/raid1/www/Hosts/bankrupt/TCRLA

/raid1/www/Hosts/bankrupt/TCRLA_Public/180529.mbx T R O U B L E D C O M P A N Y R E P O R T E R L A T I N A M E R I C A Tuesday, May 29, 2018, Vol. 19, No. 105 Headlines B R A Z I L BANCO MERCANTIL: Moody's Reviews Caa1 Deposit Rating for Downgrade BRAZIL: Reaches New Deal to End Truck Drivers' Strike CARTA GOIAS: Moody's Cuts CFR to B3, Outlook Stable C A Y M A N I S L A N D S SHACKLETON 2014-V-4 CLO: Moody's Rates Class E Notes 'Ba3' C O S T A R I C A BANCO DE COSTA RICA: Fitch Maintains bb- Viability Rating on RWN D O M I N I C A N R E P U B L I C DOMINICAN REPUBLIC: Debt No Problem as Long as It's Paid E C U A D O R ECUADOR: Former VP Pursues Appeal of Corruption Conviction J A M A I C A DIGICEL GROUP: Discloses Plans to Cut Debt M E X I C O MEXICO: Posts Moderate Trade Deficit in April P E R U PERU: Joins Colombia in Andean Antitrust Leniency Fight P U E R T O R I C O BARRANQUITAS ULTRASOUND: U.S. Trustee Can Appoint PCO DYNAMIC MRI: DOJ Watchdog Can Appoint PCO KONA GRILL: Regains Compliance with Nasdaq Listing Requirement WESTERN HOST: Taps De La Rosa Stella as Accountant WESTERN HOST: Taps Gratacos Law Firm as Legal Counsel - - - - - =========== B R A Z I L =========== BANCO MERCANTIL: Moody's Reviews Caa1 Deposit Rating for Downgrade ------------------------------------------------------------------ Moody's Investors Service has downgraded Banco Mercantil do Brasil S.A.'s (Banco Mercantil) long-term national scale deposit rating to Caa1.br from B3.br. At the same time, Moody's placed all long- term ratings of Banco Mercantil on review for downgrade. The ratings placed on review for downgrade include its long term local and foreign currency deposit ratings of Caa1, its long-term foreign-currency senior unsecured medium-term note program rating of (P)Caa1, as well as its long-term foreign currency subordinated debt rating of Caa2. The long term national scale deposit ratings of Caa1.br was also placed on review for further downgrade. Banco Mercantil's baseline credit assessment (BCA) and adjusted BCA of caa1, along with its long-term counterparty risk assessments of B3(cr), were also placed on review for downgrade. Banco Mercantil's short term ratings were unaffected by this action. The following rating of Banco Mercantil do Brasil S.A. was downgraded: - Long-term Brazilian national scale deposit rating to Caa1.br from B3.br; The following ratings and assessments of Banco Mercantil do Brasil S.A. were placed on review for downgrade: - Long term global local-currency deposit rating of Caa1; - Long term global foreign-currency deposit rating to Caa1; - Long term foreign-currency senior unsecured medium-term note program of (P)Caa1 - Long-term foreign currency subordinated debt rating of Caa2; - Baseline credit assessment of caa1; - Adjusted baseline credit assessment of caa1; - Long-term counterparty risk assessment of B3(cr); RATINGS RATIONALE The downgrade of Banco Mercantil's national scale deposit rating as well as the review for downgrade of its debt and deposit ratings reflect the heightened challenges the bank faces in generating sustainable profitability and hence internal capital generation in order to meet the upcoming requirements of Basel III implementation in January 2019. The rating review will focus on Banco Mercantil's ability to improve its profitability and increase its capital, in light of the Central Bank of Brazil's recent decision not to approve its proposed capital increase. Banco Mercantil's 1Q2018 results reported still weak asset quality and profitability trends, despite a slight improvement over 2017 ratios due to lower funding, provisioning and operating costs. Net income as a percentage of tangible assets was 0.8% in 1Q2018 and 0.5% over the last twelve months to March 2018. In large part, Banco Mercantil's profits in 2016 and 2017 were derived from sales of payroll loans to third parties. However, Banco Mercantil's net profit from loan sales in 1Q2018 was 84% lower than the previous period a year before and Moody's expects it will remain limited going forward. In addition, lower interest rates and increasing competition for payroll loans will put further pressure on Banco Mercantil's interest income in 2018 and annual operating costs will improve only marginally at best. Due to the significant deleveraging Banco Mercantil has experienced in recent years and a series of capital injections from its shareholders, the bank's regulatory tier 1 ratio of 8.6% remains above the current regulatory minimum of 7.875%, including the capital conservation buffer. However, the regulatory minimum plus the capital conservation buffer is set to increase to 8.5% by 2019 which will leave the bank with a very small regulatory cushion given the pressures it faces in generating capital internally, unless it increases its capital by alternative means. On May 17, 2018, Banco Mercantil reported that a R$60 