/raid1/www/Hosts/bankrupt/TCRLA

/raid1/www/Hosts/bankrupt/TCRLA_Public/180112.mbx T R O U B L E D C O M P A N Y R E P O R T E R L A T I N A M E R I C A Friday, January 12, 2018, Vol. 19, No. 9 Headlines B R A Z I L HIDROVIAS DO BRASIL: Fitch Assigns 'BB' Long-Term IDR C H I L E CHILE: Economy Expected to Grow 3.2% in 2018, Economists Say D O M I N I C A N R E P U B L I C CAP CANA: Denies Towers Violate Zoning DOMINICAN REP: Retailers Want to Nix Severance Pay, Advance Tax P U E R T O R I C O A'GACI LLC: Files for Chapter 11 to Cut Retail Footprint AGACI LLC: Case Summary & 20 Largest Unsecured Creditors LIBERTY CABLEVISION: Bank Debt Trades at 4.08% Off PUERTO RICO: Gov't Launches Statehood Campaign in Congress PUERTO RICAN PARADE: Feb. 7 Disclosure Statement Hearing SEASTAR HOLDINGS: Wants Up to $1.89M DIP Financing From Volant SVI V E N E Z U E L A VENEZUELA: Pays Brazil Half of $540 Million Trade Debt VENEZUELA: S&P Lowers 2020 Global Bond Rating to 'D' - - - - - =========== B R A Z I L =========== HIDROVIAS DO BRASIL: Fitch Assigns 'BB' Long-Term IDR ----------------------------------------------------- Fitch Ratings has assigned a Long-Term Foreign Currency Issuer Default Rating (IDR) and Long-Term Local Currency IDR of 'BB' to Hidrovias do Brasil S.A. (HdB), Fitch has also assigned HdB a National Long-Term rating of 'AA-(bra)'. The Rating Outlook is Stable. The ratings reflect HdB's stable cash flow generation, limited business diversification, Low FX exposure, and relative smaller scale when compared to regional peers. The Stable Outook reflects Fitch's view that HdB will develop its operations while reaching net financial leverage around 3.5x and generating positive FCF during 2018-2019. KEY RATING DRIVERS Stable Cash Flow Generation Driven by Take-or-Pay Contracts: HdB's ratings incorporate its stable cash flow generation, which reflects the majority of its EBITDA being generated under long- term take-or-pay contracts. These contracts provide cash flow visibility and contain features that allow for inflation-adjusted price increases and pass-through of fuel charges. Volume risk under take-or-pay contracts is essentially passed on to customers due to their long-term nature. HdB already has approximately 85% of its total capacity contracted under long-term take-or-pay agreements for the next 10 years. Fitch expects HdB's annual cash flow generation, measured as EBITDA, to reach an average of BRL425 million during 2017-2019. 2017 Turning-Point Year, Expanding Scale: HdB consistently increased its scale of operations through new contracts during 2014-2017, resulting in improved operational performance in 2017. The company's total annual EBITDA increased to BRL301 million from BRL20 million in 2015 during the LTM period ended Sept. 30, 2017. HdB's EBITDA margin increased to 47.6% from 10.3% during the same period. The company maintains capacity to transport approximately 17 million tonnes via its 325 barges with a total capacity of 712 thousand tonnes, 19 push boats, and 5 auxiliary push boats as well as its main port terminals Mirituba Transhipment Station, Villa do Conde TUP, and TGM. Limited Diversification Counterbalanced by Low Counterparty Risk: HdB's operations present some concentration risk, which is not expected to materially change during 2017-2019. In terms of product, grains, iron ore, and bauxite represent 54%, 30%; and, 12%, respectively, of HdB's total annual EBITDA. In terms of routes, the Miritituba-Vila do Conde route represents approximately 50% of the company's total EBITDA. Company operations result in approximately 62% and 38% of the total EBITDA being generated in Brazil and Uruguay/Paraguay, respectively. HdB's main clients are Vale, COFCO, Mitsui, and Alunorte, which represent 34%, 30%, 16%, and 13%, respectively, of the company's annual EBITDA. Positively factored into the ratings is the company's low counterparty risk, as most of its clients are top players rated investment grade or above. Low FX Risk: The company exposure to currency risk is moderate, as mismatches among revenues, cost and debt are anticipated to remain immaterial over the next several years. HdB maintains approximately 60% and 70% of its revenues and cost structure, denominated in U.S. dollars, respectively. The ratings factor in HdB's financial strategy as to its liability management and plans to partially hedge its debt structure. After debt-hedging, total debt is anticipated to maintain a 60%/40% composition between U.S. dollar and local currency composition. Credit Metrics Supportive of the Rating, Material Deleveraging: Fitch views HdB's net leverage as high but saw it consistently declining during 2017-2019 driven by higher cash flow generation as new contracted volume ramped up. The company's net leverage - measured as total net debt/EBITDA - was 10.3x and 6.5x in 2016 and LTM Sept. 30, 2017, respectively. Fitch expects HdB's net leverage ratio to be at 4.3x as of Dec. 31, 2017; trending to levels in the 3.5x-3x range during 2019. The company's interest coverage, measured as EBITDA/interest paid, is expected to be around 3x during 2017-2019, improving from 0.9x in 2016. Fitch views HdB's expected 2017-2019 credit metric levels to be in line with the 'BB' rating. Positive and Increasing FCF: Fitch expects HdB to consistently reach positive FCF during 2017-2019 driven by expanding revenues, better cash flow generation; and significantly lower capex levels. The company completed an important capex plan of approximately BRL1.7 billion, 45% of whihc was funded with equity injections, during 2014-2016. HdB plans lower future capex levels, targeting a total amount of around BRL335 million during 2017-2019. This combination