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/raid1/www/Hosts/bankrupt/TCRLA_Public/180216.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, February 16, 2018, Vol. 19, No. 34 Headlines B R A Z I L AGENCIA DE FOMENTO: Fitch Affirms C Long-Term IDR D O M I N I C A N R E P U B L I C DOMINICAN REP: Moneychangers Refute Bank: Dollars Are Scarce DOMINICAN REPUBLIC: Top Challenge is to Step Up Reforms, IMF Says J A M A I C A JAMAICA: Carreras Says Government Unlikely to Meet Revenue Target P U E R T O R I C O MAC ACQUISITION: Court Confirms Amended Chapter 11 Plan PUBLIC BUILDING AUTHORITY PR: S&P Cuts Series L Bond Rating to 'D' UNIVERSITY OF THE SACRED HEART PR: S&P Affirms 'BB' Bond Rating V E N E Z U E L A VENEZUELA: Blames Blackout on Sabotage X X X X X X X X X LATAM: IDB Launches 2018 Call for Proposals to Receive Financing - - - - - =========== B R A Z I L =========== AGENCIA DE FOMENTO: Fitch Affirms C Long-Term IDR -------------------------------------------------- Fitch Ratings has affirmed Agencia de Fomento do Estado do Rio de Janeiro S.A.'s (AgeRio) Long-Term Local and Foreign Currency Issuer Default Ratings (IDRs) at 'C' and Long-Term National Ratings at 'C(bra)'. KEY RATING DRIVERS - IDRS, NATIONAL RATINGS AND SUPPORT RATING AgeRio's IDRs and National Ratings align with those of its parent, the State of Rio de Janeiro (ERio; Long-Term Local and Foreign Currency IDRs 'C'). AgeRio's Support Rating (SR) of '5' reflects that there is a possibility of parental support, although it cannot be relied upon, given ERio's very weak financial capacity. However, AgeRio's small size increases the relative ability of ERio to provide support in case of need. Fitch does not assign a Viability Rating to AgeRio, as it is a development agency and therefore cannot be assessed on a standalone basis. Fitch believes that ERio's willingness to support AgeRio remains high, even though its capacity to support is very low. AgeRio is strategically important for ERio, as it acts as the state's development arm and implements its economic development policies both as a lender and a financial agent. A track record of frequent capital injections by ERio, most recently in the second half of 2015, reinforces Fitch's view. Furthermore, ERio controls 99.99% of AgeRio, and, according to a state law, ERio's stake in AgeRio's voting shares cannot fall below 51%. AgeRio's financial profile has no direct rating implications, but it has remained broadly stable since Fitch's last annual review. The agency's asset quality indicators started coming under pressure in 2015 and reached their weakest levels in 2016. As of June 2017, they remained broadly unchanged. In this period, impaired loans, classified in the D-H risk category in the central bank's risk scale, stood at a high 24%. Significant amount of renegotiations and a net charge-off of about 7% of average gross loans helped preserve the NPL ratio at a relatively low 4% in this period. AgeRio's loan book is adequately provisioned, with loan loss reserves covering 85% of impaired loans at June 2017. AgeRio's earnings have historically been adequate, broadly stable and compatible with the agency's strategy, despite volatility in impairment charges. As of June 2017, the agency's ROAA fell slightly to 1.6% (1.8% in 2016), as a result of both an increase in the effective tax-rate and a non-recurring impairment expense charged for the collateral that was received for a non-performing loan. In 2018, AgeRio's operating results could be negatively affected if part of the renegotiated loans fails to perform, which might require additional loan loss reserves. As of June 30, 2017, funding consisted of lines from Banco Nacional de Desenvolvimento Economico Social (BNDES, Long-Term Local and Foreign Currency IDRs BB/Negative) and FINEP (Long-Term Local and Foreign Currency IDRs BB/Negative), a public entity subordinate to the Ministry of Science, Technology and Innovation, which accounted for 65% and 35% of total funding, respectively. In July 2016, BNDES suspended its funding lines to AgeRio following ERio's nonpayment of its obligations to the federal government. Existing BNDES operations were not affected by this suspension, but future new funding from BNDES will be conditional on ERio honoring its debt to the federal government. AgeRio is very highly capitalized and has significant room for growth. As of June 30, 2017, its total regulatory capital ratio was approximately 67%. Historically, ERio has reinvested all dividends back into AgeRio. In the same period, AgeRio's liquidity also remained very high, whereby liquid assets (government securities and investment funds consisting entirely of government securities and reverse repos) corresponded to 3.5 times its total liabilities, compared to the 10% minimum limit required by the regulator. RATING SENSITIVITIES IDRs, NATIONAL RATINGS AND