million proposed capital increase was not approved by the Brazilian Central Bank for documentation reasons. Banco Mercantil's capitalization as of March 2018, as measured by Moody's preferred ratio of tangible common equity (TCE) to risk weighted-assets (RWA), was significantly lower however. The bank's regulatory capital gives credit to a high volume of deferred tax assets (DTAs) associated with loan loss provisions, which Moody's discounts because of uncertainty regarding their loss absorption capacity. The bank's asset risk continues to be constrained by delinquencies in its loans to small and midsized enterprises (SMEs) that remain vulnerable to a very gradual recovery. Banco Mercantil's SME delinquencies have averaged 14.3% since 2015 and rose by 240 basis points in the first quarter of 2018. The quality of the remainder of Banco Mercantil's loan book, 34% of which consists of unsecured consumer loans and 48% of payroll loans predominantly to retirees, has also worsened recently. Consumer delinquencies rose by 50 basis points to 6.8% in the first quarter of 2018 versus December 2017 as the bank's unsecured consumer loans to already indebted pensioners have seasoned. Consequently, the bank's overall 90 day delinquency ratio rose to 9.0% as of March 2018, up by 100 basis points versus December 2017. In addition, Moody's notes that Banco Mercantil's funding, which is over 80% deposit based, has been stable yet it is also of short tenor. However, funding risk is somewhat offset by the bank's holdings of liquid assets which accounted for 27% of total assets as of March 2018. WHAT COULD CHANGE THE RATINGS DOWN The ratings could be downgraded if Moody's determines that profitability trends will not likely be sufficient to allow the bank to meet new capital requirements on a sustainable basis. Continuing deterioration in asset quality would also pressure ratings if it leads to rising provisioning costs and lowering capital generation. The ratings could be confirmed if Moody's determines that profitability stabilizes at levels sufficient to enable the bank to maintain compliance with capital requirements. The principal methodology used in these ratings was Banks published in April 2018. BRAZIL: Reaches New Deal to End Truck Drivers' Strike ----------------------------------------------------- Luciana Magalhaes at The Wall Street Journal reports that the Brazilian government reached a new agreement with truck drivers to end a seven-day strike that left many businesses without vital supplies and most gas stations in the country without fuel. The government has agreed to a discount in diesel prices that will be in place for 60 days and to sign a bill that will allow truckers not to pay toll on rear axles when not in use, among other concessions, Brazilian President Michel Temer said during a televised speech, according to The Wall Street Journal. This is the second agreement announced by the government in an attempt to end the strike, the report notes. Last week, the government said several truckers' unions had agreed to suspend the strike, but one of the biggest groups representing drivers, the Brazilian Association of Truckers (Abcam), rejected the deal, the report relays. Brazilian truck drivers began the stoppage on May 21, asking the government to cut taxes on diesel fuel after a recent spike in prices, the report discloses. The government brought in the military to help clear the roads, but many truckers remained off the job, threatening an already weak economy, the report says. Over the weekend, local media reported that armed forces were escorting fuel trucks to supply some essential services, the report notes. But several Brazilian airports are without fuel and supermarkets are reporting shortage of some fresh products, while farmers say millions of animals may die in the coming days due to lack of feed, the report discloses. As reported in the Troubled Company Reporter-Latin America on Feb. 28, 2018, Fitch Ratings has downgraded Brazil's Long-Term Foreign Currency Issuer Default Rating (IDR) to 'BB-' from 'BB' and revised the Rating Outlook to Stable from Negative. CARTA GOIAS: Moody's Cuts CFR to B3, Outlook Stable --------------------------------------------------- Moody's America Latina has downgraded Carta Goias Industria e Comercio de Papeis S.A. ("Carta Goias")'s corporate family rating to B3 from B2 (global scale) and to B1.br from Ba1.br (national scale). The outlook for the ratings is stable. Ratings downgraded: Issuer: Carta Goias Industria e Comercio de Papeis S.A. - Corporate Family Rating: B3 (from B2) in the global scale and B1.br (from Ba1.br) in the national scale The outlook for the ratings is stable. RATINGS RATIONALE The downgrade to B3/B1.br reflects Moody's expectation that, despite an expected recovery in operating performance supported by the ongoing investments, Carta Goias' liquidity remains tight, which leads to