of increasing EBITDA and lower capex is expected to result in FCF levels of approximately BRL77 million and BRL150 million in 2018 and 2019, respectively. The ratings incorporate the expectation the company will not pay dividends during 2017- 2019. DERIVATION SUMMARY The company is well positioned in the 'BB' rating category relative to transportation/logistics peers, which are generally rated in the 'BB' to 'BBB' rating categories. On the National rating scale, HdB's ratings incorporates considerations such as its track record in operational performance, capital structure, scale, and expected credit profile during 2017-2019 versus its Brazilian peers such as MRS Logistics (Long-term Foreign Currency IDR BB+/Negative; Long-term Local Currency IDR BBB-/Stable; National Long-term rating AAA(bra)/ Stable), VLI S.A. (National Long-term rating AA+/Stable); and Rumo S.A. (Long-term Foreign Currency IDR BB-/Positive; Long-term Local Currency IDR BB- /Positive; National Long-term rating A(bra)/ Positive). HdB is starting to build a good track record in terms of profitability, FCF generation and net leverage metrics based on new take-or-pay contracts, which offer more stable cash flow generation versus its main peers. HdB's forecasted 2017-2019 credit metrics are partially offset by the company's smaller size compared to other Brazilian peers. Expected 2017-2019 net leverage metrics are in line with the average net leverage expected for other rated Brazilian peers in the transportation/logistics sector. The following rated companies Rumo S.A., VLI S.A. and MRS Logistics S.A. are forecasted to reach 2017 net leverage ratios of 4.2x, 3x, and 1.7x, respectively. HdB's ratings factor in the expectation the company's net leverage ratio trending to around 3.5x by 2019. The company is well positioned relative to its Brazilian peers in terms of FCF generation and after completing an intensive capex plan during 2014-2016. HdB is expected to generate positive FCF during 2017- 2019, while Rumo and VLI are anticipated to remain negative FCF during the same period due to committed capex plans. MRS is anticipated to continue to be FCF positive during the period. KEY ASSUMPTIONS Fitch's key assumptions within Fitch rating case for the issuer include: - Annual EBITDA levels in the BRL400 million-BRL500 million range during 2017-2019 - Positive FCF during 2017-2019. - Interest coverage (EBITDA/paid interest) consistently around 3x during 2018-2019 - Net leverage (Net debt/EBITDA) consistently around 3.5x during 2018-2019 RATING SENSITIVITIES Future Developments That May, Individually or Collectively, Lead to Positive Rating Action - Material improvement in EBITDA and FCF generation over levels incorporated in the ratings - Interest coverage (EBITDA/paid Interest ratio) consistently above 4x - Net leverage (net debt / EBITDA) consistently below 3x Future Developments That May, Individually or Collectively, Lead to Negative Rating Action - Decline in EBITDA levels consistently below levels incorporated in the ratings - Negative FCF - Interest coverage (EBITDA/paid interest) consistently below 2.5x during 2018-2019 - Net leverage (net debt / EBITDA ratio) consistently above 4x during 2018-2019 LIQUIDITY Fitch expects HdB to consistently maintain positive FCF during 2017-2019 driven by expanding revenues, better cash flow generation, and significantly lower capex levels. The company completed an important capex plan of approximately BRL1.7 billion,;45% funded with equity injections, during 2014-2016. HdB plans lower future capex levels, targeting a total amount in capex of around BRL 335 million during 2017-2019. This combination of increasing EBITDA and lower capex is expected to result in s FCF levels of approximately BRL77 million and BRL150 million in 2018 and 2019, respectively. The ratings incorporate the expectation the company will not pay dividends during 2017-2019. FULL LIST OF RATING ACTIONS Hidrovias do Brasil S.A. Fitch has assigned the following ratings: Hidrovias do Brasil S.A. -- Long-Term Foreign Currency IDR 'BB' ; -- Long-term Local Currency IDR 'BB' ; -- National Long-Term Rating 'AA-(bra)'. The Rating Outlook is Stable ========= C H I L E ========= CHILE: Economy Expected to Grow 3.2% in 2018, Economists Say ------------------------------------------------------------ The Latin American Herald reports that Chile's economy is projected to grow 3.2 percent this year, the Central Bank said, citing a survey of economists. The gross domestic product (GDP), according to economists' estimates, grew at an annualized rate of 2.9 percent in December, according to The Latin American Herald. The growth in December came on the heels of a 3.2 percent expansion in GDP in November, the report notes. The GDP estimates come from the Monthly Survey of Economic Expectations, which polls 58 academic economists, consultants and bank economists on the state of the national economy, the report relays. The Central Bank said in its most recent Monetary Policy Report (IPOM) that it was leaving its 2017 GDP growth estimate unchanged at 1.4 percent, the report notes. Chile's economy, according to the IPOM, will grow between 2.5 percent and 3.5 percent in 2018, the report adds. =================================== D O M I N I C A N R E P U B L I C =================================== CAP CANA: Denies Towers Violate Zoning -------------------------------------- Dominican Today reports that the Cap Cana resort group affirmed that it has fully complied with Tourism Ministry zoning on the construction of maximum floors at beachfronts warning that changing the rules puts legal security at stake. In a published statement Cap Cana said they decided on their own