/raid1/www/Hosts/bankrupt/TCRLA

/raid1/www/Hosts/bankrupt/TCRLA_Public/180518.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, May 18, 2018, Vol. 19, No. 98 Headlines A N T I G U A & B A R B U D A ANTIGUA & BARBUDA: Minister Out of Cabinet Amid Bribery Scandal A R G E N T I N A IRSA PROPIEDADES: Fitch Affirms LT FC IDR at B, Outlook Stable B A R B A D O S BARBADOS: Being Taken Before the Caribbean Court of Justice Again B R A Z I L JBS: S&P Raises Corp Credit Rating to 'B+', Outlook Positive JBS SA: Seara Seeks Profitability, Won't Sacrifice Profits OI SA: U.S. Court to Hear Fight Over Bankruptcy Plan D O M I N I C A N R E P U B L I C DOMINICAN REPUBLIC: Must Brace for Oil Price Hike Shock M E X I C O GRUPO IDESA: Fitch Cuts Sr. Unsec. LT Rating to B-, Removes RWN P U E R T O R I C O KONA GRILL: Berke Bakay Holds 15.7% Stake as of May 2 KONA GRILL: Director Nanyan Zheng Has 19.9% Stake as of May 2 - - - - - ================================ A N T I G U A & B A R B U D A =============================== ANTIGUA & BARBUDA: Minister Out of Cabinet Amid Bribery Scandal --------------------------------------------------------------- Caribbean360.com reports that Antigua and Barbuda's Trade and Investment Minister Asot Michael has resigned from the Cabinet amid allegations that he is linked to a British investor accused of bribery. Minister Michael submitted his resignation letter, which takes effect tomorrow, to Prime Minister Gaston Browne, who accepted it and asked Governor General Sir Rodney Williams to revoke his appointment, according to Caribbean360.com. The move comes on the heels of the opposition United Progressive Party's (UPP) political leader Harold Lovell calling for him to either step down or be fired, the report notes. Although insisting that he had done nothing wrong, Michael said he would resign "to allow the government to fulfil its obligations to the people, without any distraction," the report says. A court in the United Kingdom heard transcripts of 2016 conversations between British billionaire Peter Virdee and his business partner Dieter Trutschler, in which Mr. Virdee talked about being asked for bribes, the report discloses. In the recordings, made by German authorities, the investor said Mr. Michael had asked him for a car for his mother, $2 million, and a watch, the report says. The media reports on the court revelations prompted Lovell to demand the removal of Michael who had been fired as minister of tourism, economic development, investment and energy last October, after he was arrested in London, but returned to the Cabinet after the March 21 elections in which he won his seat, the report discloses. The report notes that Mr. Lovell contended that the latest controversy "once again drags the name of Antigua and Barbuda into the mud". "It is absolutely important that Mr. Michael should do the right thing and he should resign immediately. Failing an immediate resignation Prime Minister Gaston Browne ought to relive him immediately of his responsibilities," he said, the report relays. But even as he stepped down, Mr. Michael insisted that he was "not a party to the court proceedings in the United Kingdom which have been reported in the media, nor have I been charged with any wrongdoing. The media reports refer to recordings of conversations between persons other than myself, and I cannot be held responsible for their utterances," the report discloses. He charged that the allegations were being used by "opposition political elements" to seek to discredit him and the Government, the report relays. And Mr. Michael' said he would do all in his power to counter and disprove allegations made against him, the report notes. "I am determined that the calumnies against me shall not stand," he wrote in his resignation letter, the report says. Mr. Michael is not the only Caribbean politician under the microscope as a result of the revelations in the British court, the report notes. St Kitts and Nevis' Prime Minister Dr. Timothy Harris is facing calls from the opposition party to step down as well, since his name was also mentioned. ================= A R G E N T I N A ================= IRSA PROPIEDADES: Fitch Affirms LT FC IDR at B, Outlook Stable -------------------------------------------------------------- Fitch Ratings has affirmed IRSA Propiedades Comerciales S.A.'s (IRSA PC) long-term, foreign-currency (FC) Issuer Default Rating (IDR) at 'B'. In addition, Fitch has affirmed IRSA PC's local- currency (LC) IDR at 'BB-'. Fitch has also affirmed IRSA PC's unsecured notes at 'B+'/'RR3'. The Rating Outlook for the corporate ratings is Stable. The rating affirmation encompassed IRSA's resilient operating performance during the past three years, despite high inflation and challenging economic conditions. IRSA