increasingly reliance on new debt instruments or refinancing of existing debt. Accordingly, Carta Goias had BRL 53 million in cash balance at the end of December 2017, with about BRL224 million in debt maturing until the end of 2019 (based on December 2017 financials). Carta Goias has been able to secure adequate funding for its working capital needs, capital expenditures and refinance its debt in the past few years. However, liquidity risk has increased in 2017 as the company embarked in a large capital expenditure program, which has increased its total debt to BRL414 million at the end of 2017, from BRL277 million at the end of 2016, and this risk is exacerbated by the challenging operating environment of the company, and the impacts of exchange rate volatility, higher costs (pulp prices increase by over 40% in the past 18 months) and still incipient recovery in consumption. Moody's acknowledges the benefits that these investments will bring to the company by allowing it to enhance its scale and expand in higher-margin segments, such as wet wipes, pads and diapers. In addition to the liquidity risk, constraining the ratings is Carta Goias small size in Brazil's tissue and personal hygiene market, with revenues of about USD232 million in 2017, relatively weak market share in its main products, although Moody's acknowledges that Carta Goias has expanded its market share in the Brazilian market of tissue in 2017, including diapers, and limited client and geographic diversification, since the company operates only in Brazil. Carta Goias' ratings continue to reflect the company's adequate credit metrics and track record of relatively stable margins, even during Brazil's recent economic recession. Its EBITDA margins have remained relatively stable between 15%-20% in the past three years, and adjusted leverage, measured by total adjusted debt to EBITDA, in the 2x-4x range in the same period. Although the ratings incorporate the execution risk for expansion projects that Carta Goias will continue to carry out in the next couple of years, Moody's expects that these projects, if successfully executed, will bring a substantial increase in scale and allow the company to expand its market presence and enhance margins. The stable outlook reflects Moody's expectations that Carta Goias will improve its cash flow from operations during 2018 with the ramp up of the recently-concluded investments, expanding its profitability and market presence overtime. The ratings could be upgraded if Carta Goias' liquidity profile improves, with higher coverage of cash to debt and lower concentration of debt in the short term. A rating upgrade would also require greater visibility over the company's financial policies and corporate governance. Quantitatively, the ratings could be upgraded if Carta Goias is able to improve its cash flow generation, with adjusted retained cash flow- capex over debt (RCF-capex/debt) of at least 2% (-32.5% at the end of 2017). At the same time, Moody's expects that Carta Goias will improve cash flow generation while carrying out its expansion projects, which will allow the company to reduce leverage. The ratings could be downgraded if Carta Goias' liquidity profile deteriorates or if its capital structure weakens, with adjusted Debt to Ebitda above 6.x (3.7 x at the end of 2017) and interest coverage (measured by adjusted EBITDA to interest expense) declines to 1.5x or lower during the execution of its expansion program. Performance falling below Moody's expectations, indicated by retained cash flow - capex to debt below 1% (-32.5% at the end of 2017), could also lead to negative rating actions. The principal methodology used in these ratings was Paper and Forest Products Industry published in March 2018. Headquartered in Niteroi, in the State of Rio de Janeiro, Carta Goias is a Brazilian privately-owned company operating in the tissue and personal hygiene segments since 1990. Fluminense Industrial is the controlling shareholder of Carta Fabril SA (100% of shares). Carta Fabril holds 97.7% of Carta Goias. Carta Goias reported revenues of USD 232 million in FY 2017. ========================== C A Y M A N I S L A N D S ========================== SHACKLETON 2014-V-4 CLO: Moody's Rates Class E Notes 'Ba3' ---------------------------------------------------------- Moody's Investors Service has assigned ratings to seven classes of notes issued by Shackleton 2014-V-R CLO, Ltd.: U.S.$2,000,000 Class X Senior Floating Rate Notes Due 2031 (the "Class X Notes"), Assigned Aaa (sf) U.S.$385,000,000 Class A Senior Floating Rate Notes Due 2031 (the "Class A Notes"), Assigned Aaa (sf) U.S.$65,500,000 Class B Senior Floating Rate Notes Due 2031 (the "Class B Notes"), Assigned Aa2 (sf) U.S.$29,750,000 Class C Mezzanine Deferrable Floating Rate Notes Due 2031 (the "Class C Notes"), Assigned A2 (sf) U.S.$33,500,000 Class D Mezzanine Deferrable Floating Rate Notes Due 2031 (the "Class D Notes"), Assigned Baa3 (sf) U.S.