor complied with Section 1113. The Court summarized the requirements contained in Section 1113 as follows: 1. The debtor in possession must make a proposal to the Union to modify the collective bargaining agreement. 2. The proposal must be based on the most complete and reliable information available at the time of the proposal. 3. The proposed modifications must be necessary to permit the reorganization of the debtor. 4. The proposed modifications must assure that all creditors, the debtor and all of the affected parties are treated fairly and equitably. 5. The debtor must provide to the Union such relevant information as is necessary to evaluate the proposal. 6. Between the time of the making of the proposal and the time of the hearing on approval of the rejection of the existing collective bargaining agreement, the debtor must meet at reasonable times with the Union. 7. At the meetings, the debtor must confer in good faith in attempting to reach mutually satisfactory modifications of the collective bargaining agreement. 8. The Union must have refused to accept the proposal without good cause. 9. The balance of the equities must clearly favor rejection of the collective bargaining agreement. After considering the factors in light of this court's findings, the court concludes that the balance of the equities in this case favors rejection. The court has already found that the burden is spread among parties in interest and that the Debtor negotiated in good faith. The evidence before the court shows that the Debtor will not be able to successfully reorganize if rejection is not permitted. Based on the evidence presented and the application of the nine-factor test, the court finds that the Debtor has satisfied the requirements of Section 1113. A full-text copy of the Court's Opinion and Order dated Dec. 7, 2017, is available at: http://bankrupt.com/misc/prb16-07690-11-235.pdf About P.J. Rosaly P.J. Rosaly Enterprises, Inc., dba Islandwide Express, filed a chapter 11 petition (Bankr. D.P.R. Case No. 16-07690) on September 28, 2016. The petition was signed by Ivan Marin, president. The Debtor is represented by Carmen D. Conde Torres, Esq. and Luisa S. Valle Castro, Esq., at C. Conde & Associates. The Debtor estimated assets and liabilities at $1 million to $10 million at the time of the filing. The Debtor is specialized in providing next day, same day delivery services to its clients, as well as temperature controlled deliveries. It is also engaged by the main banks in the island and provide internal messenger and clearing house services to these institutions. There are two related parties to this company: Islandwide Logistics, Inc. and HME Holdings, Inc. Together, they form the Islandwide Group. PROPERTY RENTAL: Taps Charles A. Cuprill as Legal Counsel --------------------------------------------------------- Property Rental and Investment Corp. seeks approval from the U.S. Bankruptcy Court for the District of Puerto Rico to hire Charles A. Cuprill, P.S.C. Law Offices as its legal counsel. The firm will advise the Debtor regarding its duties under the Bankruptcy Code and will provide other legal services related to its Chapter 11 case. The firm's hourly rates are: Charles Cuprill, Esq. $350 Associates $250 Paralegals $85 The Debtor has agreed to pay the firm a retainer in the sum of $10,000. Mr. Cuprill disclosed in a court filing that his firm has no connection with the Debtor or any of its insiders and creditors. The firm can be reached through: Charles Alfred Cuprill, Esq. Charles A. Cuprill, P.S.C. Law Offices 356 Calle Fortaleza, Second Floor San Juan, PR 00901 Tel: (787) 977-0515 Fax: (787) 977-0518 Email: cacuprill@cuprill.com Email: ccuprill@cuprill.comffices About Property Rental and Investment Corp. Property Rental and Investment Corp. is a privately-held company engaged in the business of real estate rentals in Puerto Rico. It owns nine commercial properties having an aggregate appraised value of $9.12 million. The Debtor sought protection under Chapter 11 of the Bankruptcy Code (Bankr. D. P.R. Case No. 17-06865) on November 16, 2017. Adrian E. Stella Arroyo, president, signed the petition. At the time of the filing, the Debtor disclosed $16.62 million in assets and $8.69 million