to leave a 100-meter swath of beach beyond the high tide mark, when the law requires just 60 meters, according to Dominican Today. "The traditional low-altitude tourism development model is established based on an approximate percentage of minimum land occupation of 60%," said Cap Cana, whose east region property is considered the country's biggest area set aside for hotels, resorts and golf courses, the report notes. It said Cap Cana's high-rises aren't on the beach and instead at an average distance of over 1,200 meters from the high tide mark, "being the closest to the sea at a distance of more than 1,000 meters and the farthest at a distance of 1,400 linear meters," the report relays. "With the understanding that the Ministry of Tourism and its incumbent Mr. Francisco Javier Garcia, as well as the Environment Ministry in the hands of Mr. Francisco Dominguez Brito are the entities that legally have the authority to issue the corresponding permits, this company has conducted due diligence in all the technical instances," Cap Cana said, the report says. It adds that it's unaware that in addition to the ministries legally designated to issue the permit, it also had to obtain approval from a private entity or specific business group, warning that changing the rules puts legal security at stake, the report adds. DOMINICAN REP: Retailers Want to Nix Severance Pay, Advance Tax --------------------------------------------------------------- Dominican Today reports that the elimination of the severance pay, a simpler tax reporting process and the exclusion of the tax payment in advance, are some of the proposals which the Dominican Merchants Federation (FDC) seeks this year as part of the country's labor and fiscal reforms. FDC president, Ivan Garcia, said the points pose a problem for MSMEs, which in many cases have to borrow to meet those commitments, according to Dominican Today. During a luncheon at the Santo Domingo Country Club, Garcia, accompanied by other FDC directors, said 95% of the companies created in the Dominican Republic go bankrupt within three years, due to tax and social security burdens, the report relays. "We understand that this country cannot continue charging taxes to a new small business just as it is charged to a large company that has been established for several years," the business leader said, 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. ====================== P U E R T O R I C O ====================== A'GACI LLC: Files for Chapter 11 to Cut Retail Footprint -------------------------------------------------------- Following an unsuccessful brick-and-mortar expansion effort, A'GACI, L.L.C., a teen-apparel retailer, sought bankruptcy protection with plans to immediately reduce its retail footprint. Founded in San Antonio, Texas, A'GACI has 76 retail stores, not including two stores in Puerto Rico that remain closed as a result of hurricanes during 2017. The Debtor's stores are located in fashion retail venues predominately in Texas, Florida, California, and Illinois. Additionally, third parties operate two A'GACI franchise locations in Venezuela. The Debtor's corporate office is located in San Antonio, Texas. The Company also has a direct-to-consumer business comprised of its e-commerce website http://www.agacistore.com/ For the year to date period ended Nov. 25, 2017, the Debtor's gross sales were $136,204,241. Of that amount, approximately 9.4% or $12,829,350 was attributable to the Debtor's e-commerce business. Mark Butterbach, CFO of A'GACI, L.L.C., said that A'GACI's financial performance has been negatively affected by (i) unsuccessful brick and mortar expansion efforts; (ii) a shift in consumer preference towards online purchases; (iii) difficulties with the implementation of the Oracle Retail System; and (iv) hurricanes that significantly impacted the Debtor's most profitable locations. Over the past two years, the Debtor opened 21 new store locations across Arizona, California, Florida, Nevada, and Puerto Rico. But the Debtor's rapid expansion into new markets spread the organization too thin to effectively respond to the rapidly changing trends in the retail market. The combined impact of the events above resulted in a substantial decrease in the Debtor's sales and earnings. For example, the Debtor's EBITDA has declined by approximately $7.2 million over the past year, from approximately $4.7 million in 2016 to approximately negative $2.5 million in 2017. The decrease in EBITDA has negatively impacted the Debtor's liquidity and its ability to meet obligations as they come due. Furthermore, the Debtor also faces an impending debt maturity -- the first lien credit facility is scheduled to mature on Jan. 30, 2018. Prepetition Capital Structure As of Nov. 25, 2017, A'GACI's unaudited balance sheet reflected total assets of approximately $82 million, total liabilities of approximately $62 million, and partners' capital of approximately $20 million. The Debtor's prepetition debt structure primarily consists of: (i) $6.072 million in borrowings outstanding as of the Petition Date under a senior secured revolving credit facility pursuant to a Credit Agreement dated as of January 30, 2015 (the "First Lien Credit Agreement") with JPMorgan Chase Bank, N.A.; (ii) $4.266 million in principal amount remained outstanding under two senior secured term loan facilities pursuant to a Loan Agreement, dated as of Jan. 19, 2017, with Bank of America, N.A.; (iii) $800,000 in capital lease obligations; and (iv) $61,000,000 in general unsecured debt obligations, including amounts owed to trade vendors and to landlords. Restructuring Initiatives According to Mr. Butterbach, throughout 2017, the Debtor has