$31,250,000 Class E Junior Deferrable Floating Rate Notes Due 2031 (the "Class E Notes"), Assigned Ba3 (sf) U.S.$9,500,000 Class F Junior Deferrable Floating Rate Notes Due 2031 (the "Class F Notes"), Assigned B3 (sf) The Class X Notes, the Class A Notes, the Class B Notes, the Class C Notes, the Class D Notes, the Class E Notes and the Class F Notes are referred to herein, together, as the "Rated Notes." RATINGS RATIONALE Moody's ratings of the Rated Notes address the expected losses posed to noteholders. The ratings reflect the risks due to defaults on the underlying portfolio of assets, the transaction's legal structure, and the characteristics of the underlying assets. Shackleton 2014-V-R is a managed cash flow CLO. The issued notes will be collateralized primarily by broadly syndicated senior secured corporate loans. At least 90% of the portfolio must consist of first lien senior secured loans, cash, and eligible investments, and up to 10% of the portfolio may consist of second lien loans, senior unsecured loans and first-lien last-out loans. The portfolio is approximately 92% ramped as of the closing date. Alcentra NY, LLC will direct the selection, acquisition and disposition of the assets on behalf of the Issuer and may engage in trading activity, including discretionary trading, during the transaction's five year reinvestment period. Thereafter, the Manager may reinvest unscheduled principal payments and proceeds from sales of credit risk assets, subject to certain restrictions. In addition to the Rated Notes, the Issuer has issued subordinated notes. The transaction incorporates interest and par coverage tests which, if triggered, divert interest and principal proceeds to pay down the notes in order of seniority. Methodology Underlying the Rating Action: The principal methodology used in these ratings was "Moody's Global Approach to Rating Collateralized Loan Obligations" published in August 2017. Factors that would lead to an upgrade or downgrade of the ratings: The performance of the Rated Notes is subject to uncertainty. The performance of the Rated Notes is sensitive to the performance of the underlying portfolio, which in turn depends on economic and credit conditions that may change. The Manager's investment decisions and management of the transaction will also affect the performance of the Rated Notes. Loss and Cash Flow Analysis: Moody's modeled the transaction using a cash flow model based on the Binomial Expansion Technique, as described in Section 2.3.2.1 of the "Moody's Global Approach to Rating Collateralized Loan Obligations" rating methodology published in August 2017. For modeling purposes, Moody's used the following base-case assumptions: Par amount: $592,678,000 Diversity Score: 73 Weighted Average Rating Factor (WARF): 2840 Weighted Average Spread (WAS): 3.15% Weighted Average Recovery Rate (WARR): 48% Weighted Average Life (WAL): 9 years Stress Scenarios: Together with the set of modeling assumptions above, Moody's conducted an additional sensitivity analysis, which was a component in determining the ratings assigned to the Rated Notes. This sensitivity analysis includes increased default probability relative to the base case. Below is a summary of the impact of an increase in default probability (expressed in terms of WARF level) on the Rated Notes (shown in terms of the number of notch difference versus the current model output, whereby a negative difference corresponds to higher expected losses), assuming that all other factors are held equal: Percentage Change in WARF -- increase of 15% (from 2840 to 3266) Rating Impact in Rating Notches Class X Notes: 0 Class A Notes: -1 Class B Notes: -2 Class C Notes: -2 Class D Notes: -1 Class E Notes: -1 Class F Notes: -3 Percentage Change in WARF -- increase of 30% (from 2840 to 3692) Rating Impact in Rating Notches Class X Notes: 0 Class A Notes: -1 Class B Notes: -4 Class C Notes: -4 Class D Notes: -2 Class E Notes: -1 Class F Notes: -5 =================== C O S T A R I C A =================== BANCO DE COSTA RICA: Fitch Maintains bb- Viability Rating on RWN ---------------------------------------------------------------- Fitch Ratings has maintained Banco de Costa Rica's (BCR) 'bb-' Viability Rating (VR) on Rating Watch Negative (RWN). Fitch has also affirmed the bank's national ratings in Costa Rica. The maintenance of the Negative Watch is due to Fitch's belief that the challenges posed by corporate governance events and risk control failures that occurred in 2017 continue to pressure the bank's performance. Visibility regarding the conclusion of the investigation is limited; however, the maintenance of a stable funding profile and evidence of management stability are relevant for the resolution of the RWN. In turn, in the event that BCR's financial performance weakens, its VR could be downgraded further. KEY RATING DRIVERS