in liabilities. PROPERTY RENTAL: Taps Luis R. Carrasquillo as Financial Consultant ------------------------------------------------------------------ Property Rental and Investment Corp. seeks approval from the U.S. Bankruptcy Court for the District of Puerto Rico to hire CPA Luis R. Carrasquillo & Co., P.S.C. as its financial consultant. The firm will oversee the financial restructuring of the Debtor's affairs by advising it on strategic planning, preparing its plan of reorganization, and participating in negotiations with creditors. Its hourly rates range from $45 to $175. Luis Carrasquillo, a certified public accountant and principal of the firm, disclosed in a court filing that he and other members of his firm are "disinterested persons" as defined in section 101(14) of the Bankruptcy Code. Carrasquillo can be reached through: Luis R. Carrasquillo Ruiz, Esq. CPA Luis R. Carrasquillo & Co., P.S.C. 28th Street, #TI-26 Turabo Gardens Avenue Caguas, PR 00725 Phone: 787-746-4555/787-746-4556 Fax: 787-746-4564 About Property Rental and Investment Corp. Property Rental and Investment Corp. is a privately-held company engaged in the business of real estate rentals in Puerto Rico. It owns nine commercial properties having an aggregate appraised value of $9.12 million. The Debtor sought protection under Chapter 11 of the Bankruptcy Code (Bankr. D. P.R. Case No. 17-06865) on November 16, 2017. Adrian E. Stella Arroyo, president, signed the petition. At the time of the filing, the Debtor disclosed $16.62 million in assets and $8.69 million in liabilities. TAMARA HOME: Taps Rivera-Velez as New Legal Counsel --------------------------------------------------- Tamara Home Care Inc. seeks approval from the U.S. Bankruptcy Court for the District of Puerto Rico to hire Rivera-Velez & Santiago, LLC, as its new legal counsel. The firm will advise the Debtor regarding its duties under the Bankruptcy Code and will provide other legal services related to its Chapter 11 case. Rivera-Velez will replace Josue Torres Crespo, Esq., who withdrew as the Debtor's attorney. Manolo Santiago Lopez, Esq., and William Rivera Velez, Esq., the attorneys who will be handling the case, will each charge an hourly fee of $150. Paralegals will charge $75 per hour. The firm will receive a retainer in the sum of $2,000. Mr. Lopez disclosed in a court filing that he and his firm do not hold or represent any interest adverse to the Debtor's estate. The firm can be reached through: Manolo R. Santiago Lopez, Esq. Vela St. 9, Suite 100 San Juan, PR 00918 Phone: (787) 691-5903 (787) 754-0140 Email: lcdo.santiago@tuquiebrapr.com About Tamara Home Care Inc. Founded in 2010, Tamara Home Care Inc. is a privately-held company that provides home health care services. It is a small business debtor as defined in 11 U.S.C. section 101(51D). Tamara Home filed a petition for liquidation under Chapter 7 of the Bankruptcy Code on June 12, 2017. The case was converted into a Chapter 11 case (Bankr. D. P.R. Case No. 17-04204) on June 14, 2017. At the time of the filing, the Debtor disclosed that it had estimated assets of less than $50,000 and liabilities of less than $100,000. Judge Brian K. Tester presides over the case. ================================ T R I N I D A D & T O B A G O ================================ TRINIDAD & TOBAGO: No Mass Lay-Offs in 2018 ------------------------------------------- Leah Sorias at Trinidad Express reports that Trinidad and Tobago Prime Minister Dr. Keith Rowley said the Government does not expect to make mass retrenchments in the public sector in 2018. This as the moratorium the Government placed on State-sector retrenchment comes to an end on December 31, according to Trinidad Express. "In going forward, in managing the reduction of the expenditure profile, we are expecting that we won't have to do that. While 2018 will be difficult, we expect we would not engage in any mass retrenchment in 2018," he assured, the report notes. Mr. Rowley's comments came during an exclusive interview with CCN TV6 journalists Faine Richards and Juhel Browne. He asserted that the people of T&T remained the Government's number one priority, the report adds. *********** 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 * * *