undertaken a review of its business to determine how to address its continuing liquidity constraints. As part of that review, the Debtor and its officers and professionals have considered various operational and strategic options to increase revenue and control costs. The review has also involved an analysis of the Debtor's marketing strategy, relationships with strategic partners, labor costs, lease expenses, and a number of other components of the business to identify opportunities to re-direct the Debtor's business to more financially viable outlets while continuing to provide valuable goods and services to the Debtor's loyal customer base. A central component of the Debtor's review has been a store-by-store analysis to, among other things, identify certain unprofitable stores to close and wind down. The Debtor has been engaged in ongoing negotiations with its landlords in an effort to allow the Debtor to more closely control fixed costs; however, negotiations to date have not yielded significant rent concessions. Ultimately, the Debtor determined that shifting its focus to its more profitable stores and its online sales warranted the closing of certain store locations. The Debtor plans to file a motion for authorization to continue store closing or similar themed sales to efficiently liquidate the merchandise and owned furniture, fixtures, and equipment located at such stores. To maximize the efficiency and net proceeds of the Store Closing Sales, the Debtor entered into an agreement with a liquidating agent to facilitate the Store Closing Sales. In addition to planning for the Store Closing Sales, the Debtor's management considered the possibilities of marketing the Debtor's business for sale either through Section 363 of the Bankruptcy Code or a plan process. In January 2018, the Debtor retained SSG Advisors, LLC to assist with exploring such efforts. "The Debtor filed this Chapter 11 Case to maximize value for the benefit of all interested parties by immediately reducing its retail footprint and conducting the process of soliciting interest in the acquisition or refinancing of the Debtor. I believe that Chapter 11 will provide the Debtor with the best opportunity to preserve its business as a going concern, make necessary changes to the Debtor's business plan, eliminate costly lease obligations at unprofitable locations, and thereby preserve value for the Debtor's estate and its stakeholders," Mr. Butterbach, the CFO, said. A copy of the affidavit of First-Day Motions: http://bankrupt.com/misc/AGACI_3_1st_Day_Affidavit.pdfs About A'GACI Founded in San Antonio, Texas, A'GACI is a fast-fashion retailer of women's apparel and accessories. A'GACI attracts young, fashion-driven consumers through its value-pricing and frequent introductions of new and trendy merchandise. It operates specialty apparel and footwear stores under the A'GACI banner as well as a direct-to-consumer business comprised of its e-commerce website http://www.agacistore.com/ As of Jan. 1, 2018, the Debtor operated 76 retail stores. A'GACI is a privately held Texas limited liability company, and its sole members are John Won and David Won. A'GACI, L.L.C., sought Chapter 11 protection (Bankr. W.D. Tex. Case No. 18-50049) on Jan. 9, 2018. David Won, manager/CMO, signed the petition. The Hon. Ronald B. King is the case judge. Ian T. Peck, Esq., at Haynes And Boone, LLP, in Fort Worth, Texas, serves as counsel to Debtor. Berkeley Research Group, LLC, is the Debtor's financial advisor. SSG Advisors, LLC, is the investment banker. Kurtzman Carson Consultants LLC is the claims agent. A'GACI, L.L.C., disclosed $82 million in assets and $62 million in liabilities as of Nov. 25, 2017. AGACI LLC: Case Summary & 20 Largest Unsecured Creditors -------------------------------------------------------- Debtor: A'GACI, L.L.C. 12460 Network Blvd., Suite 106 San Antonio, TX 78249 Business Description: Founded in San Antonio, Texas, A'GACI -- http://www.agacistore.com-- is a fast-fashion retailer of women's apparel and accessories. A'GACI attracts young, fashion-driven consumers through its value- pricing and frequent introductions of new and trendy merchandise. The Debtor operates specialty apparel and footwear stores under the A'GACI banner as well as a direct-to- consumer business comprised of its e- commerce website www.agacistore.com. Stores feature an assortment of tops, dresses, bottoms, jewelry, and accessories sold primarily under the Debtor's exclusive A'GACI label. In addition, the Debtor sells shoes under its sister brand labels of O'Shoes and Boutique Five. Boutique Five also comprises a portion of apparel and accessory merchandise. Chapter 11 Petition Date: January 9, 2018 Case No.: 18-50049 Court: United States Bankruptcy Court Western District of Texas (San Antonio) Judge: Hon. Ronald B. King Debtor's Counsel: Ian T. Peck, Esq. HAYNES AND BOONE, LLP 201 Main Street, Ste. 2200 Fort Worth, TX 76102-3125 Tel: 817-347-6613 Fax: 817-348-2350 Email: ian.peck@haynesboone.com Debtor's Financial Advisor: BERKELEY RESEARCH GROUP, LLC Debtor's Investment Bankers: SSG ADVISORS, LLC Debtor's Claims, Noticing & Balloting Agent: KURTZMAN CARSON CONSULTANTS LLC Web site: http://www.kccllc.net/agaci Total Assets: $82 million as of Nov. 25, 2017 Total Debt: $62 million as of Nov. 25, 2017 The petition was signed by David Won, manager/CMO. A full-text copy of the petition is available for free at: http://bankrupt.com/misc/txwb18-50049.pdf Debtor's List of 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Bank of America DC Lien Unknown Ray Abbott 100 N Tryon St. Charlotte, NC 28202 American Express Merchant $1,659,156 Alan Vigil Credit Card Attn: Express Mail Remittance