VR On Oct. 19, 2017 Fitch downgraded BCR's VR to 'bb-' from 'bb' and placed it on RWN to reflect a reassessment of the bank's management and risk appetite, after a group of senior managers and members of the board of directors were imprisoned for peculation charges related to the approval of a troubled loan. In Fitch's view, the weaknesses in the bank's governance framework have tested the quality of its risk controls and challenged execution of its strategy. Since then, interim directors and managers have been appointed and BCR has operated normally while sustaining deposit stability. However, appointments are temporary and investigations are still ongoing. Upside potential for BCR's VR is limited. In Fitch's view, the losses resulting from the troubled loan and the risk control failures that occurred in 2017 have affected the bank's core metrics to a level that is consistent with its current rating level. As of December 2017, profitability decreased as a result of higher credit costs. Fitch expects profitability metrics to recover their historic trend in the medium term; however, increases in profitability may be delayed as a result of the low economic and credit growth rates. BCR has also announced a potential merger with the state owned bank Banco Credito Agricola de Cartago. The terms and conditions for the merger have not been finalized and will be included in legislation that requires congressional approval to allow the banks to merge. Once the details of the transaction are disclosed, the agency will evaluate the effect, if any, on the ratings of Banco de Costa Rica. Asset quality has weakened as a result of the deterioration of large credits and reserves coverage for past due loans have decreased. As of march 2018, the impaired loans ratio increased to 2.61% and reserves coverage for past due loans decreased to 60%, comparing below similarly rated peers'. Funding and liquidity are generally stable and does not show a material impact from the 2017 events, favoured by the explicit sovereign guarantee for all the bank's obligations. However, in the Fitch's view, this aspect of the bank's financial profile remains most sensitive to the impact of any negative outcome in the ongoing investigation. Favourably, BCR's Fitch Core Capital ratio maintains a positive trend, increasing to 13.02% as of March 2018 as a result low assets growth and full profits retention. NATIONAL RATINGS The national ratings in Costa Rica are driven by the potential support of the Costa Rican government (BB/Negative). As stated in the National Banking System Law, all senior liabilities of the Costa Rican state-owned banks' have the guarantee of the state and the government is required to collaborate with the entity. RATING SENSITIVITIES VR The VR could be downgraded due to a material weakening of the bank's credit fundamentals related to additional developments from the corporate governance events. Specifically, material weakening of the bank's profitability, in terms of a ratio of operating profits to risk weighted assets consistently below 1.25% could result in a downgrade of its VR, but this is not Fitch's baseline scenario. BCR's VR could be affirmed and removed from Negative Watch if the bank continues to maintain a stable financial profile and demonstrates stability in management through the board of directors' transition period and the ongoing investigation process of bank officers and directors. NATIONAL RATINGS The national ratings of BCR are subject to changes in the capacity of the sovereign to support the bank. Changes in the sovereign rating will not necessarily affect BCR's national ratings, as these reflect the relative strength of the sovereign compared to other issuers rated in Costa Rica. The maintains the following on Rating Watch Negative Banco de Costa Rica --Viability Rating 'bb-'. Fitch has affirmed the following: --Long-term National Rating at 'AA+(cri)'; Outlook Stable; --Short-term National Rating at 'F1+(cri)'; --Programa de Emisiones de Bonos Estandarizados del Banco de Costa Rica 2012 at 'AA+(cri)'; --Programa de Emisiones de Bonos Estandarizados Dolares-BCR 2016 at 'AA+(cri)'; --Programa de Emisiones de Bonos Estandarizados Colones-BCR 2016 at 'AA+(cri)'; --Programa de Emisiones de Papel Comercial Dolares-BCR 2016 at 'F1+(cri)'; --Programa de Emisiones de Papel Comercial Colones-BCR 2016 at 'F1+(cri)'. =================================== D O M I N I C A N R E P U B L I C =================================== DOMINICAN REPUBLIC: Debt No Problem as Long as It's Paid -------------------------------------------------------- Dominican Today reports that the UN Development Program (UNDP) local representative, Lorenzo Jimenez, said indebtedness isn't a problem for countries as long as they show their ability to pay. He said that in Dominican Republic's case, "it is evident that its economy is sufficiently solvent and that nobody should doubt it," according to Dominican Today. "I would say that debt is not a problem as long as it can be paid, that's where the key is, there is not a single country in the world that is not in debt, the problem is whether it can be paid or not and it seems that no one in their right mind today would question Dominican Republic's financial solvency," UNDP official said, the report notes. Central Bank In that regard, Central banker Hector Valdez Albizu said official data show that the public sector consolidated debt represented 54.97% of GDP to February, the report relays. Various political and economic sectors have expressed concern over the country's debt level and warn of a possible crisis as a result, the report adds. 