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/raid1/www/Hosts/bankrupt/TCRLA_Public/180119.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 19, 2018, Vol. 19, No. 14 Headlines B R A Z I L PETROLEO BRASILEIRO: Transfers Rights on 2 Concessions to Total LAUREATE EDUCATION: S&P Hikes Sr. Secured Credit Ratings to 'B+' JBS SA: Pinnacle Asset to Acquire Unit's 5 Rivers Cattle Feeding D O M I N I C A N R E P U B L I C DOMINICAN REPUBLIC: Tax Director Warns of Sectors of Tax Evasion DOMINICAN REPUBLIC: Needs a Wider Tax Base, World Bank Says DOMINICAN REPUBLIC: US Litigation Compounds Energy Woes E C U A D O R ECUADOR: Makes 3.6MM Barrels of Oil Available in Spot Sale G R E N A D A GRENADA: To Be Removed From EU Tax Haven List P U E R T O R I C O MCO INDUSTRIES: Plan and Disclosures Hearing Set for Feb. 9 T R I N I D A D & T O B A G O TRINIDAD & TOBAGO: Poverty Pretenders Prevail in the Country - - - - - =========== B R A Z I L =========== PETROLEO BRASILEIRO: Transfers Rights on 2 Concessions to Total --------------------------------------------------------------- EFE News reports that Brazilian state oil company Petroleo Brasileiro S.A. (Petrobras) said it had completed two transactions involving the transfer of rights to two deepwater concessions in the Atlantic Ocean to French oil major Total. "Petrobras and Total announce that they have finalized a decisive milestone in the realization of their Strategic Alliance, signed in March 2017," the companies said in a joint press release, according to EFE News. Both concessions are located in Brazil's offshore Santos Basin and have proven reserves in the pre-salt region, a recently discovered oil frontier located below thick layers of rocks and salt under the sea bed that, if successfully developed, could transform Brazil into one of the world's largest crude exporters, the report relays. In the first transaction, Petrobras transferred 35 percent of the rights and operatorship of the Lapa field in Block BM-S-9A, in which Total now has a 35 percent stake, Royal Dutch Shell has 30 percent, Spanish-Chinese joint venture Repsol-Sinopec has 25 percent and Petrobras has 10 percent, the report relays. The report notes that the field was brought into production in late 2016 by a floating production storage and offloading (FPSO) unit with a 100,000-barrel-per-day capacity. In the second transaction, Petrobras transferred to Total a 22.5 percent stake in the Iara area, which comprises the Sururu, Berbigao and Oeste de Atapu fields in Block BM-S-11A, the report discloses. Petrobras remains the operator of that block with a 42.5 percent stake, while Shell has 25 percent and Portugal's Galp Energia has 10 percent, the report relays. Production in Iara is expected to start in 2018 at the Berbigao and Sururu fields once an FPSO with a production capacity of 150,000 barrels per day begins operating, the report relays. Petrobras will receive $1.95 billion from Total for the rights to those stakes, the report notes. "This amount does not include $400 million that can be triggered by Petrobras to carry a part of its investment share in the Iara development fields and contingent payments," the Brazilian company said, the report relays. Asset sales are one of the tools Petrobras plans to use to become leaner and adjust to a more adverse scenario brought about by a drop in global oil prices in recent years and to the company's lower revenue and severe financial problems, the report adds. As reported in the Troubled Company Reporter-Latin America on Feb. 14, 2017, S&P Global Ratings raised its global scale ratings on Petroleo Brasileiro S.A. (Petrobras) to 'BB-' from 'B+', including its corporate credit rating and the ratings on the senior unsecured notes issued through the company's financing vehicles (Petrobras International Finance Co. and Petrobras Global Finance B.V.). LAUREATE EDUCATION: S&P Hikes Sr. Secured Credit Ratings to 'B+' ----------------------------------------------------------------- S&P Global Ratings raised its issue-level rating on Laureate Education Inc.'s senior secured credit facility to 'B+' from 'B' and revised the recovery rating to '2' from '3'. The '2' recovery rating indicates S&P's expectation for substantial recovery (70%-90%; rounded estimate: 75%) in the event of a payment default. The upgrade follows the company's repayment of $350 million of the term loan borrowings primarily from assets sale proceeds. The issue-rating upgrade reflects lower outstanding secured debt under S&P's simulated default scenario and higher recovery prospects for secured lenders. S&P's recovery valuation assumes the company would be valued at a 6x EBITDA multiple, with almost 70% of its estimated $2.5 billion recovery value located at nonguarantor foreign subsidiaries. Pro forma for the debt repayment, as of Sept. 30, 2017, the company's senior secured credit facility comprised a $385 million