PC's 'B' LT FC IDR is constrained by the Republic of Argentina's 'B' country ceiling, which limits the foreign currency rating of most Argentine corporates. Fitch's Country Ceilings are designed to reflect the risks associated with sovereigns placing restrictions upon private sector corporates, which may prevent them from converting local currency to any foreign currency under a stress scenario, and/or may not allow the transfer of foreign currency abroad to service foreign currency debt obligations. The rating affirmation of IRSA's notes at 'B+'/'RR3' reflects above-average recovery expectations for these obligations, as it is Fitch's belief that a default on debt denominated in a foreign currency by IRSA would be driven by exchange controls rather than a deterioration of its solid financial profile or strong business position. KEY RATING DRIVERS Constrained by Economic Environment: IRSA PC's long-term FC IDR continues to be constrained at 'B' by the Country Ceiling assigned to Argentina. Country Ceilings are designed to reflect the risks associated with sovereigns placing restrictions on private sector corporates, which may prevent them from converting LC to any FC under a stress scenario, and/or may not allow the transfer of FC abroad to service FC debt obligations. Strong Parent-Subsidiary Linkage: Fitch views the rating linkage between IRSA PC (B/Stable) and its parent company, Inversiones y Representaciones S.A. (B/Stable), as strong as IRSA PC is operationally integral to its parent company. The ratings for both entities are viewed as closely related, with IRSA PC considered as having the stronger credit profile. Inversiones y Representaciones S.A. owns 86.3% of IRSA PC. The parent-subsidiary strategic and operational linkages between the aforementioned entities are strong based on the entities' common management team and decision making process. IRSA PC's upstream dividends represent a relevant part of Inversiones y Representaciones S.A.'s cash flow generation, which reinforces the strong credit linkage. FX Risk Factors into Ratings: Devaluation risk is also present for the company as most of its cash flow is denominated in Argentine pesos -- approximately 85% of its total revenues -- and most of its debt is in U.S. dollars. This risk is partially mitigated by the company's capacity to maintain its rental income linked to inflation, which indirectly incorporates the impact of the devaluation of the local currency against the U.S. dollar. Fitch incorporates as a positive credit factor the company's good track record of successfully manage its operations while facing a challenging operating environment coupled with high FX risk volatility during the last several years. Largest Player in Argentina: The company's 'BB-' LC rating reflects IRSA PC's solid business position as one of the largest owners and managers of shopping centers and offices in Argentina in terms of gross leasable area (GLA) and the number of rental properties. IRSA PC owns 16 shopping centers in Argentina with a total GLA of 343,023 square meters (sqm) and seven premium offices with 84,982 sqm as of March 31, 2018. IRSA PC's cumulative tenant sales in the shopping center segment totalled ARS31.2 billion during the first nine months of fiscal 2018 (ended March 31, 2018). As of March 31, 2018, the value of the company's investment properties is estimated at ARS47.3 billion (USD2.4 billion). All the investment properties are unencumbered assets. Consistent Operational Performance, High Occupancy: The company maintains a high-quality property portfolio resulting in consistently stable margins and high occupancy rates. As of March 31, 2018, the company's occupancy level in the shopping center and premium offices segments remain solid at 98.6% and 91%, respectively. The company owns and manages seven premium office buildings in the city of Buenos Aires and owns certain properties for future development in Buenos Aires and several provincial cities. The company consistently kept an EBITDA margin of around 75% in the past several years. The company shows some near-term concentration in its lease agreements; approximately 35% to 40% of its lease contracts expire during the first year, as the contracts are generally for 36 months. While this ratio is high for the industry, IRSA PC's market position and property portfolio quality have enabled it to renew contracts and maintain its occupancy rates consistently above 95% during the last 10 years. Low Leverage: IRSA PC's leverage is low for a real estate company. Fitch expects net leverage to remain stable, at about 2.5x by fiscal year-end 2019 (2.4x at LTM March 2018) thanks to increased EBITDA and stable profitability. As of March 31, 2018, IRSA PC had total debt of ARS10.8 billion (USD541 million), which