SUPPORT RATING Changes in Parental Support: AgeRio's ratings are linked to those of ERio. Any changes in ERio's ratings or willingness to support AgeRio would lead to a review of its ratings. Fitch has affirmed the following: -- Long-Term Foreign and Local Currency IDRs at 'C'; -- Short-Term Foreign and Local Currency IDRs at 'C'; -- Long-term National Rating at 'C(bra)'; -- Short-term National Rating at 'C(bra)'; -- Support Rating at '5'. =================================== D O M I N I C A N R E P U B L I C =================================== DOMINICAN REP: Moneychangers Refute Bank: Dollars Are Scarce ------------------------------------------------------------ Dominican Today, citing outlet El Dia, reports that one day after the Central banker Hector Valdez Albizu affirmed that the country has the US currency "and more coming," moneychangers complain that dollars have become scarcer in the market in recent weeks. Pedro Arias, a moneychanger says they're receiving only bills of lower denomination, according to Dominican Today. "Here only 20, 25 or 50 dollars arrive, the large quantities apparently go elsewhere," the report quoted Mr. Albizu as saying. Some suspect currency hoarding by the Government and companies, the report relays. The report notes that Mr. Valdez meanwhile stressed that there's no shortage of dollars in the Dominican Republic and "a lot of foreign currency" instead. He refuted claims that banks dispatch from US$10,000 to US$20,000 at 50 points above the market rate, the report relays. "The banks often give priority to corporate clients," Mr. Valdez added. Depreciation The Dominican peso depreciated 0.10 percent against the dollar in the currency market, according to Central Bank data, 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: Top Challenge is to Step Up Reforms, IMF Says ----------------------------------------------------------------- Dominican Today reports that the IMF mission that visited the country during the past two weeks, concluded that the main challenge for the future is to accelerate reforms to create resilience against risks, raise potential growth and further reduce poverty and inequality. "The efforts made by the government to strengthen the fiscal position are welcome, but more significant consolidation measures are needed to address structural fiscal weaknesses," the entity said, according to Dominican Today. The mission said the recent measures to strengthen the tax and customs administration are helping raise tax revenues, however, "these would be insufficient to reverse the upward dynamic of the debt in the face of tightening global financial conditions, rising oil prices and a higher burden of debt service," the report notes. In that context, the IMF mission said greater efforts will be required to rebuild the capacity of public finances to cushion shocks, taking into account the social impact and growth in the composition of the fiscal consolidation process, the report relays. "This would mean focusing the adjustment on the broadening of the tax base, including the targeting of tax exemptions and incentives, and the simplification of the tax system while protecting the most vulnerable," it said, adding that the savings resulting from a lower interest charge could then be used to increase social spending and public investment, the report notes. A more robust fiscal policy framework would underpin efforts to improve the fiscal position. A medium-term fiscal framework, anchored in longer-term sustainability objectives, would help to reduce policy uncertainty and further strengthen its credibility with economic agents," it added. 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. ============= J A M A I C A ============= JAMAICA: Carreras Says Government Unlikely to Meet Revenue Target ----------------------------------------------------------------- RJR News reports that Carreras Limited said it's unlikely that the Jamaica government will meet its revenue target from the tax on tobacco products this fiscal year and has placed blame on the tax affecting the affordability of cigarettes and subsequently sales. According to company officials, the Government had announced that revenues from tobacco would increase by J$826 million this fiscal year with the hike in the Special Consumption Tax from $14 to $17 per stick of cigarette, the report notes. However, the company says based on actual volume performance up to December last year, it is evident that the Government's revenue target will not be achieved, the report relays. Carreras says the Government is on track to collect one billion dollars less than its collection in 2016/2017 which taken together is an overall reduction of $1.826- billion compared to its projections, the report relays. Meanwhile, the cigarette tax affected Carreras financial performance for the April to December period, the report discloses. It