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. ============= E C U A D O R ============= ECUADOR: Former VP Pursues Appeal of Corruption Conviction ---------------------------------------------------------- Alianza News reports that an Ecuadorian former vice president appeared before the National Court of Justice in a bid to have his six-year prison sentence for corruption overturned. Before entering the courthouse, Jorge Glas greeted dozens of supporters of leftist ex-head of state Rafael Correa, who had urged people via Twitter to gather outside the building and show their support for a "political prisoner" and "innocent man," according to Alianza News. The report notes that the National Court's criminal chamber found Mr. Glas guilty last December of receiving bribes totaling $13.5 million from Odebrecht in return for helping the Brazilian engineering giant secure five construction contracts between 2012 and 2016. But former Foreign Minister Ricardo Patino and lawmaker Sofia Espin testified at the hearing that Mr. Glas -- the ex-right hand man of Mr. Correa, Ecuador's president from 2007 to 2017 -- was innocent of the charges and the victim of political and media persecution, the report notes. The report relays that Mr. Glas was placed in pre-trial detention on Oct. 2 as part of the corruption probe and was constitutionally stripped of his position as vice president in early January after being absent from his post for more than three months. After serving as Correa's vice president from May 2013 until the latter left office four years later, Mr. Glas continued to be the country's No. 2 official under current President Lenin Moreno, the report relays. President Moreno also once served as Correa's vice president and was the latter's hand-picked successor, the report notes. But President Moreno, who was elected in February 2017 and took office three months later, distanced himself from Correa in July of last year, saying the country had greater equality but that he had inherited a "critical" financial situation due to high levels of public debt, the report discloses. President Moreno then stripped Mr. Glas of his official duties last August after the latter accused the president of having provided false economic data aimed at tarnishing the legacy of Mr. Correa's Citizens' Revolution, the report relays. Mr. Correa has been living in his wife's homeland of Belgium since leaving office, the report notes. In a settlement in late 2016 with authorities in the United States, Brazil and Switzerland, Odebrecht and petrochemical unit Braskem pleaded guilty and agreed to pay at least $3.5 billion to resolve charges arising out of bid-rigging schemes that began as early as 2001 and involved the payment of hundreds of millions of dollars in bribes to officials in more than a dozen countries, the report recalls. As reported in the Troubled Company Reporter-Latin America on Jan. 24, 2018, Fitch Ratings has assigned a 'B' rating to Ecuador's USD3 billion notes maturing Jan. 23, 2028. The notes have a coupon of 7.875%. ============= J A M A I C A ============= DIGICEL GROUP: Discloses Plans to Cut Debt ------------------------------------------ RJR News reports that it's being reported that the Digicel Group has told bondholders of its plans to cut debt through a mixture of earnings growth and so-called inorganic measures. According to the sources, quoted by the Irish Times newspaper, Digicel aims to reduce borrowings to about 5.7 times earnings in the fiscal year 2019 from around 6.7 times in the preceding year, the report notes. Capital expenditure will be reduced to between US$330 million and US$350 million, a drop of about 30 per cent, according to RJR News. The company is meeting investors in a so-called "non-deal roadshow" as the yield on its 2020 bonds rises as high as 20 per cent, more than doubling in the last three months, the report says. Digicel told bondholders that it's on track to meet its earnings guidance of just over US$1-billion this fiscal year, the report adds. As reported in the Troubled Company Reporter-Latin America on May 26, 2017, Fitch Ratings has affirmed at 'B' the Long-term Foreign-currency Issuer Default Ratings (IDR) of