/raid1/www/Hosts/bankrupt/TCRLA_Public/180613.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
Wednesday, June 13, 2018, Vol. 19, No. 116
Headlines
A R G E N T I N A
SANTA FE: Fitch Affirms 'B' IDRs & US$250MM Unsec. Notes Rating
B R A Z I L
COMGAS: Moody's Hikes Corp. Family Rating to Ba1
COSAN SA: Fitch Affirms 'BB' Long-Term FC IDR, Outlook Stable
D O M I N I C A N R E P U B L I C
DOMINICAN REPUBLIC: May Prices Climb 0.26% Paced by Transport
G U A T E M A L A
GUATEMALA: Volcano Death Toll Rises to 114
GUATEMALA: Moody's Affirms Ba1 Issuer & Unsec. Bond Ratings
J A M A I C A
JAMAICA: To Strengthen Ties With Kenya
M E X I C O
MEXICO: Credit Risk at Highest Level Since Trump's Inauguration
P U E R T O R I C O
APB IMPORTS: Case Summary & 4 Unsecured Creditors
AUTO MASTERS: Seeks to Hire Tamarez CPA as Accountant
CLINICA SANTA ROSA: July 19 Disclosure Statement Hearing
MINSUR SA: Moody's Alters Outlook to Stable & Affirms Ba3 CFR
TRAILER VAN: New Plan Discloses Settlement Deal with J. Torres
TOYS R US: Court Approves Assignment of Lease to Raymours
TOYS R US: Ombudsman Taps Hirschler Fleischer as Legal Counsel
V E N E Z U E L A
VENEZUELA: Caracas Runs Out of Water
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A R G E N T I N A
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SANTA FE: Fitch Affirms 'B' IDRs & US$250MM Unsec. Notes Rating
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Fitch Ratings has affirmed the Province of Santa Fe, Argentina's
Long-Term Foreign and Local Currency Issuer Default Ratings (IDRs)
at 'B'. The Rating Outlook is Stable. The issue ratings on Santa
Fe's senior unsecured foreign currency notes (USD250 million each)
have also been affirmed at 'B'. The ratings of the Province are
constrained by the sovereign.
KEY RATING DRIVERS
Santa Fe's ratings are supported by the province's strong
sustainability and leverage ratios, adequate liquidity position,
positive and stable operating margins, which have been underpinned
by a solid and stable revenue system, coupled with a controlled
evolution of operating expenditures. These strengths
counterbalance Santa Fe's rating constrains, which include a weak
institutional framework and poor macroeconomic performance in
Argentina as well as contingent liabilities related to unfunded
pension and retirement obligations.
Institutional Framework: Weak, Stable.
Fitch considers Argentina's institutional framework weak, given
the country's structural weaknesses, including its complex and
imbalanced fiscal regime with no equalization funding. With recent
reforms and agreements, several important tax and federal revenue
distribution changes are underway. Fitch will monitor the
implementation of these measures and their impact on the
province's public finances, and expects that any agreements will
track fiscal improvements.
Economy: Weak, Stable.
Fitch evaluates Argentine subnational economies as weak, due to
the country's macroeconomic context of high inflation and currency
depreciation. Santa Fe's economy is relatively broad, diverse and
stable, making it resilient to most external economic shocks.
However, it reports a high taxpayer concentration, as the 10
largest taxpayers contributed to 15.1% of gross income tax
collection in 2017. In line with Argentina's economy, Santa Fe has
experienced significant economic volatility in recent years,
including numerous periods of low or negative growth and high and
volatile levels of inflation and ARS devaluation or depreciation.
Management and Administration: Neutral, Stable
Fitch evaluates Santa Fe's management as neutral. Among Argentine
provinces, Santa Fe stands out for its clear long-term capital
planning, efficient decision making process, good level of
transparency and timely financial reporting. Even though the
Province's financial and debt management policies have been
institutionalized and prudent, the USD250 million notes recently
placed by the Province will be amortized through two or three
annual instalments, increasing the refinancing risk in those
years. Santa Fe adhered to the 2017 Fiscal Consensus between the
nation and provinces, which should additionally underpin targeted
fiscal improvements throughout 2018.
Fiscal Performance: Neutral, Positive
In November 2015, Argentina's Supreme Court declared
unconstitutional the deduction from federal tax co-participation
payments (15%) and custom duties (1.9%) assessed on Santa Fe to
finance, respectively, the National Social Security Administration
(ANSES, its Spanish acronym) and the Federal Administration of
Public Revenue (AFIP, its Spanish acronym). The resulting positive
effect on operating revenue, coupled with a restrained evolution
of operating expenditure, have significantly strengthened Santa
Fe's fiscal performance. Operating margin (operating balance-to-
operating revenue) improved to 11.2% in 2016 from 4.0% in 2015 and
was 11.0% in 2017.
Salary and price adjustments and the pension deficit may pressure
operating expenditure in the forthcoming years. However, Fitch
expects that Santa Fe's fiscal performance may continue improving,
as the Province would receive around ARS50 billion from the
national government, compensation for the amounts that were
improperly withheld between 2006 and 2015.
Debt: Strength, Stable.
Fitch views Santa Fe's debt, liabilities and liquidity as a strong
rating factor. Direct debt to current revenue ratio increased to
9.7% in 2017 from 3.2% in 2015. Despite this hike, payback (direct
debt to current balance) ratio closed at 0.89 years, given the
strengthening of the current margin.
Santa Fe plans to incur additional debt for up to USD1 billion.
Besides additional long-term debt for ARS3.5 billion included in
the 2018 budget, the Province has been authorized to take USD300
million from the World Bank's IFC and ARS500 million for public
works at the Rosario International Airport and is negotiating with
the provincial legislature to increase by USD500 million the
amount authorized by Law No. 13,543 of 2016. Around 93% of the
provincial outstanding and expected debt will be denominated in
foreign currency (mostly USD). Santa Fe does not enter into hedge.
Considering these plans, Fitch estimates direct debt-to-current
revenue to remain below 20% in the next 2 to 3 years, while direct
debt servicing-to-operating balance will be around 25% between
2018 and 2020. Therefore, despite the sharp increase in projected
debt burden ratios, Fitch believes Santa Fe's future debt profile
will not be weakened for the next 2 to 3 years and considers that
the currency risk faced by the Province will remain manageable,
due to its low leverage and to the relatively long maturity and
low interest rates of its outstanding and expected debt.
Santa Fe did not transfer the pension and retirement fund to the
national government. From 2006 to 2015, the Province was obliged
to cover the deficit of its pension system, which reached ARS4.2
billion in 2017. The national government transferred ARS1.1
billion to partially finance this deficit. Considering the pension
harmonization criteria, Santa Fe estimates the national government
to cover 80% of the pension deficit in the future.
Santa Fe estimates an updated amount of ARS49.8 billion from the
national government to refund the amounts improperly withheld to
finance ANSES and AFIP. Once both parties agree on the amount of
debt and its scheme of payment, the Province will refund the
revenues from the ARS10.3 billion compensation notes that the
national government has deposited in the Central Bank (BCRA, its
Spanish acronym) for this purpose.
The Province's liquidity tools are quite diverse as it can cover
temporary deficits of the provincial treasury through the use of
the fund balances of the entire province's non-financial public
sector without financial cost (FUCO, its Spanish acronym, ARS11.7
billion in 2017). Santa Fe is also authorized to issue short-term
treasury notes in 2018 for up to ARS3.65 billion or its equivalent
in other currencies.
RATING SENSITIVITIES
The ratings of Santa Fe are constrained by the sovereign, which
means that its IDR should move in tandem with Argentina's
sovereign ratings. An upgrade of the sovereign IDR could lead to
an upgrade in Santa Fe's rating. Conversely, a downgrade of
Argentina's IDR, or a sudden increase in the public debt burden
along with weak operating margins that significantly affect
sustainability ratios, could lead to a negative rating action.