consists primarily of USD-denominated unsecured debt. In March 2016, the company issued a senior unsecured bond for a total of USD360 million and used the proceeds to repay 2017 notes (USD120 million) and USD240 million of intercompany loans from the holding company. In September 2017, the company issued USD140 million notes -- due in September 2020 -- in the local market, proceeds are expected to be used primarily in the company's capex plan. Capex Plan Incorporated: Fitch expects the company to execute an important capex plan, estimated at USD200 million, during 2018- 2020. The capex plan includes the addition of approximately 70,000 square meters of GLA in the office segment (Polo Dot and Catalinas projects), the expansion of Alto Palermo Mall (approximately 4,000 sqm), as well as some strategic land acquisitions. Fitch views the company as maintaining its stable capital structure while executing its capex plan based on its expected cash flow generation and current liquidity position. Recovery Analysis Assumptions: The 'RR3' Recovery Rating reflects good recovery prospects in the event of default. The notching above the soft cap of 'RR4' for bonds issued by Argentine corporates reflects IRSA PC's strong credit profile and ability to operate should a potential economic of political crisis occur in Argentina. Fitch assumes a going-concern scenario in its recovery analysis for IRSA PC. Fitch assumes a going-concern enterprise value of ARS11.7 billion based on post-default EBITDA of approximately ARS2 billion (a 35% discount from the company's LTM March 2018 EBITDA level of ARS3 billion) and a multiple of 6x. After deducting 10% for administrative claims, the remaining ARS10.6 billion of enterprise value leads to recovery for IRSA PC's unsecured debt of approximately 97%. Fitch caps IRSA PC's recovery prospects to 'RR3'. DERIVATION SUMMARY The company's operations are primarily focused in Argentina. IRSA PC's long-term FC IDR continues to be constrained at 'B' by the Country Ceiling assigned to Argentina. Absent this rating constraint, IRSA PC's ratings could be several notches above their current levels. The operating environment influence is in effect for these ratings. IRSA PC's credit metrics compare well with its main peers in the real estate sector. IRSA PC's ratings reflect an experienced and well-positioned shopping mall operator in the Argentina mall industry. The company also maintains an important business position in the Buenos Aires office market, which represents approximately 10% to 15% of its total annual revenues. IRSA PC's EBITDA margin of around 75% during 2016-2018 is viewed as strong when compared with the main players in Latin America such as Fibra Uno (BBB/Stable), InRetail Real Estate (BB+/Stable), and BR Malls (BB/Stable) with EBITDA margins of 76.5%, 80% and 71%, respectively, during the same period. IRSA PC's net leverage is low for a real estate company. The company's leverage, measured as net adjusted debt/EBITDAR, is expected to remain in the 2x to 3x range during 2018-2019, which is viewed as strong when compared with regional peers. Fibra Uno, InRetail Real Estate; and, BR Malls, which are expected to reach net leverage ratios of 5.5x, 5.8x and 2.6x, respectively, during the same period. In terms of interest coverage, IRSA PC's EBITDA/net interest ratio is anticipated to be in the 3.0x-3.5x range during 2018-2019, which is viewed as stronger when compared with expected levels for Fibra UNO (2.8x), InRetail Real Estate (2.5x) and BR Malls (2.5x) during the same period. IRSA PC's level of unencumbered assets to unsecured debt at 4.4x, and its total net loan to value ratio at approximately 16% during 2018-2020 are well positioned when compared with regional peers rated in the 'BB' and 'BBB' rating categories. KEY ASSUMPTIONS Fitch's Key Assumptions within its Rating Case for the Issuer --2018-2020 EBITDA Margin around 75%; --Shopping Mall segment representing approximately 87% of the company's total revenues; --Occupancy in the Shopping Mall Segment Stable at 98%; --Net leverage ratio in the 2x to 3x range during 2018-2020; --Interest coverage to remain consistently above 3x during 2018- 2020. RATING SENSITIVITIES Developments That May, Individually or Collectively, Lead to Positive Rating Action An upgrade of the Argentina sovereign rating could trigger a positive rating action. Developments That May, Individually or Collectively, Lead to Negative Rating Action A downgrade could be triggered by a downgrade of the Argentine sovereign rating or a significant deterioration of IRSA PC's credit metrics, leading to an interest coverage ratio below 2.0x. LIQUIDITY No Liquidity Issues, High Unencumbered Asset Base: Liquidity is viewed as adequate, considering IRSA PC's interest