earned total operating revenue of $ 9.53 billion and $2.5 billion in net income which were both down ten per cent when compared to the prior year, the report relays. Carreras experienced a decline in sales volume since the increase in the tobacco tax. The company says legal sales volume lost is being channeled directly to the illicit trade which continues to expand as a result of continuous tax increases, the report adds. As reported in the Troubled Company Reporter-Latin America on Feb. 5, 2018, Fitch Ratings has affirmed Jamaica's Long-Term Foreign-Currency Issuer Default Rating (IDR) at 'B' and has revised the Rating Outlook to Positive from Stable. ====================== P U E R T O R I C O ====================== MAC ACQUISITION: Court Confirms Amended Chapter 11 Plan ------------------------------------------------------- Judge Mary F. Walrath of the U.S. Bankruptcy Court for the District of Delaware, on Feb. 7, issued a findings of fact, conclusions of law, and order confirming the Amended Joint Chapter 11 Plan of Reorganization of Mac Acquisition LLC, and its debtor affiliates. On Dec. 13, 2017, the Court held a hearing to consider the adequacy of the disclosure statement and the objection of the Official Committee of Unsecured Creditors with respect to the Disclosure Statement. The Court sustained in part and overruled in part the Committee's objection. Following the hearing, the Debtors made certain revisions to the Plan and Disclosure Statement consistent with the statements made at the hearing and the Court's ruling. A revised Plan and Disclosure Statement were filed with the Court on December 14, 2017, a full-text copy of which is available at: http://bankrupt.com/misc/deb17-12224-301.pdf On Dec. 15, 2017, the Court approved the Disclosure Statement, as amended. Prior to the Confirmation Hearing, the Debtors amended their Plan several times to, among other things, provide that the Exit Facility in the aggregate amount up to $8,500,000, will have a maturity of 36 months following the Effective Date. A full-text copy of the confirmed Amended Plan is available at: http://bankrupt.com/misc/deb17-12224-505.pdf About Mac Acquisition LLC Mac Acquisition LLC, et al. -- https://www.macaronigrill.com/ -- operate full-service casual dining restaurants under the trade name, "Romano's Macaroni Grill." As of Oct. 18, 2017, the company operates 93 company-owned restaurants located in 23 states, with a workforce of approximately 4,600 employees. Non-debtor affiliate RMG Development franchises an additional 23 restaurants in Florida, Hawaii, Illinois, Texas, Puerto Rico, Mexico, Bahrain, Egypt, Oman, the United Arab Emirates, Qatar, Germany, and Saudi Arabia. During 2016, Mac Acquisition and RMG generated gross revenues through restaurant sales and franchisee payments of approximately $230 million. On Oct. 18, 2017, Mac Acquisition LLC, and eight affiliates sought Chapter 11 protection (Bankr. D. Del. Lead Case No. 17-12224). Mac Acquisition's estimated assets of $10 million to $50 million and debt at $50 million to $100 million. The Hon. Mary F. Walrath is the case judge. The Debtors tapped Young Conaway Stargatt & Taylor, LLP, as Delaware bankruptcy counsel; Gibson, Dunn & Crutcher LLP, as general bankruptcy counsel; Mackinac Partners, LLC, as financial advisor; and Duff & Phelps Securities, LLC as financial advisor and investment banker. Donlin, Recano & Company, Inc., is the claims agent. On October 30, 2017, the Office of the U.S. Trustee appointed an official committee of unsecured creditors. The committee hired Kelley Drye & Warren LLP as its lead counsel, and Bayard, P.A., as co-counsel with Kelley Drye. PUBLIC BUILDING AUTHORITY PR: S&P Cuts Series L Bond Rating to 'D' ------------------------------------------------------------------ S&P Global Ratings has corrected by lowering its rating on two maturities of Puerto Rico Public Building Authority's series L revenue refunding bonds due July 1, 2021, to 'D' (default) from 'CC'. Due to an administrative error, S&P inadvertently omitted these two maturities from the rating action to lower the building authority's series L revenue refunding bonds following a default on their debt service payment on July 1, 2016. UNIVERSITY OF THE SACRED HEART PR: S&P Affirms 'BB' Bond Rating ---------------------------------------------------------------- S&P Global Ratings removed from CreditWatch negative and affirmed its 'BB' rating on the Puerto Rico Industrial, Tourist, Educational, Medical, and Environmental Control Facilities Finance Authority's series 2012 higher education revenue bonds, issued for the University of the Sacred Heart (USH; Universidad del Sagrado Corazon). The outlook is stable. "Removal of the rating from CreditWatch reflects S&P Global Ratings' receipt of information it requested from the university to maintain the ratings and S&P Global