Santa Fe, Province of
- Long Term Issuer Default Rating; Affirmed; B; RO:Sta
- Local Currency Long Term Issuer Default Rating; Affirmed; B;
RO:Sta
- Senior unsecured LT B; Long Term Rating; Affirmed; B
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B R A Z I L
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COMGAS: Moody's Hikes Corp. Family Rating to Ba1
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Moody's America Latina Ltda. upgraded Cia de Gas de Sao Paulo-
COMGAS' Corporate Family Ratings (CFR) and senior unsecured
ratings to Ba1/Aaa.br from Ba2/Aa1.br, respectively in the global
scale and Brazil's national scale. The outlook is stable.
The upgrade reflects the improvement in sales volume performance
with a 6.3% (ex-thermo) growth registered in the 1Q2018 following
an increase of 4.2% in 2017, that reversed volume declines of the
previous two years. Despite its regulated nature, COMGAS proved to
have a resilient and overall predictable cash-flow. This coupled
with an adequate liquidity position and low leverage for the
rating category further supports the upgrade. The ratings also
consider Moody's expectation that the company will continue to
register overall strong credit metrics sustained by the short- and
medium-term economic growth prospects together with the
maintenance of timely and adequate tariff adjustments as well as
relative stable EBITDA margins from the take or pay (TOP)
contractual terms with Petroleo Brasileiro S.A. - PETROBRAS (Ba2
stable).
Regulated utilities have linkages to the sovereign credit quality
to the extent these companies are exposed to a domestic end-
customer base and subject to government policies. Nevertheless,
the extent to which each company is immediately affected by an
eventual reversal of the economic growth and its ability to
withstand a prolonged downturn varies according to its intrinsic
credit quality and business profile.
RATINGS RATIONALE
The ratings reflect COMGAS' strong and relatively stable cash
flows from the regulated gas distribution business in an
economically robust service area with high operating efficiency.
The positive track record of cost recovery combined with overall
supportive regulatory framework further support the ratings. The
company has proven expertise in the gas distribution market and
resilient access to the local banking and capital markets.
On the other hand, the ratings still consider that COMGAS is a
purely domestic operation that has clear linkages with Brazil's
credit fundamentals as captured in the country's sovereign rating.
COMGAS is also exposed to price volatility of the gas supply that
is not immediately passed through to consumers, and therefore
requires short term working capital. The reliance on PETROBRAS as
the only gas supplier together with the relatively high exposure
to industrial consumers also weigh on the ratings. The aggressive
dividend distribution profile as well as the still pending tariff
review also constrain the ratings.
The stable outlook reflects Moody's expectation that the company's
credit metrics will remain robust, driven by its predictable cash
flow profile. In addition, the overall supportive regulatory
framework and take or pay contract with PETROBRAS, that mitigates
volume exposure, are also incorporated in the outlook. The stable
outlook is also reflective of the stable outlook for Brazil, given
the domestic nature of the company's operations and, consequently,
its links to the local economic/regulatory environment, and
ultimate credit quality.
What Could Change the Rating - Up /Down
Given the stable outlook, an upgrade is unlikely in the short
term. An upgrade of Brazil's sovereign bond rating could trigger
upward pressure on the company's ratings given the intrinsic
linkages of COMGAS and the Brazilian sovereign.
On the other hand, deterioration in the sovereign's credit quality
could exert downward pressure on COMGAS ratings. The ratings could
also be downgraded if there is a significant and sustained
deterioration in the company's credit metrics and liquidity.
Quantitatively, the ratings or outlook would come under downward
pressure if the cash flow from operations pre working capital (CFO
Pre-W/C) interest coverage ratio falls below 3.5x and the CFO Pre-
W/C-to-debt ratio stays below 19% for an extended period. Moody's
perception of deteriorated stability and transparency of the
regulatory regime would also add pressure to the ratings as well
if volumes stay consistently below Moody's forecast. The ratings
could be revised downward if there are changes in the take or pay
terms with PETROBRAS or in the tariff adjustment regime that
affect the company's overall stable cash flow generation.
Headquartered in Sao Paulo, COMGAS is a local gas distribution
utility serving piped natural gas in a concession area of 177
municipalities in the State of Sao Paulo (Ba2, stable), including
the metropolitan region known as Greater Sao Paulo, with a
population of around 30.1 million which accounts for approximately
26% of the country's GDP. The concession area is also close to an
important natural gas production area (the Santos Basin), and to
the gas pipeline from Bolivia.
COMGAS distributes natural gas to industrial, residential,
commercial, automotive, thermal-power generation and cogeneration
consumers under a 30-year public concession agreement signed on
May 31, 1999. Upon expiration, the concession can be extended
additional 20 years upon the concessionaire's request. In 2017,
COMGAS posted net revenues of BRL5.2 billion (excluding
construction) and EBITDA of BRL1.9 billion, as per Moody's
standard adjustments.
Since November 2012 COMGAS is controlled by COSAN S.A. Industria e
Comercio (Ba2 stable) with 79.9% of total capital while the other
shareholders and free float hold the remaining 20.1%
The principal methodology used in these ratings was Regulated
Electric and Gas Utilities published in June 2017.
COSAN SA: Fitch Affirms 'BB' Long-Term FC IDR, Outlook Stable
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Fitch Ratings has affirmed Cosan S.A. Industria e Comercio's Long-
Term Foreign Currency (FC) Issuer Default Rating at 'BB', Local
Currency (LCs) IDR at 'BB+' and National Long-Term rating at
'AA+(bra)'. The Rating Outlook for the corporate ratings is
Stable. The ratings on all related debts were affirmed at 'BB', as
they are unconditionally and irrevocably guaranteed by Cosan.
Cosan's ratings are supported by its strong and diversified asset
portfolio. Fitch expects this portfolio to continue providing a
robust flow of dividends to Cosan in order to cover its interest
expenses above 4x and pay a sufficient dividend to support its
main shareholder's (Cosan Ltd.) cash flow needs. The company's
portfolio benefits from the strength of activities such as
distribution of natural gas, and the sale of fuels and lubricants.
The share of the more volatile sugar and ethanol (S&E) business
over Cosan's pro forma consolidated EBITDA slightly increased to
40% in the last 12 months (LTM) ended March 31, 2018, from 37% in
the same period of previous year due to soaring sugar prices in
2017.
The ratings also incorporate Fitch's expectation of leverage
reduction in the short term due to higher than forecasted
dividends received from its investees. The company reported net
adjusted leverage of 3.1x as of LTM through March 31, 2018
comparing favourably with 4.4x for the same period of the previous
year and 3.5x for fiscal 2017, and is expected to reach 1.60 at
2018 year-end. Cosan's liquidity is strong and the company has an
extended debt maturity profile and undrawn committed standby
facility. Fitch's analysis also considers the subordination of
Cosan's debt to the obligations of its main investments, as access
to their cash is limited to dividends received.
Cosan's FC IDR is capped by Brazil's country ceiling currently
rated 'BB'. The sovereign rating is 'BB-'/Outlook Stable and a
downgrade would also trigger a downgrade of Brazil's country
ceiling and, consequently, of Cosan's FC IDR.
KEY RATING DRIVERS
Robust Asset Portfolio: Cosan's three main assets and sources of
dividends are companies with robust credit quality. Raizen
Combustiveis S.A. (Raizen Combustiveis; FC and LC IDRs
'BBB'/Outlook Stable, National Scale rating 'AAA(bra)'/Outlook
Stable) is the second largest fuel distributor in Brazil, with
predictable operational cash generation. Despite its more volatile
results, Raizen Energia S.A. (Raizen Energia; rated the same as
Raizen Combustiveis) is the largest S&E company in Brazil, and as
such, it benefits from large business scale, which somewhat
mitigates the current challenging scenario for the sector.