revolving credit facility due 2022 and $1.238 billion outstanding on its $1.6 billion term loan due 2024. S&P said, "Our 'B' corporate credit rating and stable rating outlook on Laureate, and our 'B-' issue-level and '5' recovery ratings on the company's $800 million senior unsecured debt, are unchanged. The '5' recovery rating reflects our expectations for modest (10%-30%; rounded estimate: 15%) recovery in the event of a payment default scenario. The stable outlook reflects our expectation that Laureate will continue to grow its revenues in the low- to mid-single-digit percentage range, maintain adequate liquidity, and lower its lease-adjusted debt leverage to the mid- to high-5x range in 2017 and to the high-4x area in 2018. We also expect that Laureate's free operating cash flow (FOCF) to debt will improve to the 5% area by year-end 2018. Our leverage calculations treat the company's preferred stock as debt." Laureate primarily provides undergraduate and graduate courses through more than 60 institutions globally. It recently announced asset sales in China, Malaysia, Italy, Cyprus, and Morocco, with plans to use a portion of the sale proceeds to repay debt. S&P views Laureate's debt repayment as credit positive but leverage remains high. However, S&P recognizes that Laureate and the preferred stockholders will have the option to convert the preferred equity to common equity in early 2018, which could moderate the company's leverage to the mid-4x area in 2018. Laureate's significant debt funding costs and high growth capital spending levels have historically resulted in limited FOCF. Furthermore, Laureate's credit measures are exposed to volatility in exchange rates and country risk because the company generates roughly three-quarters of its EBITDA outside the U.S. An upgrade would be contingent on Laureate maintaining stable operating performance with organic revenue growth in addition to the company adopting a less aggressive financial policy such that lease-adjusted leverage declines to low-4x levels and FOCF to debt improves to the high-single-digit percentage range. Reduced dependence on foreign currency earnings to repay predominantly U.S. dollar denominated debt would also be supportive of an upgrade. S&P could lower the corporate credit rating if it expects that Laureate's lease-adjusted leverage would increase to over 6x or if it generates FOCF below $50 million on a sustained basis. A tightening of the company's covenant cushion to below 15% could also result in a downgrade. This scenario could occur if Laureate faces significant adverse currency movements, or an economic downturn in Mexico, Brazil, or Chile result in material reduction in student enrollments. RATINGS LIST Laureate Education Inc. Corporate Credit Rating B/Stable/-- Issue-level Ratings Raised; Recovery Ratings Revised To From Laureate Education Inc. Senior Secured B+ B Recovery Rating 2(75%) 3(65%) Rating Affirmed; Recovery Rating Unchanged Senior Unsecured B- Recovery Rating 5(15%) JBS SA: Pinnacle Asset to Acquire Unit's 5 Rivers Cattle Feeding ---------------------------------------------------------------- Affiliates of Pinnacle Asset Management, L.P., a leading commodities and natural resources investment firm, disclosed that they have entered into an agreement to acquire the U.S.-based cattle feeding assets and farms, collectively known as Five Rivers Cattle Feeding, from JBS USA, a leading global food company, for approximately US$200 million. Five Rivers Cattle Feeding is the largest cattle feeding operation in the world, with roots in the U.S. dating back to the 1920s. The transaction includes 11 feed yards across Arizona, Colorado, Idaho, Kansas, Oklahoma and Texas, with feeding capacity of more than 900,000 head of cattle, and a long-term agreement to supply cattle to JBS USA beef processing plants. The current Five Rivers management team will remain in place, led by president and CEO Mike Thoren, to ensure business continuity and build upon Five Rivers' strong track record of innovation and stewardship. "The sale of the Five Rivers Cattle Feeding assets and farms is a strategic move that will allow JBS USA to more efficiently deploy working capital and focus on the company's core food and value- added products businesses," said Andre Nogueira, CEO of JBS USA."The transaction concludes the Divestment Program previously announced and unanimously approved by the JBS S.A. board of directors, and more favorably positions the company for future opportunities. The long-term partnership with Pinnacle will ensure JBS USA's continued ability to produce high-quality beef products, including natural, certified humane, raised without antibiotics, source-verified and traditional products, enjoyed by customers and consumers around the world." "The acquisition of the largest and most respected cattle feeding operation in the world continues Pinnacle's strategic