coverage, manageable debt schedule, FCF trend, good access to local banks and significant level of unencumbered assets. The company has no material debt payments due during 2018-2019. As of March 31, 2018, the company had cash and cash equivalents of about ARS3.3 billion (USD165 million). In addition, the company had ARS3.5 billion (USD173 million) as investments in financial assets, which provides additional financial flexibility. The company's loan to value is estimated at 23% (net LTV of 13%), which reflects IRSA PC's unencumbered property value of approximately USD2.4 billion, as of March 31, 2018. The company's liquidity is further supported by its adequate interest coverage ratios, measured as EBITDA over interest expenses. Fitch expects IRSA PC's interest coverage to be around 3.2x during 2018-2019. FULL LIST OF RATING ACTIONS IRSA Propiedades Comerciales S.A.: Fitch has affirmed the following ratings: --Long-term, foreign-currency IDR 'B'; --Long-term, local-currency IDR 'BB-'; --USD360 million senior unsecured foreign currency notes 'B+'/'RR3'. =============== B A R B A D O S =============== BARBADOS: Being Taken Before the Caribbean Court of Justice Again ----------------------------------------------------------------- Caribbean360.com reports that the Barbados Government is being taken before the Caribbean Court of Justice (CCJ) again. Locally-based Arawak Cement Company Limited (ACCL) and its parent company Trinidad Cement Limited (TCL) are taking on the government for contravening several articles of the Revised Treaty of Chaguaramas (RTC) which established the Caribbean Community (CARICOM), according to Caribbean360.com. They say the government unilaterally reduced the Common External Tariff (CET) on cement, which had been set by the Council of Trade and Economic Development (COTED), from 60 per cent to five per cent, the report notes. Arawak and TCL disclosed that they filed an application for Special Leave at the CCJ to pursue an Originating Application against the government in the matter. In its original jurisdiction, the CCJ interprets and applies the Revised Treaty. In a statement, the companies argued that the reduction of the rate caused "distorted competition" and promoted unfair trade practices within the CARICOM Single Market and Economy (CSME), the report notes. They are also seeking a declaration that the Government of Barbados contravened article 79 of the Revised Treaty by misclassifying imported cement, the report says. "As it stands, the imported cement from Portugal and Turkey has been and is being marketed as cement for general use as stated on its packaging, and is being sold for the same applications as the locally produced Arawak Cement brand," the companies said in a statement obtained by the news agency. "ACCL and TCL are asking for the immediate reinstatement of the COTED-approved 60 per cent rate of duty on cement imports classified as 'other hydraulic cements'; application of the classification of 'building cement (grey)' to all imports of general purpose building cement from third States, which are marketed in direct competition to and used in substitution for the cement produced by TCL and Arawak and other regional producers of general purpose 'building cement'; damages for the total loss suffered by the company dating back to November 2015 and other relief as the court considers just." The companies insisted that deviation from the policies of COTED -- the region's established body for trade and economic activity -- is preventing the country from collecting rightful taxes and duties, and could have long-term consequences for Arawak's sustainability, manufacturing operations and also for the Barbados economy, the report notes. The public was first alerted to the legal action by leader of the opposition Barbados Labour Party, Mia Mottley, who made the disclosure at a political meeting, the report adds. =========== B R A Z I L =========== JBS: S&P Raises Corp Credit Rating to 'B+', Outlook Positive ------------------------------------------------------------ S&P Global Ratings raised its global scale corporate credit ratings on JBS S.A. (JBS) and JBS USA Lux S.A. to 'B+' from 'B'. S&P said, "In addition, we raised our national scale rating on JBS to 'brA' from 'brBB+'. We also raised the senior unsecured debt ratings on JBS and JBS USA to 'B+' from 'B' and the senior secured debt ratings on JBS USA to 'BB' from 'BB-'. At the same time, we removed all ratings from CreditWatch developing. The outlook on the corporate credit ratings is positive." All recovery ratings remain unchanged. The recovery rating of '1' on JBS USA's senior secured debt reflects very high (95%) recovery expectations. The recovery rating of '3' on JBS USA's senior unsecured debt reflects meaningful (65%) recovery