Companhia de Gas de Sao Paulo (Comgas; FC IDR 'BB'/Outlook Stable,
LC IDR 'BBB-'/Outlook Stable, National Scale rating
'AAA(bra)'/Outlook Stable) is the largest natural gas distributor
in Brazil, with high growth potential.
Raizen's investment grade ratings are based on the combined
financial strength of the two operational companies and their
mutual financial support and cross guarantees. Raizen is a joint
venture (JV) and represents an important investment for both its
shareholders: Shell (AA-/Negative Outlook) and Cosan. The ratings
benefit from Raizen's strong financial profile, underpinned by
conservative capital structure and robust liquidity. Fitch's
expectation that the company will maintain positive and strong
free cash flow (FCF) in the coming years was factored into the
analysis.
Comgas' ratings reflect the solid fundamentals of its natural gas
distribution business and historically robust financial profile,
supported by reduced leverage, adequate financial flexibility and
significant cash flow from operations (CFFO). Comgas' business
profile benefits from its operations in the state of Sao Paulo,
and from a long-term concession agreement, which comprises clauses
with non-manageable costs pass through protecting the company's
cash flow generation. Comgas' growth prospects are favourable over
the medium and long term given the expectation of expansion of its
gas distribution network and customer base.
High Interest Coverage Expected to Remain: Fitch expects Cosan's
investees to pay robust dividend payments over the next few years,
with Cosan receiving around BRL2.1 billion in 2018, 70% coming
from Raizen, which is 44% higher than 2017. Fitch expects Cosan's
EBITDA plus dividends to interest coverage to be above 4x on a
sustainable basis and will allow the company to gradually reduce
its debt. In 2017, the ratio of EBITDA and dividends
received/interest expense was near 2.9x. Cosan's access to its
main investees is limited to dividends, as the control of Raizen
Combustiveis and Raizen Energia are jointly controlled by Cosan
and Shell. Comgas is a regulated concession and any intercompany
loan to shareholders must be approved by regulators.
Lower Leverage: Cosan's leverage reduction should be faster than
anticipated, due to the increased dividend inflow, which is
expected to remain high over the next four years. The company
reported net adjusted debt of BRL5.3 billion and total dividend
inflow of BRL1.3 billion in the LTM ended March 31, 2018, bringing
down the ratio of net adjusted debt-to-EBITDA plus dividends
received to 3.1x. This compares with the net adjusted debt of
BRL4.9 billion and net adjusted leverage of 3.5x reported in 2017.
As of March 31, 2018, total debt consisted solely of intercompany
loans of BRL4 billion, which represent bond issuances by its fully
owned subsidiaries, and non-voting preferred shares of BRL1.4
billion. Although issued by Cosan Luxembourg S.A. (Cosan
Luxembourg) and Cosan Overseas Ltd. (Cosan Overseas), the
associated debt at both entities is guaranteed by Cosan, which is
ultimately responsible for the payment. Fitch also incorporates
into debt the net derivative balances and BRL209 million remaining
balance for the acquisition of Comgas shares.
DERIVATION SUMMARY
Cosan's ratings are supported by its strong and diversified asset
portfolio, with activities in distribution of natural gas, and the
sale of fuels and lubricants. Cosan benefits from the robust
credit quality of its investees and their capacity to pay robust
dividend over the next few years. The ratings incorporate the
subordination of Cosan's debt to the obligations of its main
investments, as access to their cash is limited to dividends
received.
Cosan's ratings compare unfavourably with Votorantim S.A's.
(VSA's, LT FC/LC IDR at BBB- and National Scale rating at
AAA(bra); Outlook Stable) one of Latin America's largest
industrial conglomerates. VSA has larger revenues and higher
geographic diversification with strong operations in the Americas
(USA, Brazil and Peru), whereas Cosan's assets are located in
Brazil mostly. VSA presents higher liquidity on a consolidated
basis with cash and near cash items of BRL8.9 billion compared to
short-term debt position of BRL2.8 billion, whereas Cosan reported
BRL3.1 billion and BRL1.6 billion, respectively, as of Dec. 31
2017. VSA also presents lower leverage following the IPO of Nexa
and sale of noncore assets. Fitch calculates VSA's pro-forma 2017
net leverage at 0.8x incorporating the transactions, whereas Cosan
posted 1.7x on a consolidated basis. In terms of leverage and cash
flow generation, Cosan performs better than Grupo KUO, S.A.B. de
C.V.'s (KUO, LT FC/LC IDR at BB; Outlook Stable), a Mexican Group
with diversified business portfolio in the consumer, automotive
and chemical industrie. KUO reported net adjusted leverage of 2.9x
and negative FCF in 2017. Cosan reported largely positive FCF for
both 2017 and LTM ended March 31 2018.
KEY ASSUMPTIONS
Fitch's Key Assumptions Within Its Rating Case for the Issuer
- An increased flow of dividends coming from Comgas, Raizen
Combustiveis and Raizen Energia over the next two years,
reaching over BRL2.0 billion per year.
- Potential new issuances will only be used to refinance
existing debt.
RATING SENSITIVITIES
Developments That May, Individually or Collectively, Lead to
Positive Rating Action
- More predictable cash flow generation at Raizen Energia, and
Cosan's interest coverage by dividends received remaining
above 3x on a sustainable basis could lead to an upgrade of
Cosan's Local Currency IDR.
- An upgrade of Brazil's Sovereign Rating and the Country
Ceiling would trigger an upgrade of Cosan's Foreign Currency
IDR and ratings for the associated bond issuances.
Developments That May, Individually or Collectively, Lead to
Negative Rating Action
- Deterioration of the credit profiles of Raizen Combustiveis,
Raizen Energia and/or Comgas, and Cosan's interest coverage by
dividends received falling below 2x on a sustainable basis.
- A downgrade of the sovereign rating may also trigger a
downgrade of Cosan's FC IDR and ratings for the associated
bond issuances.
LIQUIDITY
Strong Liquidity: Cosan's debt maturity profile is well laddered
and is not expected to pressure the company's cash flows until
2021 when the preferred shares of BRL1.4 billion are due. Fitch
expects Cosan to report cash position of BRL1.5 billion in 2018
and no short-term debt already including the shares buyback of
BRL538 million in the year and assuming BRL450 million dividends.
As of March 31, 2018, the company cashed proceeds from the sale of
BRL1.3 billion credit it was eligible to as indemnity compensation
payments from a lawsuit filed against the Federal Government on
sugar and ethanol price controls implemented in the 90's. The sale
helped the company to rebuild its cash position following the
disbursement of the first BRL834 million tranche for the
acquisition of 17% of Comgas shares in December 2017.
As of March 31, 2018, the holding company had BRL1.5 billion of
cash versus short-term debt of BRL513 million, yielding robust
cash-to-short-term debt coverage of over 3 times. Fitch expects
Cosan to receive a robust inflow of dividends that should provide
adequate repayment capacity for upcoming interest. Cosan's
liquidity is reinforced by the positive dividend track record and
an undrawn standby credit facility of BRL501 million.
FULL LIST OF RATING ACTIONS
Fitch has affirmed the following ratings:
Cosan S.A Industria e Comercio:
- Long-Term Foreign Currency IDR at 'BB'; Outlook Stable;
- Long-Term Local Currency IDR at 'BB+'; Outlook Stable;
National Long-Term rating at 'AA+(bra)'; Outlook Stable.
Cosan Overseas Limited:
- Perpetual notes at 'BB'.
Cosan Luxembourg S.A.:
- Senior unsecured notes due 2023 and 2027 at 'BB'.
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D O M I N I C A N R E P U B L I C
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DOMINICAN REPUBLIC: May Prices Climb 0.26% Paced by Transport
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Dominican Today reports that Dominican Republic's Central Bank on
Mon. said consumer prices climbed 0.26% in May compared to April
this year.
"Therefore the accumulated inflation between January and May was
1.22%. Meanwhile, the annualized core inflation, that is, the one
of the last twelve months, stood at 2.70%," the Central Bank said,
according to Dominican Today.