Digicel Group Limited (DGL) and its subsidiaries, Digicel Limited (DL) and Digicel International Finance Limited (DIFL), collectively referred to as Digicel. The Rating Outlook is Stable. Fitch has also affirmed all existing issue ratings of Digicel's debt instruments. =========== M E X I C O =========== MEXICO: Posts Moderate Trade Deficit in April --------------------------------------------- Anthony Harrup at The Wall Street Journal reports that Mexico ran up a moderate $289 million trade deficit in April as both imports and exports posted double-digit growth from a year earlier, unfazed by negotiations to redraw a pact with the country's main trading partner. Exports expanded 17% from April of 2017 to $37.2 billion, including a 54% jump in oil exports and a 15% rise in shipments of factory-made goods, the National Statistics Institute said, according to The Wall Street Journal. Imports rose 21% to $37.5 billion, with Mexico bringing in more petroleum products, equipment and machinery, and producer goods such as components for manufacturing, the agency said, the report notes. The increases in imports and exports from a year before were positively affected by the shift in the Easter holiday week to March this year, which meant April had more working days than in 2017, the report relays. The country's overall trade continues expanding from last year's record $829 billion, unaffected by occasionally contentious talks between Mexico, the U.S. and Canada to rewrite the North American Free Trade Agreement, the report says. The WSJ notes that exports in the first four months of 2018 rose 12.6% to $142.4 billion and imports were up 12.6% at $144.5 billion. "The existing Nafta is still working, our exports are growing. Of course there's uncertainty, which is what we want to combat," Economy Minister Ildefonso Guajardo told the Televisa network, the report relays. Mr. Guajardo said he thinks there is a 40% chance an agreement can be reached before Mexico's presidential election on July 1, and an 80% chance of getting a deal done before the U.S. midterm elections in November, the report discloses. Nafta negotiations have recently been bogged down over rules of origin in the auto sector and U.S. demands such as a so-called sunset clause that would allow the pact to expire after five years unless explicitly renewed and the elimination of certain mechanisms for settling disputes, the report notes. The report discloses that vehicles and auto parts, which account for a third of Mexico's manufacturing exports, are at the center of the Nafta negotiations where the U.S. is demanding greater regional and U.S. content. Energy trade is less controversial for the U.S., as Mexico imports most of its gasoline and natural gas from its northern neighbor, the report relays. Mexico ran up a $6.5 billion petroleum trade deficit in the January-April period, partly offset by a $4.4 billion surplus in non-petroleum trade, the report adds. ======= P E R U ======= PERU: Joins Colombia in Andean Antitrust Leniency Fight ------------------------------------------------------- Latin Lawyer reports that Peru's competition authority has joined Colombia's in opposing two Andean regional bodies that may punish companies that had been granted leniency in those bodies' member countries. ====================== P U E R T O R I C O ====================== BARRANQUITAS ULTRASOUND: U.S. Trustee Can Appoint PCO ----------------------------------------------------- The Hon. Mildred Caban Flores of the U.S. Bankruptcy Court for the District of Puerto Rico has directed the U.S. Trustee appoint a patient care ombudsman in the case of Barranquitas Ultrasound and Mammography Center, Inc. or inform the Court in writing why the appointment of an ombudsman is not necessary for the protection of the patients. About Barranquitas Ultrasound and Mammography Center, Inc. Barranquitas Ultrasound and Mammography Center, Inc., filed a Chapter 11 bankruptcy petition (Bankr. D.P.R. Case No. 18-02225) on April 25, 2018. In the petition signed by its president Miriam Alicea Aponte, the Debtor estimated assets and liabilities of less than $500,000 each. The Debtor hired Carmen D. Conde Torres, Esq., at C. Conde & Assoc. DYNAMIC MRI: DOJ Watchdog Can Appoint PCO ----------------------------------------- The Hon. Enrique S. Lamoutte Inclan of the U.S. Bankruptcy Court for the District of Puerto Rico has directed the U.S. Trustee to appoint a patient care ombudsman in the case of Dynamic MRI & 3D CT CSP or inform the Court in writing why the appointment of an ombudsman is not necessary for the protection of the patients. About Dynamic MRI & 3D CT CSP Dynamic MRI & 3D CT CSP sought protection under Chapter 11 of the Bankruptcy Code (Bankr. D. P.R. Case No. 18-02525) on May 7, 2018. In the petition signed by its president, Manuel R. Prats, the Debtor estimated assets of less than $1 million and liabilities of less