expectations. The recovery rating of '4' on JBS USA's 2028 senior unsecured notes reflects average (30%) recovery expectations because unlike the other senior unsecured notes, this debt doesn't have guarantee from JBS. And the recovery rating of '4' on JBS's senior unsecured debt reflects average (45%) recovery expectations. The upgrade reflects JBS's successful refinancing of most of its short-term debt that was slated to mature in July 2018, significantly improving the company's liquidity position. JBS extended the maturity of R$12.2 billion of debt by three years, with amortizations of only 25% of the amount until July 2021. As a result, S&P revised its assessment on the company's liquidity to adequate from less than adequate. S&P said, "We expect JBS to maintain solid operations thanks to geographic and product diversification, which allows the company to mitigate the impact stemming from the industry's downturns. This should allow JBS to reduce leverage over the next few years even amid higher pressures on its profitability this year. The latter is due to higher input costs and fierce competition in the company's Brazilian and export operations for beef and poultry, partly mitigated by the weaker Brazilian real. "We believe that any potential contingent liabilities or unfavorable developments in the ongoing corruption investigations of the company could pose risks for its access to capital and credit markets. The completion of investigations and potential fines arising from them remain currently uncertain. Also, JBS has historically maintained a much lower cash cushion compared with its liquidity needs, which could occur again in the future. We incorporate these risks in our negative comparable ratings analysis on the company, but this could change in the short term if we have greater clarity over the ongoing investigations and over the company's track record of a more prudent liquidity risk management." JBS SA: Seara Seeks Profitability, Won't Sacrifice Profits ---------------------------------------------------------- Carolina Mandl at Reuters reports that JBS SA said that its Seara processed food division will not begin a price war to gain market share. In a conference call, Chief Operating Officer Gilberto Tomazoni said JBS' priority to Seara is profitability, according to Reuters. JBS beat earnings estimates for the first quarter, the report notes. OI SA: U.S. Court to Hear Fight Over Bankruptcy Plan ---------------------------------------------------- Gram Slattery at Reuters reports that a U.S. bankruptcy court is set to hear a dispute involving Brazilian telecoms company Oi SA and major shareholder Bratel Brasil SA, Bratel said, as investor discontent with Oi's bankruptcy reorganization process shows no signs of abating. Bratel, a subsidiary of Portugal's Pharol SGPS SA, which owns almost 28 percent of Oi's common shares, said it had filed a legal complaint in the United States, according to Reuters. The complaint alleges that the rights of Oi shareholders were violated as part of an agreement approved by creditors in December to severely dilute shareholders' equity to take Oi out of bankruptcy protection, the report notes. In the statement, Bratel said Judge Sean Lane of the U.S. Bankruptcy Court for the Southern District of New York had scheduled a hearing for May 29, the report notes. Representatives for Oi criticized the move in a separate statement sent to Reuters, writing that the company "believes Pharol is acting in a totally isolated way in relation to all of the stakeholders in this process," and that Pharol is trying to repeat arguments it unsuccessfully made in Brazilian courts, the report says. "The company . . . will take the needed measures to protect from attacks that potentially hurt its operations," the company said, the report relays. In December, creditors in Oi, Brazil's largest fixed-line operator, approved a plan to restructure some BRL65 billion ($17.7 billion) in debt which will result in shareholders' equity being diluted by 72 percent, recounts the report. Shareholders vigorously objected, especially as the company's board was effectively removed from the process shortly before the vote, the report notes. That dilution process, in which debt will be converted into equity, has not yet occurred, though executives have told Reuters they hope to complete the process before the end of June, says Reuters. That has resulted in several legal challenges. As reported in the Troubled Company Reporter-Latin America on March 26, 2018, S&P Global Ratings raised its global scale corporate credit ratings on Oi S.A. and its subsidiary Telemar Norte Leste S.A. to 'CCC+' from 'D' and its national scale ratings to 'brB' from 'D'. All debt ratings remain at 'D'. The outlook on the corporate credit