It said the rise in prices in May is mainly from a higher cost in
the groups transport (0.86%) and housing (1.17%), the report
notes. "The growth of 0.86% in the Transportation group index in
May 2018 was due to increases in fuel prices," the Central Bank
said, the report relays.
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.
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G U A T E M A L A
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GUATEMALA: Volcano Death Toll Rises to 114
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EFE News reports that Guatemalan emergency crews found four more
bodies, evidently belonging to a single family who perished in the
June 3 eruption of the Volcan de Fuego volcano, thanks to
survivors helping with search efforts, thus raising the confirmed
death toll to 114.
Conred national disaster coordinator brigades, firefighters, army
troops and international experts -- aided by surviving local
residents -- entered so-called "Ground Zero" in the community of
San Miguel Los Lotes, in the southern province of Escuintla, which
was buried under volcanic ash and devastated by pyroclastic flows,
according to EFE News.
GUATEMALA: Moody's Affirms Ba1 Issuer & Unsec. Bond Ratings
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Moody's Investors Service has affirmed the Government of
Guatemala's Ba1 issuer and Ba1 senior unsecured bond ratings. The
outlook remains stable.
The key drivers for the rating affirmation are:
1. A track record of prudent fiscal management and proven economic
resiliency to domestic and external shocks
2. Rating constraints stemming from weak institutions and a low
wealth levels
Guatemala's long-term foreign currency bond ceiling remains
unchanged at Baa3. The foreign-currency deposit ceiling remains at
Ba2, while the local-currency bond and deposit ceilings remain at
Baa1. The short-term foreign-currency bond ceiling remains at P-3,
while the short-term foreign currency deposit ceiling remains
unchanged at NP.
RATINGS RATIONALE
RATIONALE FOR AFFIRMATION OF GUATEMALA's Ba1 RATING
FIRST DRIVER: PRUDENT FISCAL MANAGEMENT AND PROVEN RESILIENCY TO
SHOCKS
Guatemala has a long track record of maintaining moderate fiscal
deficits. Since 2000 the average fiscal deficit has been less than
2% of GDP, and it never breached 3.3% of GDP during that time
frame. The low fiscal deficits are mainly the result of containing
spending as the government's revenue base is among the lowest in
Moody's rated universe. A combination of a large informal sector,
tax evasion, and low tax rates resulted in government revenues of
between 10% and 11% of GDP over the last ten years.
The low deficits have limited the overall debt burden. The
government debt reached 24% of GDP last year, about half the
median of all Ba1 rated sovereigns. Moody's expects government
debt to remain around 24% this year and next as well. Measured as
percentage of revenues Guatemala's government debt is higher than
similar-rated peers, due to the low tax intake, but has remained
stable over time.
The fiscal results highlight a proven resiliency to multiple
domestic and external shocks, including a recovery from a 36-year
civil war, the 2008/2009 US financial crisis, and multiple natural
disasters. Since 2015 political scandals have led to the
resignation of one president and the investigation of another. Yet
throughout all those challenges government finances and the
country's external position have remained relatively stable,
highlighting various different administrations' ability to manage
adverse conditions without compromising macroeconomic stability.
SECOND DRIVER: CONSTRAINTS STEMMING FROM WEAK INSTITUTIONS AND LOW
WEALTH LEVELS
Constraining the rating are weak institutions and low income per
capita. Guatemala ranks lower in the Worldwide Governance
Indicators, part of Moody's formal assessment of a sovereign's
institutional strength, than most rated peers. Key weaknesses are
in the areas of rule of law and overall government effectiveness.
An investigation by the United Nations-funded International
Commission Against Impunity in Guatemala (CICIG) on campaign
finance contributions led last year to accusations against
President Jimmy Morales and widespread protests. Yet despite this,
positive aspects to highlight include a long track record of
prudent fiscal and monetary policies, data transparency, and a
solid relationship with the IMF and other multilaterals.
Guatemala's $75 billion economy is the largest in Central America,
above the Ba1 median of $58 billion. But the country's per capita
GDP (PPP basis) of $8144 in 2017 is less than half that of rated
peers. Limited growth potential and weak development indicators
continue to be key constraints on Guatemala's sovereign rating.
On June 3, Guatemala's Fuego volcano, located some 25 miles from
the capital, erupted resulting in over 100 deaths and many more
affected by the widespread ash fallout. The volcano eruption has
displaced thousands of people, damaged some crops and briefly
closed the country's main airport. Nonetheless, and despite the
tragic loss of human lives, Moody's believe that the fiscal and
economic impact will be limited since, unlike other environmental
disasters affecting other nations, such as earthquakes and
hurricanes, the eruption did not destroy any major infrastructure.
Gross investment of 12.1% of GDP in 2017 remains a limiting factor
for medium-term growth prospects of the Guatemalan economy.
Guatemala has the fifth lowest gross investment to GDP ratio in
Moody's rated universe, only higher than Angola, Cuba, Greece and
Venezuela. Gross investment averaged 20% of GDP in the five years
prior to 2009 but less than 14% of GDP since then. Factors
restraining investment in Guatemala include weak social
indicators, domestic security challenges and weak rule of law.
RATIONALE FOR THE STABLE OUTLOOK
The stable outlook reflects Moody's expectation that moderate
medium-term growth prospects and the government's long-standing
commitment to prudent fiscal and monetary policies will continue
to maintain debt at close to current levels, despite pressures
arising from high poverty levels and relatively weak institutions.
WHAT COULD CHANGE THE RATING UP/DOWN
An upgrade to Guatemala's rating is unlikely in the near to medium
term. Upward pressure on the rating would require both (i)
improvement in economic conditions that lead to higher GDP growth
on a sustained basis, and (ii) material improvement of the
country's institutional framework in general and its governance
indicators in particular.
Conversely, the rating could experience downward pressure if (i)
there is an erosion of the country's longstanding commitment to
prudent fiscal management, (ii) worse-than-expected economic
performance results in persistently higher debt ratios, or (iii)
weak social development indicators and domestic security
challenges begin to pose a threat to political stability.
GDP per capita (PPP basis, US$): 8,145 (2017 Actual) (also known
as Per Capita Income)
Real GDP growth (% change): 2.8% (2017 Actual) (also known as GDP
Growth)
Inflation Rate (CPI, % change Dec/Dec): 5.7% (2017 Actual)
Gen. Gov. Financial Balance/GDP: -1.3% (2017 Actual) (also known
as Fiscal Balance)
Current Account Balance/GDP: 1.5% (2017 Actual) (also known as
External Balance)
External debt/GDP: 25.1% (2017 Actual)
Level of economic development: Low level of economic resilience
Default history: No default events (on bonds or loans) have been
recorded since 1983.
On June 7, 2018, a rating committee was called to discuss the
rating of the Guatemala, Government of. The main points raised
during the discussion were: The issuer's economic fundamentals,
including its economic strength, have not materially changed. The
issuer's institutional strength/ framework, have not materially
changed. The issuer's fiscal or financial strength, including its
debt profile, has not materially changed.
The principal methodology used in these ratings was Sovereign Bond
Ratings published in December 2016.
=============
J A M A I C A
=============
JAMAICA: To Strengthen Ties With Kenya
--------------------------------------
RJR News reports that President of Kenya Uhuru Kenyatta has held
talks with Prime Minister Andrew Holness at the sidelines of the
G7 Summit in Canada where the leaders agreed to get tangible
bilateral relations moving between the two countries.
The two explored how to leverage on quick wins such as codeshare
for airlines with Kenya Airways due to start non-stop flights from
Nairobi to New York in October easing flight connections to
Kingston, Jamaica, which is three hours from New York, according
to RJR News.
The report notes that on boosting trade between the two countries,
President Kenyatta and Prime Minister Holness agreed that Kenya
could export its tea and coffee to Jamaica and in turn import
peanuts from the island.