Ratings' assessment of the university's operations and finances," said S&P Global Ratings credit analyst Jamie Seman. S&P said, "We assessed the university's enterprise profile as adequate, characterized by its history of declining enrollment. We assessed the university's financial profile as vulnerable based on full accrual deficits in both fiscal years 2015-2017, weak financial balance sheet metrics, high student fee dependence, and heavy reliance on Pell and similar grants for tuition revenue. We believe that these financial characteristics make it vulnerable to economic conditions beyond its control. We believe Puerto Rico's prolonged recession, structural deficits, recent natural disasters, and economic uncertainty will continue to constrain consumer budgets. As a result, we also believe enrollment pressures and weakened financial position at universities in Puerto Rico (including USH) will likely continue during the next two years due to depressed economic conditions. "The stable outlook reflects our expectation that, during the one- year outlook period, USH will continue to stabilize enrollment at or near current levels. We also expect operations to improve toward breakeven on a full accrual basis and its financial resources to improve beyond fiscal 2017. In addition, we do not expect USH to issue any new debt within the outlook period. "We could consider a negative rating action during the one-year outlook period if enrollment declines further, material full- accrual operating deficits continue, or financial resource ratios were to decrease to levels no longer consistent with the rating category. "We believe that a positive rating action is unlikely during the outlook period, due to financial resource ratios that are low for the rating category. We also believe Puerto Rico's depressed economic conditions will likely continue during the next year, limiting USH's ability to grow enrollment beyond current levels. We would view an improvement in enrollment and demand, positive operations, and growth in financial resources positively." ================= V E N E Z U E L A ================= VENEZUELA: Blames Blackout on Sabotage -------------------------------------- EFE News reports that Venezuela's minister of electric energy said that the blackout affecting this capital and other areas was due to sabotage at a substation in the central state of Miranda. "Santa Teresa substation suffered an act of sabotage and vandalism that caused a large explosion and a fire," Luis Motta Dominguez said on Instagram, according to EFE News. As reported in the Troubled Company Reporter-Latin America on Jan. 12, 2018, S&P Global Ratings lowered its issue rating on the Bolivarian Republic of Venezuela's global bond due 2020 to 'D' from 'CC'. At the same time, S&P affirmed its 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 S&P placed them on Nov. 3, 2017. Other foreign currency senior unsecured debt issues not currently rated 'D' are rated 'CC' ================= X X X X X X X X X ================= LATAM: IDB Launches 2018 Call for Proposals to Receive Financing --------------------------------------------------------------- The Inter-American Development Bank (IDB) launched the 2018 call for proposals for the Regional Public Goods (RPG) Initiative in Latin America and the Caribbean (LAC), which supports projects involving three or more countries. The RPG Initiative provides technical grants to finance solutions that resolve shared challenges through regional cooperation. Since 2004, the RPG Initiative has financed 154 projects, investing more than $112 million. The proposals must involve a collective solution produced by at least three IDB borrowing member countries. The Initiative is open to the promotion of RPGs in any topic, alignment with the Bank's operational priorities is a selection criterion. The other two criteria are the value added of a regional (vs. national) approach to addressing a development challenge or opportunity, as well as sustaining the benefits of regional collective action beyond the support of the Initiative. Past RPG-funded projects have included a protocol for joint procurement and quality of medicines in Central America, an action plan for the energy efficiency in the Caribbean hotels, support to the interoperability of foreign trade single windows, a framework for protection and registration of migrant workers in the Southern Cone and regional standards for school infrastructure across Latin America and the Caribbean, among others. All Information regarding the 2018 Call for Proposals can be accessed in the RPG Initiative website. All proposals must be presented in accordance with the General Guidelines applicable to all Call for Proposals and must be submitted online before 05:00 pm (US Eastern Standard Time) on April 16th, 2018. *********** 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 * * *