than $1 million. Judge Enrique S. Lamoutte Inclan presides over the case. The Debtor is represented by Carmen D. Conde Torres, Esq. of C. Conde & Associates. KONA GRILL: Regains Compliance with Nasdaq Listing Requirement -------------------------------------------------------------- Kona Grill, Inc., received a letter from The Nasdaq Stock Market on May 21, 2018, stating that for the last 10 consecutive trading days, from May 7 to 18, 2018, the Company's minimum market value of publicly held shares has been $15,000,0000 or greater. On May 3, 2018, Kona Grill received a deficiency notice from Nasdaq for failure to meet Nasdaq's $15,000,000 minimum market value of publicly held shares continued listing standard, as required by Nasdaq Listing Rule 5450(b)(2)(C). As provided in the Nasdaq rules, the Company has 180 calendar days, or until Oct. 30, 2018, to regain compliance with the continued listing standard. The Company has regained compliance with the Rule and the matter is now closed. 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 March 31, 2018, Kona Grill had $87.01 million in total assets, $83.84 million in total liabilities and $3.16 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. WESTERN HOST: Taps De La Rosa Stella as Accountant -------------------------------------------------- Western Host Associates, Inc., seeks approval from the U.S. Bankruptcy Court for the District of Puerto Rico to hire De La Rosa Stella LLC as its accountant. The firm will review the financial situation of the Debtor and current circumstances to develop a reorganization strategy; assist in the formulation of a plan of reorganization; prepare cash flow projections of the Debtor under the proposed plan; review monthly and quarterly operation reports; assist the Debtor's legal counsel; and provide other accounting services. The firm will charge these hourly rates: Marie Olga De La Rosa Stella $200 Certified Public Accountant $150 MBA in Accounting or Taxes $125 Senior Accountant $75 Technical Support $75 Marie Olga De La Rosa, president of De La Rosa Stella LLC, disclosed in a court filing that she is a "disinterested person" as defined in section 101(14) of the Bankruptcy Code. The firm can be reached through: Marie Olga De La Rosa De La Rosa Stella LLC P.O. Box 625 Caguas, PR 00726 Tel: 939-262-3367 Fax: 787-453-5365 Email: delarosacpa@gmail.com Email: delarosacpallc@gmail.com About Western Host Associates Inc. Western Host Associates, Inc., owns a four-story commercial hotel building located at 202 San Jose Street, Old San Juan, Puerto Rico. The hotel is currently non-operational and is valued by the company at $1.35 million. The company previously sought bankruptcy protection on Nov. 14, 2012 (Bankr. D.P.R. Case No. 12- 09093) and on May 19, 2011 (Bankr. D.P.R. Case No. 11-04152). Western Host Associates sought protection under Chapter 11 of the Bankruptcy Code (Bankr. D.P.R. Case No. 18-02696) on May 15, 2018. In the petition signed by Luis Alvarez, president, the Debtor disclosed $1.36 million in assets and $4.82 million in liabilities. Judge Brian K. Tester presides over the case. WESTERN HOST: Taps Gratacos Law Firm as Legal Counsel ----------------------------------------------------- Western Host Associates Inc. seeks approval from the U.S. Bankruptcy Court for the District of Puerto Rico to hire Gratacos Law Firm, PSC as its legal counsel. The firm will advise the Debtor regarding its duties under the Bankruptcy Code; negotiate with creditors to prepare a plan of reorganization or arrange an orderly liquidation of its assets; and provide other legal services related to its Chapter 11 case. Gratacos received $1,283 as payment for attorney's fees and $1,717 for the filing fees. Victor Gratacos Diaz, Esq., at Gratacos, disclosed in a court filing that his firm is a "disinterested person" as defined in Section 101(14) of the Bankruptcy Code. The firm can be reached through: Victor Gratacos Diaz, Esq. Gratacos Law Firm, PSC P.O. Box 7571 Caguas, PR 00726 Phone: (787) 746-4772 Fax: (787) 746-3633 Email: bankruptcy@gratacoslaw.com About Western Host Associates Western Host Associates, Inc., owns a four-story commercial hotel building located at 202 San Jose Street, Old San Juan, Puerto Rico. The hotel is currently non-operational and is valued by the company at $1.35 million. The company previously sought bankruptcy protection on Nov. 14, 2012 (Bankr. D.P.R. Case No. 12- 09093) and on May 19, 2011 (Bankr. D.P.R. Case No. 11-04152). Western Host Associates sought protection under Chapter 11 of the Bankruptcy Code (Bankr. D.P.R. Case No. 18-02696) on May 15, 2018. In the petition signed by Luis Alvarez, president, the Debtor disclosed $1.36 million in assets and $4.82 million in liabilities. Judge Brian K. Tester presides over the case. *********** 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. 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