President Kenyatta also pledged t to work with Jamaica in ensuring
the African, Caribbean and Pacific (ACP) Group of States speaks
with one voice and is not splintered along continent lines, the
report relays.
Exchange of athletics coaches also featured at the talks between
President Kenyatta and Prime Minister Holness, the report says.
The leaders also discussed culture and entertainment as a bedrock
for promoting tourism in the two countries, the report adds.
As reported in the Troubled Company Reporter-Latin America on
Feb. 5, 2018, Fitch Ratings affirmed Jamaica's Long-Term
Foreign-Currency Issuer Default Rating (IDR) at 'B' and has
revised the Rating Outlook to Positive from Stable.
===========
M E X I C O
===========
MEXICO: Credit Risk at Highest Level Since Trump's Inauguration
---------------------------------------------------------------
Justin Villamil at Bloomberg News reports that Mexico's credit
risk is at the highest level since the days after Donald Trump's
inauguration.
Five-year credit-default swaps that hedge against a drop in the
value of Mexico's sovereign debt have soared as the July 1
presidential election nears, according to Bloomberg News. Leftist
Andres Manuel Lopez Obrador holds a commanding lead in the polls,
and traders are concerned his victory could upend the economy just
as the country is roiled by increasing trade tensions with the
U.S., Bloomberg News notes.
Other Mexican assets are also showing signs of stress as the
election approaches, Bloomberg News relays. The peso's 2.9
percent drop this month is the second-worst performance among
major currencies, Bloomberg News notes. Dollar-denominated
sovereign bonds, meanwhile, have lost 1.3 percent in June,
Bloomberg News says.
The CDS moves are due to "currency, domestic growth, and election
concerns," said Michael Roche, a strategist at Seaport Global
Holdings in New York, Bloomberg News discloses. He sees default-
swap costs rising up to election day, at which point investors
will adjust to the new reality, Bloomberg News adds.
Bloomberg's Poll Tracker shows Lopez Obrador with a 26 percentage
point lead over second-place Ricardo Anaya.
======================
P U E R T O R I C O
======================
APB IMPORTS: Case Summary & 4 Unsecured Creditors
--------------------------------------------------
Affiliated companies that filed voluntary petitions seeking relief
under Chapter 11 of the Bankruptcy Code:
Debtor Case No.
------ --------
APB Imports, Inc. 18-03273
1351 Ashford Ave.
San Juan, PR 00908
Condado Realty Co., Inc. 18-03274
1351 Ashford Ave.
San Juan, PR 00908
Business Description: APB Imports and Condado Realty Co. are
lessors of real estate based in San Juan,
Puerto Rico.
Chapter 11 Petition Date: June 10, 2018
Court: United States Bankruptcy Court
District of Puerto Rico (Old San Juan)
Debtors' Counsel: Alexis Fuentes-Hernandez, Esq.
FUENTES LAW OFFICES, LLC
PO Box 9022726
San Juan, PR 00902
Tel: (787) 722-5216
Fax: (787) 722-5206
E-mail: alex@fuentes-law.com
Assets and Liabilities:
Estimated Estimated
Assets Liabilities
------------ ------------
APB Imports $1 mil. to $10 million $1 mil. to $10 million
Condado Realty $1 mil. to $10 million $1 mil. to $10 million
The petitions were signed by Aurora M. Ray Chacon, secretary.
A full-text copy of APB Imports' petition containing, among other
items, a list of the Debtor's four unsecured creditors is
available for free at:
http://bankrupt.com/misc/prb18-03273.pdf
A full-text copy of Condado Realty's petition containing, among
other items, a list of the Debtor's four unsecured creditors is
available for free at:
http://bankrupt.com/misc/prb18-03274.pdf
AUTO MASTERS: Seeks to Hire Tamarez CPA as Accountant
-----------------------------------------------------
Auto Masters Express, Inc., seeks authority from the U.S.
Bankruptcy Court for the District of Puerto Rico to employ Tamarez
CPA, LLC, as accountant to the Debtor.
Auto Masters requires Tamarez CPA to:
a. reconcile financial information to assist the Debtor in the
preparation of monthly operating reports;
b. assist in the reconciliation and clarification of proof of
claims filed and amount due to creditors;
c. provide general accounting and tax services to prepare
year-end reports and income tax preparation; and
d. assist the Debtor and the Debtor's counsel in the
preparation of the supporting documents for the Chapter 11
Reorganization Plan.
Tamarez CPA will be paid at these hourly rates:
Albert Tamarez-Vasquez, CPA, CIRA $150
CPA Supervisor $100
Senior Accountant $85
Staff Accountant $65
Tamarez CPA will be paid a retainer in the amount of $2,000.
Tamarez CPA will also be reimbursed for reasonable out-of-pocket
expenses incurred.
Albert Tamarez-Vasquez, a partner at Tamarez CPA, LLC, assured the
Court that the firm is a "disinterested person" as the term is
defined in Section 101(14) of the Bankruptcy Code and does not
represent any interest adverse to the Debtor and its estates.
Tamarez CPA can be reached at:
Albert Tamarez-Vasquez
TAMAREZ CPA, LLC
1519 Ave. Ponce De Leon, Suite 412
San Juan, PR 00909-1713
Tel: (787) 795-2855
Fax: (787) 200-7912
E-mail: atamarez@tamarezcpa.com
About Auto Masters Express
Auto Masters Express, Inc., filed a Chapter 11 bankruptcy petition
(Bankr. D.P.R. Case No. 18-01464) on March 19, 2018. Carlos
Alberto Ruiz Law Offices is serving as counsel.
CLINICA SANTA ROSA: July 19 Disclosure Statement Hearing
--------------------------------------------------------
Judge Edward A Godoy of the U.S. Bankruptcy Court for the District
of Puerto Rico will convene a hearing to consider approval of the
disclosure statement filed by Clinica Santa Rosa Inc. July 19,
2018 at 9:30 A.M. is fixed for the hearing on approval of
disclosure statement.
Class 2 Secured Claim is comprised of USDA Rural Development
within which classifies the amount of $13,861,820.08 Upon
confirmation of the plan, the Debtor will transfer to Mennonite
General Hospital, Inc., a real property and equipment over which
Rural holds a secured interest. Rural will be paid $2,400,000.00.
Class 3, Secured Claim is comprised of U.S. Department of Housing
and Urban Development filed the amount of $1,027,868.84.
Class 4, Secured Creditor, is comprosed of Hospital Menonita
Guayama, Inc., filed an amount of $2,164.336.00, of which
$1,059,354 were filed as secured amount
Class 7, General Unsecured Creditors will receive a lump sum
payment of a total amount of $20,000 on the effective date of the
plan.
The means of execution of the plan is that Hospital General
Menonita Inc. will provide said funds in order to obtain all
rights over Debtor's assets.
A full-text copy of the Disclosure Statement is available at:
http://bankrupt.com/misc/prb16-09033-261.pdf
About Clinica Santa Rosa
Clinica Santa Rosa, Inc., engaged in a healthcare business, filed
a Chapter 11 petition (Bankr. D.P.R. Case No. 16-09033) on Nov.
14, 2016. The petition was signed by Fernando Alarcon Ocasio,
president. At the time of the filing, the Debtor estimated assets
at $1 million to $10 million and liabilities $10 million to $50
million.
The Debtor is represented by Antonio I. Hernandez Santiago, Esq.
The U.S. Trustee for the District of Puerto Rico appointed Edna
Diaz De Jesus and the Patient Care Ombudsman for Clinica Santa
Rosa.
MINSUR SA: Moody's Alters Outlook to Stable & Affirms Ba3 CFR
-------------------------------------------------------------
Moody's Investors Service affirmed Minsur S.A.'s Ba3 corporate
family rating and the Ba3 rating assigned to its USD 450 million
senior unsecured notes due in 2024. The outlook was changed to
stable from positive.
Ratings affirmed:
Issuer: Minsur S.A.