Processing 1200 W 7th St L2 200 Los Angeles, CA 90017 Infogain Corporation Expense $975,094 485 Alberto Way Ste 100 Los Gatos, CA 95032 Ambiance Apparel/Wax Jean Merchant $426,007 2415 E 15th Street Los Angeles, CA 90021 Top Guy Int'l Trading Inc. Merchant $385,018 333 Brea Canyon Rd City of Industry, CA 91789 Elegance Enterprise Corp Merchant $378,392 18217 Railroad Street City of Industry, CA 91748 Oceanarc Capital Partners LLC Expense $300,000 Ron Rubick 299 Park Ave New York, NY 10171 JP Original Corp. Merchant $293,347 19101 E Walnut Drive North City of Industry, CA 91748 Love Letter Collection Merchant $293,246 C O Rosenthal & Rosenthal Inc. PO Box 88926 Chicago, IL 60695-1926 Day G Merchant $241,255 Westfield Landlord $231,359 SDI Industries Inc. Expense $230,104 San Antonio Merchant Shippers Expense $173,914 Tovia Merchant $147,822 Banjul Inc. Merchant $122,600 Privy Inc. Merchant $120,508 Aspire Systems Consulting Pte Ltd Expense $120,330 Demandware, Inc. Expense $109,999 Awin Inc. Expense $108,598 Chocolate U.S.A. Merchant $104,049 LIBERTY CABLEVISION: Bank Debt Trades at 4.08% Off -------------------------------------------------- Participations in a syndicated loan under which Liberty Cablevision of Puerto Rico is a borrower traded in the secondary market at 95.92 cents-on-the-dollar during the week ended Friday, December 15, 2017, according to data compiled by LSTA/Thomson Reuters MTM Pricing. This represents an increase of 1.23 percentage points from the previous week. Liberty Cablevision of Puerto Rico pays 350 basis points above LIBOR to borrow under the $530 million facility. The bank loan matures on Dec. 25, 2021 and Moody's B2 rating and Standard & Poor's B rating. The loan is one of the biggest gainers and losers among 247 widely quoted syndicated loans with five or more bids in secondary trading for the week ended December 15. PUERTO RICO: Gov't Launches Statehood Campaign in Congress ---------------------------------------------------------- EFE News reports that Puerto Rico's legislative delegation launched a campaign in Congress to demand statehood for the island. The bipartisan delegation appointed by Gov. Ricardo Rossello, accompanied by the governor himself and three former governors, said at a press conference in the US Capitol that Puerto Ricans have already voted twice in favor of joining the US as its 51st state and it is "necessary" for them to have the same opportunities and rights as other Americans, according to EFE News. Rep. Jenniffer Gonzalez-Colon, the territory's nonvoting member in Congress, appeared on the House floor to demand statehood, saying that "The island overwhelmingly voted for statehood in 2012 by a margin of 61 percent and 97 percent in June of last year," the report notes. However, despite that apparent high level of approval, only 24 percent of Puerto Rican voters went to the polls for the 2017 plebiscite, the report relays. "It is our moral imperative to demand Congress recognize 3.4 million disenfranchised Americans. It is time to end Puerto Ricans' second-class citizenship, and statehood is the only guarantee for that to happen," the report quoted Ms. Rossello as saying. She said that the effects of Hurricane Maria, which devastated the island a little over four months ago, had highlighted the fact that Puerto Ricans are treated as "second-class" citizens, and he emphasized that the roots of that problem must be found, the report relays. In his judgment, the central difficulty is the "lack of political representation" for the island in the US Congress as a commonwealth, and he said that this year his administration will do everything possible to push for a referendum that will provide the island's residents with their full rights, the report relays. The delegation's "shadow senators" include former Democratic Gov. Carlos Romero Barcelo and National Republican Committeewoman of the Republican Party of Puerto Rico Zoraida Fonalledas, the report says. In addition, the shadow House members on the delegation are former Democratic Gov. Pedro Rossello Gonzalez, former Republican Gov. Luis Fortuno, former president of the Senate of Puerto Rico and current State Chair of the Democratic Party of Puerto Rico Charles Rodriguez, former chief of the US Office of Citizenship Alfonso Aguilar and baseball Hall of Famer Ivan "Pudge" Rodriguez, who was not present, the report notes. The report says that residents of Puerto Rico living on the island may not vote in US presidential or congressional races, although they may serve in any branch of the military. The two powerful hurricanes that struck Puerto Rico this past year caused local authorities to put the statehood campaign on hold, but now that most of the island's residents have regained their water and electricity service the campaign has been resumed, the report adds. 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 RICAN PARADE: Feb. 7 Disclosure Statement Hearing -------------------------------------------------------- Judge Carol A. Doyle of the U.S. Bankruptcy Court for the Northern District of Illinois will hold a hearing on February 7, 2018 at 10:30 a.m. to determine the adequacy of Puerto Rican Parade Committee of Chicago, Inc.'s disclosure statement that was filed on September 29, 2017. All objections to the disclosure statement must be filed no later than January 12, 2018. A full-text copy of Judge Doyle's order dated December 8, 2017 is available at: http://bankrupt.com/misc/ilnb17-03480-46.pdf About Puerto Rican Parade Committee Puerto Rican Parade Committee of Chicago, Inc., sought protection under Chapter 11 of the Bankruptcy Code (Bankr. N.D. Ill. Case No. 17-03480) on Feb. 6, 2017. The petition was