ratings is positive. =================================== D O M I N I C A N R E P U B L I C =================================== DOMINICAN REPUBLIC: Must Brace for Oil Price Hike Shock ------------------------------------------------------- Dominican Today reports that Economy professor Antonio Ciriaco warned that the Dominican government has little wiggle room to deal with a shock that can be unleashed by an even more pronounced increase in international oil prices and the high growth rate will have to be sacrificed to check inflation, depreciation and to avert an increase in poverty. The dean of the Santo Domingo State University (UASD) School of Economics said Dominican Republic's Central Bank will have no other alternative than to reduce the effects of the oil price hike with increases in the benchmark rate, according to Dominican Today. "Those are factors that are not controlled. They are international shocks and the government will have to have a more restrictive monetary policy; that is to increase interest rates to maintain an exchange rate in the neighborhood of what was forecast for this year, which is around RD$50 to RD$51 per dollar," Mr. Ciriaco said, quoted by Diario Libre, the report notes. For Ciriaco higher oil prices will have an immediate impact on fuel prices and the cost of household staples, the report relays. "The government has structural deficits, apart from stability. Here there is fiscal, trade deficit, which are not resolved with specific measures, but with structural policies. Otherwise, growth turns into marketing," Mr. Ciriaco added. As reported in the Troubled Company Reporter-Latin America on April 23, 2018, S&P Global Ratings affirmed its 'BB-/B' long- and short-term sovereign credit ratings on the Dominican Republic. The outlook remains stable. =========== M E X I C O =========== GRUPO IDESA: Fitch Cuts Sr. Unsec. LT Rating to B-, Removes RWN --------------------------------------------------------------- Fitch Ratings has downgraded the issuance ratings of various speculative grade Latin American corporates and removed the ratings from Rating Watch Negative. KEY RATING DRIVERS The rating action reflects the implementation of Fitch's "Country Specific Treatment of Recovery Ratings" methodology dated April 16th, 2018. The revised methodology precludes the upward notching of issue ratings from Issuer Default Ratings that could result from above average recovery expectations for several countries in Latin American. The issuance ratings listed are expected to move in tandem with each individual IDR absent a criteria change. FULL LIST OF RATING ACTIONS Fitch has taken the following rating actions: Gran Tierra Energy International Holdings Ltd. --Senior unsecured long-term rating downgraded to 'B'/'RR4' from 'B+'/'RR3'; Removed from Rating Watch Negative. Grupo IDESA, S.A. de C.V, --Senior unsecured long-term rating downgraded to 'B-'/'RR4' from 'B'/'RR3'; Removed from Rating Watch Negative. Grupo Posadas, S.A.B. De C.V. --Senior unsecured long-term rating downgraded to 'B'/'RR4' from 'B+'/'RR3'; Removed from Rating Watch Negative. Servicios Corporativos Javer, S.A.B. de C.V. --Senior unsecured long-term rating downgraded to 'B+'/'RR4' from 'BB-'/'RR3'; Removed from Rating Watch Negative. ====================== P U E R T O R I C O ====================== KONA GRILL: Berke Bakay Holds 15.7% Stake as of May 2 ------------------------------------------------------ In a Schedule 13D/A filed with the Securities and Exchange Commission, Berke Bakay reported that as of May 2, 2018, he beneficially owns 2,097,555 shares of common stock of Kona Grill, Inc. representing 15.7 percent of the shares outstanding. On May 4, 2018, Mr. Bakay acquired 492,997 shares of the Company's Common Stock at a purchase price of $1.785. The purchase was related to the Company's private placement of 2,651,261 shares of Common Stock to Ahwanova at a purchase price of $1.785 on May 4, 2018, as described in the Company's Form 8-K report filed on May 7, 2018. Mr. Bakay acquired the 492,997 shares in order to retain his current beneficial ownership of 15.7% following the private placement. BBS Capital Fund, LP is the beneficial owner of the 1,330,000 shares of Common Stock it beneficially holds, which represents 10.0% of the Issuer's outstanding shares of Common Stock. BBS Capital Management, LP, BBS Capital GP, LP, and BBS Capital, LLC are each the beneficial owners of the 1,330,000 shares of Common Stock of the Issuer held by the Fund, which represents 10.0% of the Issuer's outstanding shares of Common Stock. Mr. Bakay is deemed to own the above shares, 492,997 shares acquired in the private placement, 152,602 shares owned by a trust for the benefit of his children and options to purchase common stock in the amount of 