LT Corporate Family Rating: affirmed at Ba3
USD450 million senior unsecured notes due 2024: affirmed at Ba3
Outlook Actions:
Issuer: Minsur S.A.
Outlook, Changed To Stable from Positive
RATINGS RATIONALE
The change in outlook to stable from positive reflects primarily
the expected weakening in Minsur's credit metrics, namely
leverage, as the company moves forward with its major expansion
project Mina Justa. The project will require total investments of
about USD1.6 billion through 2020 and will result in a sharp
increase in leverage and sustained negative free cash flows at
least until its start-up in late 2020/early 2021. Minsur has sold
40% of the project to Inversiones Alxar S.A., a subsidiary of
Chilean company Empresas Copec S.A., with which Minsur will share
the capex and risks of the project. Mina Justa will be partially
funded with approximately USD800 million in a non-recourse project
finance debt. Minsur and Copec will provide completion guarantees
during the construction period. The remaining of the project will
be funded with Minsur and Alxar's own cash flows/equity
contributions.
Moody's estimates gross adjusted leverage to peak at close to 6x
by 2020, considering full consolidation of Mina Justa, or at
around 4x in a 60% consolidation scenario. Despite the higher
leverage during Mina Justa's construction phase, the Ba3 ratings
remain adequate and are supported by Minsur's strong operating
performance and track record of execution, good quality of assets,
competitive costs basis, strong liquidity position and comfortable
debt amortization schedule (mainly represented by the 2024 USD450
mm senior unsecured notes). Moody's expects the company to quickly
deleverage once Mina Justa starts operations in 2021.
Minsur's Ba3 ratings continue to reflect the company's high
margins along with its position as the third largest tin producer
worldwide. The company's credit quality is additionally supported
by low-cost and high-grade positions, largely due to its ownership
of San Rafael mine, the world's largest tin-producing underground
mine, and large investments towards diversification. Mina Justa
will substantially increase Minsur's size and diversification away
from tin.
An upward rating movement would require evidence that the company
is on track to execute its growth and diversification strategy
while maintaining adequate liquidity to carry out its operations
and meet debt obligations. Quantitatively, a positive action would
also require leverage -- as measured by Total Adjusted Gross Debt
to EBITDA -- to trends towards 3.5x and interest coverage --
expressed by Adjusted EBITDA to Interest Expense -- to stay above
3.5x on a consistent basis.
Ratings could be negatively impacted if profitability and cash
generation capacity materially deteriorates, for example, due to a
combination of a drop in metals prices and increase in production
costs significantly exceeding Moody's expectations. Negative
pressure could also arise if the company faces disruptions in its
expansion projects, mainly represented by Mina Justa, with delays
in construction or higher than anticipated capital expenditures
pressuring liquidity, leverage and interest coverage metrics.
Specifically, if EBIT margin falls below 5%, or an increase in
debt levels or weak operating performance lead to leverage ratios
staying at 4x or above after the completion of Mina Justa, and
interest coverage below 2.5x on a consistent basis, ratings could
be downgraded.
The principal methodology used in this rating was "Mining
Industry" published in April 2018.
Headquartered in Lima, Peru, Minsur S.A. is a majority-owned
subsidiary of Peruvian conglomerate Inversiones Breca S.A. (not
rated). The company is primarily a producer and seller of tin,
mined from its San Rafael mine, located in the Puno region of
Peru, and a producer and seller of gold, mined from its Pucamarca
mine, located in the Tacna region of Peru. Through its
subsidiaries, Minsur has other mining and smelting assets in Peru
and Brazil, producing tin, as well as niobium and tantalum alloys
as byproducts in Taboca, in the northern region of Brazil. Minsur
reported consolidated revenues of USD 685 million in the LTM ended
in March 2018.
TRAILER VAN: New Plan Discloses Settlement Deal with J. Torres
--------------------------------------------------------------
Trailer Van Corp. filed with the U.S. Bankruptcy Court for the
District of Puerto Rico an amended disclosure statement, dated
June 1, 2018, referring to its plan of reorganization, which
provides the quickest recovery and will maximize the return to
creditors on their claims.
Class 3 under the latest plan is comprised of the allowable
Unsecured Credit of Ms. Jacqueline Pietri Torres. An adversary
proceeding was filed against said creditor and a settlement was
reached and filed with the Court on May 31, 2018. The total amount
owed under this class amounts to $349,966.33. Under the agreement,
two land properties, which are assets of debtor's estate, are to
be transferred to the creditor in full payment of its credit.
As of the Petition Date, the Debtor owned assets and had
liabilities, as more particularly described in its Schedules and
Statement of Financial Affairs, which Debtor filed with the
Bankruptcy Court.
The previous version of the plan provided that the Debtor will
effect payment of allowed claims, with the available funds
originating from the Debtor's operations and the collection of the
Debtor's accounts receivable. In addition, the Debtor will sell,
during the life of the Plan, real property in order to comply with
the payments required under the Plan.
A full-text copy of the Amended Disclosure Statement is available
at http://bankrupt.com/misc/prb16-07655-11-89.pdf
About Trailer Van Corp.
Headquartered in Carolina, Puerto Rico, Trailer Van Corp. filed
for Chapter 11 bankruptcy protection (Bankr. D.P.R. Case No. 16-
07655) on Sept. 27, 2016, estimating its assets at up to $50,000
and its liabilities at between $100,001 and $500,000. Fausto
David Godreau Zayas, Esq., at Godreau & Gonzalez Law serves as the
Debtor's bankruptcy counsel.
In June 1979, Frank Sanfilippo Sr. and his partner Peter
Uscinowicz founded Trailer Van Corp., under the concept of
bringing into the Island of Puerto Rico a mean of storage and
mobile office trailer.
TOYS R US: Court Approves Assignment of Lease to Raymours
---------------------------------------------------------
NTH 250 E LLC owns premises located at 250 East Route 4, Paramus,
New Jersey, which it leases to Debtors Toys "R" Us, Inc., and
affiliates pursuant to a lease executed on Sept. 19, 1972 between
the predecessors in interest of TRU and NTH. On March 23, 2018,
the Court entered the Order Establishing Bidding Procedures and
Granting Related Relief, approving the Debtors' sale, and
assumption and assignment, of certain real property and unexpired
leases and auction and bidding procedures for soliciting and
selecting the best offers for those assets. The Lease was one of
the assets included in the Bidding Procedures Order. TRU, in
connection with the Bidding Procedures Order, is seeking final
approval of the assumption and assignment of the Lease to Raymours
Furniture Company, Inc. NTH has objected to the proposed
assignment, asserting that the transaction is impermissible
because the Debtors cannot assign the Lease free and clear of the
use restriction contained therein.
After carefully considering the evidence and submissions of the
parties, Bankruptcy Judge Keith L. Phillips overruled NTH's
objection.
NTH has objected to the proposed assignment, asserting that the
transaction is impermissible because the Use Restriction cannot be
voided. The Debtors argue that section 365(f) of the Bankruptcy
Code, 11 U.S.C. section 365(f), allows them to assign the Lease
free and clear of the Use Restriction.
The facts and circumstances of this case compel the Court to find
that the Use Restriction will unduly hamper the Debtors' ability
to assign the Lease and prevent the full realization of the value
of the Debtors' assets. When balancing the interests of the
Debtors against those of NTH, it is evident that the interest of
the Debtors in obtaining the full value of the below-market Lease
outweighs the detriment to NTH. In this case, NTH has failed to
provide any clear evidence of harm beyond its inability to acquire
an undervalued lease at the expense of the Debtors. The $1,300,000
offered by Raymours represents maximum value to the bankruptcy
estates.