path of investment and development of our diversified, global, physical commodity platform, of which livestock is a critical sector," said Jason M. Kellman, managing partner and Chief Investment Officer of Pinnacle Asset Management. "We are excited to work closely with our operating partner, Arcadia Asset Management and strategic partner, Ospraie Management to support Five Rivers' talented management team." "Ospraie is pleased to partner with Pinnacle and Arcadia on this market-leading, commodity transaction," said Jason Mraz, president of Ospraie Management, who is a strategic partner to Pinnacle on this transaction."We have a long history of working together and have great respect for both partners' expertise in physical commodities." "We are excited to combine Arcadia's livestock marketing and risk management experience with the first-class management team at Five Rivers," said Jordan Levi, managing member of Arcadia Asset Management, LLC. "We believe that the complementary strengths of Pinnacle, Arcadia, Ospraie and Five Rivers will create significant value. We look forward to continuing the legacy of best-in-class production, livestock care and animal welfare, and environmental stewardship established by the more than 600 skilled professionals who comprise the Five Rivers Cattle Feeding team." An orderly sales process will be conducted to ensure normal business operations during the transition. JBS Five Rivers will continue to operate as usual, including the purchasing of cattle and commodities in the ordinary course of business, until the closure of the transaction. In addition, JBS USA will continue agreements to purchase cattle from feed yards associated with Five Rivers Cattle Feeding operations. Completion of the acquisition is subject to U.S. regulatory review and approval, approval from the JBS S.A. Board of Directors and Pinnacle Asset Management, L.P., securing the relevant funding. As reported in the Troubled Company Reporter-Latin America on Nov. 22, 2017, Fitch Ratings has downgraded JBS S.A.'s Long-term Foreign and Local Currency Issuer Default Ratings (IDRs). The senior unsecured notes guaranteed by JBS S.A. were downgraded to 'BB-' from 'BB.' =================================== D O M I N I C A N R E P U B L I C =================================== DOMINICAN REPUBLIC: Tax Director Warns of Sectors of Tax Evasion ---------------------------------------------------------------- Dominican Today reports that Internal Taxes Director Magin Diaz urged productive sectors and individuals to be apprised of Law 155-17, on money laundering and terrorism financing, and to "be very careful with evasion," because a key issue lies in identifying the final beneficiaries. "It's necessary to understand that the world has changed and that the country is being evaluated by international organizations on money laundering and the sanctions are very drastic," the official in a gathering hosted by the Dominican Merchants Federation (Cadeco) held in a local hotel, according to Dominican Today. "That's why the Government embarked on this new law on laundering and the preparation of various institutions," he said, and stressed that the country has made significant progress and that the first results will be announced in six months, the report notes. Accompanied by retail mogul Jose Luis (Pepin) Corripio who delivered a speech on employment, Diaz revealed that the law now guarantees banking access to the DGII without a court order. "Before, a process had to be exhausted, but now the modification of the Securities Market Law breaks that barrier of bank secrecy," the report relays. 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. DOMINICAN REPUBLIC: Needs a Wider Tax Base, World Bank Says ----------------------------------------------------------- Dominican Today reports that the World Bank released a new report which identifies the ways Dominican Republic's tax system can become more efficient, to increase revenue, and promote inclusive growth and competitiveness. Among other points, the report lists the type of efficiency targets, such as the number of goods and services that pay ITBIS tax, being a uniform charge, and especially consumption, which in its view requires the highest level of efficiency, according to Dominican Today. To achieve higher efficiency on ITBIS, the report says, Dominican Republic would have to raise collection on more products and services that are now ITBIS-free, the report notes. "Despite the solid growth trajectory, the indicators of poverty and inequality in the Dominican Republic remain relatively high, the report relays. In view of the Fiscal Pact foreseen in the National Development Strategy Act 2030, this diagnostic evaluates options to improve fiscal efficiency and increase revenues," said World Bank representative Alessandro Legrottaglie, the report says. "Options include better policies to increase