signed by Angel Medina, president. The case is assigned to Judge Carol A. Doyle. At the time of the filing, the Debtor estimated assets of less than $1 million. Paul M. Bach, Esq., and Penelope N. Bach, Esq., at the Bach Law Offices, serve as the Debtor's bankruptcy counsel. SEASTAR HOLDINGS: Wants Up to $1.89M DIP Financing From Volant SVI ------------------------------------------------------------------ SeaStar Holdings, Inc., and its affiliates ask the U.S. Bankruptcy Court for the District of Delaware for authorization to obtain postpetition loans, advances, and other financing accommodations and to enter into a senior secured, super-priority debtors-in-possession credit facility and security agreement with Volant SVI Funding, LLC. The Debtors have secured a debtors-in-possession credit facility in a maximum principal amount of up to $10,189,286 through April 7, 2018. To continue operating in the ordinary course while formulating and seeking approval of the terms of a sale of substantially all of the Debtors' assets pursuant to the U.S. Bankruptcy Code Section 363 during this period, the Debtors need to access liquidity. The Debtors will obtain this liquidity from the DIP Facility. The use of cash collateral alone would be insufficient to meet the Debtors' postpetition liquidity needs and provide the assurances to passengers, suppliers, and employees during this period. In fact, without the DIP Facility, the Debtors would not be able to operate at all for more than a few days into these Chapter 11 cases. Therefore, additional financing is necessary to maintain the value of the Debtors' businesses and, ultimately, effectuate a successful sale and reorganization process. The Debtors' decision to proceed with the DIP Facility comes after a dedicated and diligent search for other available and better financing alternatives. The DIP Facility is the best, and likely the only, available source of financing and provides the Debtors with the liquidity it needs to operate during these Chapter 11 Cases. The DIP Facility was negotiated at arm's length on terms that are reasonable. Thus, to ensure the Debtors' access to sufficient liquidity that will provide the foundation for maximizing value for all stakeholders, the DIP Facility should be approved. To provide the foundation for maximizing the value of the Debtors and their assets for all stakeholders, and to take advantage of preferred financing terms being offered by the DIP Lender, the DIP Facility should be approved. The approval is requested on an interim basis, for funding up to $1,894,999, which the Debtors require over the next several weeks, and on a final basis, for funding up to the total $10,189,286, which the Debtors require to operate through the contemplated conclusion of their proposed sale process. The Debtors do not currently have any available cash. Based on expected receipts and disbursements in the ordinary course of business, the Debtors' cash balance will, absent new financing, drop to near or below zero within a few days. Accordingly, the use of cash collateral alone will not be sufficient to fund these Chapter 11 Cases through a sale process (or, in fact, past the end of the week), and, without additional cash resources being made immediately available, the Debtors will be unable to provide comfort to passengers, suppliers, and employees that might otherwise discontinue service with the Debtors during the proposed sale process. A critical need exists for the Debtors to obtain funds in order to continue the operation of their business and consummate an orderly sale of their assets. The Debtors have requested that the DIP Lender permits the use of Cash Collateral and makes loans and advances and provide other financial accommodations to the Debtors. On an interim basis, and for the balance of the DIP Facility, on a final basis. The ability of the Debtors to continue to operate their business through their proposed sale process, and indeed in the very immediate future, depends upon the Debtors obtaining financing. The DIP Lender is willing to make loans and advances and provide such other financial accommodations on a priming secured and super-priority administrative basis, as more particularly described herein. Accordingly, the relief requested in this Motion is necessary, essential, and appropriate for the continued operation of the Debtors' businesses and the management and preservation of their assets and properties through the proposed sale process, and is in the best interests of the Debtors, their estates, and creditors. The terms of the DIP Facility have been negotiated at arm's length and in "good faith," as that term is used in Bankruptcy Code section 364(e), and are in the best interests of the Debtors, their estates, and creditors. The DIP Lender is extending financing to the Debtors in good faith, and the DIP Facility Secured Parties are entitled to the benefits of the provisions of Bankruptcy Code Section 364(e). 