The evidence before the Court is that Raymours would not have bid
on the Lease had it thought that the Use Restriction would be
retained. The effect of the Raymours auction participation was to
increase the price of the Lease to $1,300,000, which was a
substantial increase over NTH's initial $500,000 bid. The parties
do not contest that after multiple rounds of bidding between
Raymours and NTH, NTH withdrew, leaving Raymours the successful
bidder. This undoubtedly led to a maximization of the value to be
received by the bankruptcy estates. Despite the assertion by NTH
that the difference between its highest bid and Raymours' winning
bid was only $50,000, had Raymours not continued bidding on the
Lease, the purchase price undoubtedly would have been
substantially lower than the eventual $1,300,000 winning bid. To
find that Raymour's bid would add only $50,000 to the bankruptcy
estates would discount the value of Raymour's contribution to the
bidding process and may have a chilling effect on future
competitive bidding.
The Court also finds that NTH has not proven any definitive harm
it will suffer if the Use Restriction is invalidated pursuant to
section 365(f). The Debtors and Raymours point out that NTH does
not own any other properties near the Premises since each of the
other nearby properties is owned by a separate limited liability
company in the Hegeman Entities. Therefore, they argue, any
possible damage from enforcement of the Use Restriction would be
to those separate companies and not to NTH. However, even if the
Court disregards those corporate identities and treats all of the
separate Hegeman Entities as one entity, the Court finds that NTH
has failed to establish the "actual and substantial detriment"
required by U.L. Radio Corp.
The Court finds that the possibility of harm to NTH resulting from
the assignment free and clear of the Use Restriction is outweighed
by the benefit of the sale to the Debtors' bankruptcy estates.
Therefore, the Court will approve the assignment of the Lease to
Raymours free and clear of the Use Restriction pursuant to section
365(f), and NTH's objection to the proposed assumption and
assignment of the Lease is overruled.
A copy of the Court's Memorandum Opinion and Order dated May 31,
2018 is available at:
http://bankrupt.com/misc/vaeb17-34665-3305.pdf
About Toys R Us, Inc.
Toys "R" Us, Inc., was an American toy and juvenile-products
retailer founded in 1948 and headquartered in Wayne, New Jersey,
in the New York City metropolitan area. Merchandise was sold in
880 Toys "R" Us and Babies "R" Us stores in the United States,
Puerto Rico and Guam, and in more than 780 international stores
and more than 245 licensed stores in 37 countries and
jurisdictions. Merchandise was also sold at e-commerce sites
including Toysrus.com and Babiesrus.com.
On July 21, 2005, a consortium of Bain Capital Partners LLC,
Kohlberg Kravis Roberts, and Vornado Realty Trust invested $1.3
billion to complete a $6.6 billion leveraged buyout of the
company.
Toys "R" Us is a privately owned entity but still files with the
U.S. Securities and Exchange Commission as required by its debt
agreements.
The Company's consolidated balance sheet showed $6.572 billion in
assets, $7.891 billion in liabilities, and a stockholders' deficit
of $1.319 billion as of April 29, 2017.
Toys "R" Us, Inc., and certain of its U.S. subsidiaries and its
Canadian subsidiary voluntarily filed for relief under Chapter 11
of the Bankruptcy Code (Bankr. E.D. Va. Lead Case No. Case No.
17-34665) on Sept. 19, 2017. In addition, the Company's Canadian
subsidiary voluntarily commenced parallel proceedings under the
Companies' Creditors Arrangement Act ("CCAA") in Canada in the
Ontario Superior Court of Justice. The Company's operations
outside of the U.S. and Canada, including its 255 licensed stores
and joint venture partnership in Asia, which are separate
entities, were not part of the Chapter 11 filing and CCAA
proceedings.
Grant Thornton is the monitor appointed in the CCAA case.
Judge Keith L. Phillips presides over the Chapter 11 cases.
In the Chapter 11 cases, Kirkland & Ellis LLP and Kirkland & Ellis
International LLP serve as the Debtors' legal counsel. Kutak Rock
LLP serves as co-counsel. Toys "R" Us employed Alvarez & Marsal
North America, LLC as its restructuring advisor; and Lazard Freres
& Co. LLC as its investment banker. It hired Prime Clerk LLC as
claims and noticing agent. Consensus Advisory Services LLC and
Consensus Securities LLC, serve as sale process investment banker.
A&G Realty Partners, LLC, serves as its real estate advisor.
On Sept. 26, 2017, the U.S. Trustee for Region 4 appointed an
official committee of unsecured creditors. The Committee retained
Kramer Levin Naftalis & Frankel LLP as its legal counsel; Wolcott
Rivers, P.C. as local counsel; FTI Consulting, Inc. as financial
advisor; and Moelis & Company LLC as investment banker.
Toys "R" Us UK
Toys "R" Us Limited, Toys "R" Us, Inc.'s UK arm with 105 stores
and 3,000 employees, was sent into administration in the United
Kingdom in February 2018.
Arron Kendall and Simon Thomas of Moorfields Advisory Limited, 88
Wood Street, London, EC2V 7QF were appointed Joint Administrators
on Feb. 28, 2018. The Administrators now manage the affairs,
business and property of the Company. The Administrators act as
agents only and without personal liability.
The Administrators said they will make every effort to secure a
buyer for all or part of the business.
Liquidation of U.S. Stores
Toys "R" Us, Inc., on March 15, 2018, filed with the U.S.
Bankruptcy Court a motion seeking Bankruptcy Court approval to
start the process of conducting an orderly wind-down of its U.S.
business and liquidation of inventory in all 735 of the Company's
U.S. stores, including stores in Puerto Rico.
Propco I Debtors
Toys "R" Us Property Company I, LLC and its subsidiaries own fee
and leasehold interests in more than 300 properties in the United
States. The Debtors lease the properties on a triple-net basis
under a master lease to Toys-Delaware, the operating entity for
all of TRU's North American businesses, which operates the
majority of the properties as Toys "R" Us stores, Babies "R" Us
stores or side-by-side stores, or subleases them to alternative
retailers.
Toys "R" Us Property was founded in 2005 and is headquartered in
Wayne, New Jersey. Toys 'R' Us Property operates as a subsidiary
of Toys "R" Us Inc.
Company LLC, MAP Real Estate LLC, TRU 2005 RE I LLC, TRU 2005 RE
II Trust, and Wayne Real Estate Company LLC (collectively, "Propco
I Debtors") sought protection under Chapter 11 of the Bankruptcy
Code (Bankr. E.D. Va. Lead Case No. 18-31429) on March 20, 2018.
The Propco I Debtors sought and obtained procedural consolidation
and joint administration of their Chapter 11 cases, separate from
the Toys "R" Us Debtors' Chapter 11 cases.
The Propco I Debtors estimated assets of $500 million to $1
billion and liabilities of $500 million to $1 billion.
Judge Keith L. Phillips presides over the Propco I Debtors' cases.
The Propco I Debtors hired Klehr Harrison Harvey Branzburg, LLP;
and Crowley, Liberatore, Ryan & Brogan, P.C., as co-counsel. The
Debtors also tapped Kutak Rock LLP. They hired Goldin Associates,
LLC, as financial advisors.
TOYS R US: Ombudsman Taps Hirschler Fleischer as Legal Counsel
--------------------------------------------------------------
Elise Frejka, Esq., the consumer privacy ombudsman appointed in
the Chapter 11 case of Toys "R" Us, Inc., seeks approval from the
U.S. Bankruptcy Court for the Eastern District of Virginia to hire
Hirschler Fleischer, P.C., as her legal counsel.
The firm will advise Ms. Frejka regarding her duties as consumer
privacy ombudsman and will provide other legal services related to
the Chapter 11 cases of Toys "R" Us and its affiliates.
Robert Westermann, Esq., and Franklin Cragle, Esq., the attorneys
who will be providing the services, charge $535 per hour and $385
per hour, respectively.
Mr. Westermann, a shareholder of Hirschler, 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:
Robert S. Westermann, Esq.
Hirschler Fleischer, P.C.