121,956 shares that are presently exercisable or become exercisable within 60 days of the date hereof. Thus, he is deemed to own 2,097,555 shares of Common Stock, which represents 15.7% of the Issuer's outstanding Common Stock. A full-text copy of the regulatory filing is available at: https://is.gd/JJiJNl About Kona Grill Kona Grill, Inc., headquartered in Scottsdale, Arizona, Kona Grill, Inc. -- http://www.konagrill.com/-- currently owns and operates 46 restaurants in 23 states and Puerto Rico. The Company's restaurants offer freshly prepared food, attentive service, and an upscale contemporary ambiance. Additionally, Kona Grill has three restaurants that operate under a franchise agreement in Dubai, United Arab Emirates; Vaughan, Canada and Monterrey, Mexico. Kona Grill incurred a net loss of $23.43 million in 2017 and a net loss of $21.62 million in 2016. As of Dec. 31, 2017, Kona Grill had $91.79 million in total assets, $86.13 million in total liabilities and $5.66 million in total stockholders' equity. The Company has incurred losses resulting in an accumulated deficit of $79.7 million, has a net working capital deficit of $7.6 million and outstanding debt of $37.8 million as of Dec. 31, 2017. The Company said in its 2017 Annual Report that these conditions together with recent debt covenant violations and subsequent debt covenant waivers and debt amendments, raise substantial doubt about its ability to continue as a going concern. KONA GRILL: Director Nanyan Zheng Has 19.9% Stake as of May 2 ------------------------------------------------------------- Mr. Nanyan Zheng, Ahwanova Limited, Wisdom Sail Limited and Audrey & Aaron Holdings Limited reported in a Schedule 13D filed with the Securities and Exchange Commission that as of May 2, 2018, they beneficially own 2,651,261 shares of common stock of Kona Grill, constituting 19.9 percent of the shares outstanding. The percentage was calculated based on total 10,112,753 shares of Common Stock outstanding as of May 2, 2018, and the additional 2,651,261 shares of Common Stock issued pursuant to the Subscription Agreement and 492,997 shares of Common Stock issued pursuant to the subscription agreement dated May 2, 2018 by and between the Issuer and Berke Bakay (incorporated by reference to Exhibit 10.2 to the Form 8-K filed with the SEC by the Issuer on May 7, 2018). Mr. Zheng is a citizen of People's Republic of China and is a director of the Issuer's board of directors. Ahwanova is a company incorporated under the laws of the British Virgin Islands and is wholly-owned by Wisdom Sail. The principal business of Ahwanova is that of an investment holding company. Wisdom Sail is a company incorporated under the laws of the Cayman Islands and is wholly-owned by Audrey & Aaron Holdings. The principal business of Wisdom Sail is that of an investment holding company. Audrey & Aaron Holdings is a company incorporated under the laws of the British Virgin Islands and is wholly owned by Equity Trustee Limited as trustee of The Happy Family Trust. The sole settlor of The Happy Family Trust is Mr. Zheng. The beneficiaries of The Happy Family Trust are Mr. Zheng, Mr. Zheng's wife (namely, Li, Sha), and Mr. Zheng's two children (namely, Zheng, Ruida and Zheng, Ruixi). The Reporting Persons, in the aggregate, have invested US$4,732,500 in the Issuer for the acquisition of 2,651,261 shares of newly issued Common Stock in the Issuer. That acquisition was funded with cash from Mr. Zheng's personal funds. A full-text copy of the regulatory filing is available at: https://is.gd/WW3egY About Kona Grill Kona Grill, Inc., headquartered in Scottsdale, Arizona, Kona Grill, Inc. -- http://www.konagrill.com/-- currently owns and operates 46 restaurants in 23 states and Puerto Rico. The Company's restaurants offer freshly prepared food, attentive service, and an upscale contemporary ambiance. Additionally, Kona Grill has three restaurants that operate under a franchise agreement in Dubai, United Arab Emirates; Vaughan, Canada and Monterrey, Mexico. Kona Grill incurred a net loss of $23.43 million in 2017 and a net loss of $21.62 million in 2016. As of Dec. 31, 2017, Kona Grill had $91.79 million in total assets, $86.13 million in total liabilities and $5.66 million in total stockholders' equity. The Company has incurred losses resulting in an accumulated deficit of $79.7 million, has a net working capital deficit of $7.6 million and outstanding debt of $37.8 million as of Dec. 31, 2017. The Company said in its 2017 Annual Report that these conditions together with recent debt covenant violations and subsequent debt covenant waivers and debt amendments, raise substantial doubt about its ability to continue as a going concern. *********** 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 * * *