revenue, better targeting of tax expenditures to benefit the poorest and an increase in the tax base by reducing informality," he said in the meeting in which the heads of the Finance and Economy ministries participated, the report notes. Highest Tax Spending World Bank senior economist Gianluca Mele, whose presentation revealed that Dominican Republic has the region's highest tax expenditure in recent years, affirmed that there's room to improve the fairness of the exemptions, the report relays. "If the level of ITBIS efficiency of the Dominican Republic was to reach the level of the region's average efficiency, it would lead to a revenue increase of 2.8% of GDP," Mr. Mele said when presenting the study "Towards A More Efficient Tax System," 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. DOMINICAN REPUBLIC: US Litigation Compounds Energy Woes ------------------------------------------------------- Dominican Today reports that the Dominican Republic disclosed that it is preparing a call for tenders for new power plants, to guarantee the country's long-term energy supply. The announcement comes just two years after the government discarded offers by at least two US-based companies to build natural gas-fired power plants without the need for financing guarantees, according to Dominican Today. State-owned Electric Utility (CDEEE) CEO Ruben Jimenez Bichara said that each year the demand grows as much as 130 megawatts, so they expect to conclude the bidding rules within 60 days so that interested international companies can bid on time and see if their power plants can be finished "at least by 2022," the report notes. He said energy projects on natural gas will be the priority in the future, the report relays. Odebrecht The dispute with the conglomerate Odebrecht and the CDEEE on the former's demand of an additional US$708 million to continue construction of the Punta Catalina power plant will be decided in a New York court, Mr. Jimenez said, the report relays. He said there's still no date set to start the international arbitration, the report relays. "This is a process that is extended and the time will come when the court will take action and there will be arguments from both sides so that in the end a decision can come out," Mr. Jimenez added. Catalina Continues The official reiterated that the litigation doesn't halt the plant's completion, and affirmed it will be operational this year as scheduled, the report relays. "The important thing is that we can give the country a project like that, because it's already an emergency in which it is working for the benefit of the Dominican people," he 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. ============= E C U A D O R ============= ECUADOR: Makes 3.6MM Barrels of Oil Available in Spot Sale ---------------------------------------------------------- EFE News reports that Ecuador has made 3.6 million barrels of Oriente crude available in a "spot" sale, a process in which more than 40 companies are participating, the Andean nation's hydrocarbons minister said. "We're carrying out the first spot sale of 2018 today. It's a 'spot' sale of 10 shipments of 360,000 barrels, or 3.6 million barrels," Carlos Perez told reporters at state oil company Petroecuador's headquarters in Quito, according to EFE News. As reported in the Troubled Company Reporter-Latin America, Egan-Jones Ratings Company, on Oct. 12, 2017, raised the foreign currency and local currency senior unsecured ratings on debt issued by the Republic of Ecuador to B+ from B. EJR also upgraded the ratings on the Company's commercial paper to B from C. Ecuador is a country straddling the equator on South America's west coast. ============= G R E N A D A ============= GRENADA: To Be Removed From EU Tax Haven List --------------------------------------------- Caribbean360.com reports that Prime Minister Dr. Keith Mitchell says Grenada is expected to be removed from the European Union Blacklist by the end of January. The decision to remove Grenada, one of 17 countries blacklisted by the EU, is expected to follow a meeting of the Financial and Economic Unit of the OECD set for January 23, according to Caribbean360.com. On December 5, 2017, the European Union Council approved and published conclusions containing an EU list of non-cooperative jurisdictions in taxation matters, the report notes. According to the Council, Grenada did not sign or ratify the OECD Multilateral Convention on Mutual Administrative Assistance as amended and did not clearly commit to addressing these issues by December 31 this year, the report relays. However, Prime Minister Mitchell said Grenada ought not to have been placed on the list in the first place, since the country had met all the conditions required, the report notes. "On January 23, the Financial and Economic Unit of the OECD will be meeting after the response from Grenada and of course we pointed