18. It is in the best interests of the Debtors' estates that they be allowed to finance their operations under the terms and conditions set forth herein. The relief requested by this request is necessary to avoid harm to the Debtors' estates, and good, adequate, and sufficient cause has been shown to justify the granting of the relief requested herein, and the immediate entry of the Interim Order. The terms of the DIP Facility and the use of cash collateral are fair and reasonable under the facts and circumstances of these Chapter 11 Cases, reflect the Debtors' exercise of prudent business judgment consistent with their fiduciary duties and constitute reasonably equivalent value and fair consideration. The Debtors have been unable to obtain the required funds in the forms of (i) unsecured credit or debt allowable under Bankruptcy Code Section 503(bX1), (ii) an administrative expense pursuant to Bankruptcy Code Section 36a@) or (b), (iii) unsecured debt having the priority afforded by Bankruptcy Code section 36a(cXl) or (iv) debt secured only as described in Bankruptcy Code section 36a@)Q) or (3). The Debtors say that it is unlikely that any other lender would provide financing to the Debtors at this stage. The DIP Facility is a strictly limited loan for a very short duration (75 days) intended to provide the Debtors with the minimal cash needed to proceed with their proposed asset sale. The DIP Lender, as the Pre-Petition Lender has a unique interest in allowing the Debtors to operate through this process. Based on the Investment Banker's experience with numerous similar financings, absent the Pre-Petition Lender's consent to be primed, the Debtors are unable to secure alternative financing. Accordingly, it is not surprising that the DIP Lender is not only the best source of postpetition financing, but the only source of postpetition financing for the Debtors, and the terms and conditions of the DIP Facility are well within the range of commercial reasonableness. The loan will have an interest rate of ll% per annum. Default rate interest is 13% per annum. A Facility Fee equal to 2% of (i) the Interim Order Amount and (ii) the Loan Amount minus the sum of (x) the Interim Order Amount plus (y) the aggregate amount of the Roll-Up Advance, which will be fully-earned and added to the outstanding principal amount of the Obligations upon entry of the Final Order. An Exit Fee equal to 2% of the amount of the Obligations (exclusive of the Roll-Up Advance) outstanding on the Termination Date, which amount shall be payable to the Lender in cash upon the Termination Date. Reimburse the DIP Lender, in accordance with, inter alia, Section 9 of the DIP Credit Agreement and the provisions of the other DIP Financing Documents, for all present and future costs and expenses, including, without limitation, all professional fees, consultant fees, appraisal fees, and legal fees and expenses paid or incurred by the DIP Lender in connection with the financing transactions as provided in the DIP Financing Documents and this Interim Order. The loan will mature the earliest of: (i) an Event of Default and the default is not cured within five (5) business days; (ii) entry of an order converting any of these Chapter 11 cases to a case under Chapter 7 of the Bankruptcy Code or dismissing any of these Chapter 11 cases; (iii). A copy of the Debtors' request: http://bankrupt.com/misc/deb18-10039-18.pdf About SeaStar Holdings Based in Puerto Rico, SeaStar Holdings, Inc., dba Seaborn Airlines, serves local passengers within the Caribbean and connecting traffic to numerous locations within or outside the United States through code share or interline arrangements with multiple airline partners. The Company's fleet consists of seven 34-seat Saab 34088s and one 15-seat Twin Otter Seaplane. The majority of the Company's inter-island flights are via the Saab fleet. The Seaplane serves as the primary air transportation between St. Croix and St. Thomas in the U.S. Virgin Islands. SeaStar Holdings, Inc., along with affiliates Seaborne Virgin Islands, Inc., and Seaborne Puerto Rico, LLC, sought Chapter 11 protection (Bankr. D. Del. Lead Case No. 18-10039) on Jan. 8, 2018. The Hon. Christopher S. Sontchi is the case judge. SeaStar Holdings estimated assets of $1 million to $10 million and debt of $10 million to $50 million as of the bankruptcy filing. Adam G. Landis, Esq., Kerri K. Mumford, Esq., and Travis J. Ferguson, Esq., at Landis Rath & Cobb LLP, serve as the Debtors' bankruptcy counsel. Sonoran Capital Advisors LLC is the Debtors' restructuring advisor. Stinson Leonard Street LLP is the special regulatory counsel. Seabury Corporate Advisors LLC is the investment banker. Rust Consulting/Omni Bankruptcy is the claims and noticing agent. ================= V E N E Z U E L A ================= VENEZUELA: Pays Brazil Half of $540 Million Trade Debt ------------------------------------------------------ The Latin American Herald reports that the Brazil Secretariat for International Affairs of the Ministry of Finance reports that on January 5, 2018, the Central Bank of Venezuela (BCV) paid its debtor balance with Brazil due back in September for the second four-month period of 2017 under the Agreement on Reciprocal Payments and Credits (CCR). The amount paid was US$262.5 million, according to The Latin American Herald. Receipt was possible due to a joint initiative between the Secretariat of International Affairs, the Central Bank of Brazil and the financing banks, the report relays. "Due to the payment by the Central Bank of Venezuela, on January 9, 2018, the Central Bank of Brazil transferred the amounts owed to the Authorized Financial Institutions with export operations registered in the four-month period, paying the internal Brazilian debts in the process," reports the Finance Ministry, notes The Latin American Herald. The report discloses that the funds went to pay BNDES, Credit Suisse and the Bank of China for financing operations of Brazilian exports to Venezuela. If Venezuela hadn't paid, Brazil's export guarantee fund FGE would have had to take the money from the Brazilian treasury to pay the installments, a situation that is also happening because of Mozambique's failure to pay for its Brazilian imports, the report relays. The transaction took place based on the Special Drawing Rights of the International Monetary Fund, "as the debtor indicated operational problems to repay debt in US