out the mistakes that were made," he said, the report says. "Grenada is expected to be removed before the end of January from that blacklist. So I think we would have gone through that process successfully," Mr. Mitchell said, the report discloses. The Ministry of Finance had issued a statement saying 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, the report relays. The report notes that those commitments were in response to concerns raised by the OECD group, regarding meeting all the criteria set up by the EU Council for Transparency and fairness in Taxation, and was well on track to doing so. Prime Minister Mitchell said it was accepted that the decision was unfair, the report relays. "But the specific case of Grenada, we had asked for some communications sent to us so that we would move and deal with what we are supposed to do," the Grenadian leader said, the report notes. "And they took a very long time to send it, so since the blacklist came on they have sent the information and we then replied and, like I said, before the end of the month, from indications in correspondent received, we expect to be release from that blacklist," he added. The report relays that Grenada was not the only Caribbean nation on the blacklist. There were three others: Barbados, St Lucia, and Trinidad and Tobago. ====================== P U E R T O R I C O ====================== MCO INDUSTRIES: Plan and Disclosures Hearing Set for Feb. 9 ----------------------------------------------------------- Judge Edward A. Godoy of the U.S. Bankruptcy Court for the District of Puerto Rico conditionally approved MCO Industries Inc.'s small business disclosure statement, dated Jan. 4, 2018, in support of its plan of reorganization. Acceptances or rejections of the Plan must be filed in writing on/or before 14 days prior to the date of the hearing on confirmation of the Plan. Any objection to the final approval of the Disclosure Statement and/or the confirmation of the Plan must be filed on/or before 14 days prior to the date of the hearing on confirmation of the Plan. A hearing for the consideration of the final approval of the Disclosure Statement and the confirmation of the Plan will be held on Feb. 9, 2018 at 9:30 a.m. at the United States Bankruptcy Court, Jose V. Toledo Federal Building & U.S. Courthouse, Southwestern Divisional Office, 300 Recinto Sur Street, San Juan, Puerto Rico. Under the Plan, Class 3 - General Unsecured Claims, totaling $946,343, are impaired. This Class will be paid 42% of their allowed claims, plus 4.25% interest, in 60 monthly installments. First 12 months at a rate of $3,682.42, and 48 at a rate of $8,289.20 per month. The Debtor's Plan will be funded with proceeds from it operations and from the moneys recovered from the lawsuit for collection of moneys filed against Finca Real, Inc. The Debtor believes its business will get a significant boost in 2018 as the demand to repair the structures and roads damaged during the passing of Hurricanes Irma and Maria will increase the demand for the aggregates and sand it sells. Sales during November 2017 exceeded $50,000.00 and the December 2017 sales exceeded $60,000.00. Moreover, there is a commitment from the Federal Government to spent over a billion dollars in road repairs that will also dramatically increase Debtor's sales during the lifespan of its Chapter 11. A full-text copy of the Disclosure Statement is available at: http://bankrupt.com/misc/prb17-00961-56.pdf About MCO Industries Inc. MCO Industries Inc. sought protection under Chapter 11 of the Bankruptcy Code (Bankr. D. P.R. Case No. 17-00961) on February 15, 2017. The petition was signed by John McComas Miro, president. The case is assigned to Judge Edward A. Godoy. At the time of the filing, the Debtor estimated assets of less than $500,000 and liabilities of $1 million to $10 million. ================================ T R I N I D A D & T O B A G O ================================ TRINIDAD & TOBAGO: Poverty Pretenders Prevail in the Country ------------------------------------------------------------ Trinidad Express reports that there are people in Trinidad and Tobago who are pretending to be poor and "masquerading poverty" and accessing social services like food cards, economist and former chairman of the Economic Development Advisory Board Dr. Terrence Farrell has said. "Our politicians and our public servants have to be able to discern real need and real vulnerability from the rent-seeking behavior of this picaroon society," Mr. Farrell urged, the report relays. He said while the Government had a social obligation to protect those who are poor, in the face of the economic challenges these persons must be clearly identified, 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 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. 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. * * * End of Transmission * * *