dollars," the report, citing the Brazil Finance Ministry, notes. Brazil also reports that Venezuela did not honor its commitments to the CCR scheduled for January 2018 of US$274.6 million, the report says. "The Brazilian government will adopt measures to seek settlement of those payments," reports the Ministry, the report relays. Venezuela has burned through its $3.7 billion of Special Drawing Rights at the IMF and the remaining IMF SDR funds are not enough to settle the remaining Brazilian debts, the report adds. As reported in the Troubled Company Reporter-Latin America on Dec. 21, 2017, Moody's Investors Service has withdrawn the Caa3 rating of the US$5 billion, 6.5% Government of Venezuela bond due on Dec.29, 2036 (ISIN USP97475AQ39). On Nov. 16, 2017, S&P Global Ratings lowered on Nov. 13, 2017, its long- and short-term foreign currency sovereign credit ratings on the Bolivarian Republic of Venezuela to 'SD/D' from 'CC/C'. The long- and short-term local currency sovereign credit ratings remain at 'CCC-/C' and are still on CreditWatch with negative implications. S&P said, "At the same time, we lowered our issue ratings on Venezuela's global bonds due 2019 and 2024 to 'D' from 'CC'. Our issue ratings on the remainder of Venezuela's foreign currency senior unsecured debt remain at 'CC'. Finally, we affirmed our transfer and convertibility assessment on the sovereign at 'CC'." VENEZUELA: S&P Lowers 2020 Global Bond Rating to 'D' ---------------------------------------------------- S&P Global Ratings lowered its issue rating on the Bolivarian Republic of Venezuela's global bond due 2020 to 'D' from 'CC'. S&P said, "At the same time, we affirmed our long- and short-term foreign currency sovereign issuer credit ratings at 'SD/D'. The long- and short-term local currency sovereign credit ratings remain at 'CCC-/C' and are still on CreditWatch with negative implications, where we placed them on Nov. 3, 2017. Other foreign currency senior unsecured debt issues not currently rated 'D' are rated 'CC'." CREDITWATCH S&P said, "Our CreditWatch negative listing reflects our opinion that there is a one-in-two chance that Venezuela could default again within the next three months. We could lower specific issue ratings to default ('D') if Venezuela doesn't make its overdue coupon payments before the stated grace period expires, or upon the execution of the announced debt restructuring. "If the sovereign cures its default on the overdue coupon payments and remains timely on other coupon payments before the restructuring debt operation is completed, we would raise our long-term foreign currency sovereign issuer credit and issue ratings to 'CC'. "If the sovereign completes any potential restructuring operation, we would lower all of our foreign currency ratings on Venezuela to default and subsequently raise them to the 'CCC' or 'B' category." RATIONALE On Jan. 8, 30 calendar days had passed since coupon payment was due for Venezuela's global bond due 2020, and Venezuela had not paid $45 million due to bondholders (or the bondholders had not received funds by that date). In accordance with S&P's criteria, "Methodology: Timeliness of Payments: Grace Periods, Guarantees, And Use of 'D' And 'SD' Ratings," we have lowered the issue ratings to 'D' (default) for this bond. Overdue coupons now include the following eight issues: -- US$2.496 billion 7.75% bonds due Oct. 13, 2019 -- US$2.496 billion 8.25% bonds due Oct. 13, 2024 -- US$1.6 billion 7.65% bonds due April 25, 2025 -- US$3 billion 11.75% bonds due Oct. 21, 2026 -- US$2 billion 9.00% bonds due May 7, 2023 -- US$2 billion 9.25% bonds due May 7, 2028 -- US$1 billion 7.00% bonds due Dec. 1, 2018 -- US$1.5 billion 6% bonds due Dec. 9, 2020 In accordance with S&P's relevant policies and procedures, the Rating Committee was composed of analysts that are qualified to vote in the committee, with sufficient experience to convey the appropriate level of knowledge and understanding of the methodology applicable. At the onset of the committee, the chair confirmed that the information provided to the Rating Committee by the primary analyst had been distributed in a timely manner and was sufficient for Committee members to make an informed decision. After the primary analyst gave opening remarks and explained the recommendation, the Committee discussed key rating factors and critical issues in accordance with the relevant criteria. Qualitative and quantitative risk factors were considered and discussed, looking at track-record and forecasts. All other key rating factors were unchanged. The chair ensured every voting member was given the opportunity to articulate his/her opinion. The chair or designee reviewed the draft report to ensure consistency with the Committee decision. The views and the decision of the rating committee are summarized in the above rationale and outlook. The weighting of all rating factors is described in the methodology used in this rating action. RATINGS LIST Downgraded; Off CreditWatch To From Venezuela (Bolivarian Republic of) Senior Unsecured US$1.5 bil 6% bonds due 2020 D CC/Watch Neg Ratings Affirmed Venezuela (Bolivarian Republic of) Sovereign Credit Rating Foreign Currency SD/--/D Transfer & Convertibility Assessment CC Senior Unsecured D Ratings Remain On CreditWatch Venezuela (Bolivarian Republic of) Sovereign Credit Rating Local Currency CCC-/Watch Neg/C Senior Unsecured CC/Watch Neg *********** 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. 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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 2018. 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. 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