The Edgeworth Building
2100 East Cary Street
P.O. Box 500
Richmond, VA 23218-0500
Telephone: 804.771.9500
Facsimile: 804.644.0957
E-mail: rwestermann@hf-law.com
About Toys R Us, Inc.
Toys "R" Us, Inc., was an American toy and juvenile-products
retailer founded in 1948 and headquartered in Wayne, New Jersey,
in the New York City metropolitan area. Merchandise was sold in
880 Toys "R" Us and Babies "R" Us stores in the United States,
Puerto Rico and Guam, and in more than 780 international stores
and more than 245 licensed stores in 37 countries and
jurisdictions. Merchandise was also sold at e-commerce sites
including Toysrus.com and Babiesrus.com.
On July 21, 2005, a consortium of Bain Capital Partners LLC,
Kohlberg Kravis Roberts, and Vornado Realty Trust invested $1.3
billion to complete a $6.6 billion leveraged buyout of the
company.
Toys "R" Us is a privately owned entity but still files with the
Securities and Exchange Commission as required by its debt
agreements.
The Company's consolidated balance sheet showed $6.572 billion in
assets, $7.891 billion in liabilities, and a stockholders' deficit
of $1.319 billion as of April 29, 2017.
Toys "R" Us, Inc., and certain of its U.S. subsidiaries and its
Canadian subsidiary voluntarily filed for relief under Chapter 11
of the Bankruptcy Code (Bankr. E.D. Va. Lead Case No. Case No.
17-34665) on Sept. 19, 2017. In addition, the Company's Canadian
subsidiary voluntarily commenced parallel proceedings under the
Companies' Creditors Arrangement Act ("CCAA") in Canada in the
Ontario Superior Court of Justice. The Company's operations
outside of the U.S. and Canada, including its 255 licensed stores
and joint venture partnership in Asia, which are separate
entities, were not part of the Chapter 11 filing and CCAA
proceedings.
Grant Thornton is the monitor appointed in the CCAA case.
Judge Keith L. Phillips presides over the Chapter 11 cases.
The Debtors tapped Kirkland & Ellis LLP and Kirkland & Ellis as
their legal counsel; Kutak Rock LLP as co-counsel; Alvarez &
Marsal North America, LLC as restructuring advisor; Lazard Freres
& Co. LLC as investment banker; Prime Clerk LLC as claims and
noticing agent; Consensus Advisory Services LLC and Consensus
Securities LLC as sale process investment banker; and A&G Realty
Partners, LLC as real estate advisor.
On Sept. 26, 2017, the U.S. Trustee for Region 4 appointed an
official committee of unsecured creditors. The Committee retained
Kramer Levin Naftalis & Frankel LLP as its legal counsel; Wolcott
Rivers, P.C. as local counsel; FTI Consulting, Inc. as financial
advisor; and Moelis & Company LLC as investment banker.
On May 29, 2018, the Office of the U.S. Trustee appointed Elise S.
Frejka, Esq., as the consumer privacy ombudsman.
Toys "R" Us UK
Toys "R" Us Limited, Toys "R" Us, Inc.'s UK arm with 105 stores
and 3,000 employees, was sent into administration in the United
Kingdom in February 2018.
Arron Kendall and Simon Thomas of Moorfields Advisory Limited, 88
Wood Street, London, EC2V 7QF were appointed Joint Administrators
on Feb. 28, 2018. The Administrators now manage the affairs,
business and property of the Company. The Administrators act as
agents only and without personal liability.
The Administrators said they will make every effort to secure a
buyer for all or part of the business.
Liquidation of U.S. Stores
Toys "R" Us, Inc., on March 15, 2018, filed with the U.S.
Bankruptcy Court a motion seeking Bankruptcy Court approval to
start the process of conducting an orderly wind-down of its U.S.
business and liquidation of inventory in all 735 of the Company's
U.S. stores, including stores in Puerto Rico.
Propco I Debtors
Toys "R" Us Property Company I, LLC and its subsidiaries own fee
and leasehold interests in more than 300 properties in the United
States. The Debtors lease the properties on a triple-net basis
under a master lease to Toys-Delaware, the operating entity for
all of TRU's North American businesses, which operates the
majority of the properties as Toys "R" Us stores, Babies "R" Us
stores or side-by-side stores, or subleases them to alternative
retailers.
Toys "R" Us Property was founded in 2005 and is headquartered in
Wayne, New Jersey. Toys 'R' Us Property operates as a subsidiary
of Toys "R" Us Inc.
Company LLC, MAP Real Estate LLC, TRU 2005 RE I LLC, TRU 2005 RE
II Trust, and Wayne Real Estate Company LLC (collectively, "Propco
I Debtors") sought protection under Chapter 11 of the Bankruptcy
Code (Bankr. E.D. Va. Lead Case No. 18-31429) on March 20, 2018.
The Propco I Debtors sought and obtained procedural consolidation
and joint administration of their Chapter 11 cases, separate from
the Toys "R" Us Debtors' Chapter 11 cases.
The Propco I Debtors estimated assets of $500 million to $1
billion and liabilities of $500 million to $1 billion.
Judge Keith L. Phillips presides over the Propco I Debtors' cases.
The Propco I Debtors hired Klehr Harrison Harvey Branzburg, LLP;
and Crowley, Liberatore, Ryan & Brogan, P.C., as co-counsel. The
Debtors also tapped Kutak Rock LLP. They hired Goldin Associates,
LLC, as financial advisors.
=================
V E N E Z U E L A
=================
VENEZUELA: Caracas Runs Out of Water
------------------------------------
Carlos Camacho at The Latin American Herald reports that the
Venezuelan capital of Caracas has been without water for the last
week, as the main reservoir serving the city, La Mariposa, is
reportedly out of commission, the latest in a series of seemingly
government-induced disasters in an oil rich yet humanitarian-
crisis wracked country.
State water utility Hidrocapital said there was going to be a 48
hour interruption in a city that has already been under severe
rationing for the last six years at least, according to The Latin
American Herald.
And perhaps most importantly, Hidrocapital will have to make do
with only Bs 17.1 billion in 2018, according to the approved
Budget, the report notes. That is 74% less than the Bs 66.3
billion it received in 2017, the report relays.
Areas of Caracas that routinely received round the clock, 24/7
water service when Hugo Chavez was alive, now can go a full week
without water, the report discloses. Former Hidrocapital official
Norberto Bausson was quoted in Caracas daily "El Universal" as
saying the interruptions affect some 5.3 million people in the
capital and parts of Miranda state alone, in this country of more
than 31 million which is also suffering under hyperinflation, the
report says.
The interruptions have been particularly severe in East Caracas,
where anti-Maduro protests are usually, held, while traditionally
pro-government West Caracas has to make do with three hours of
water a day in certain, selected areas, the report notes.
Neighbors took their SUVs to the pumping station in Urbanizacion
Horizonte, trying to fetch enough water in cans and other ill-
suited canisters to withstand the shortage, the report relays.
A similar situation is being experienced, to some degree, all over
Venezuela, a situation that has prompted the government to
threaten arrest anyone who protests the interruption in water
service, the report relays.
Government critics don't see an end to the deterioration, painting
instead a "Walking Dead"-type of dystopia for future Venezuela,
the report notes.
"In the short term, the water and electricity services will
collapse, gasoline will run out, there will be no public
transportation and the salary will no longer purchase anything.
All of this is the fault of the dictatorship. Now is the moment
for the working class to get together to demand democracy and
freedom," Jose Guedez, an opposition lawmaker, tweeted morning, as
Caracas was looking at yet another day without water, the report
relays.
In its yearly report, published, the Ministry of Eco-Socialism and
Water reported that -- while there seems to be plenty of socialism
in Venezuela -- there is in fact less water, The Latin American
Herald relays. In 31 of the country's 62 reservoirs there was
indeed 30% less water than at the same point last year, according
to the report, The Latin American Herald notes.
While repeating the common claim that failures are the result of
equipment and theft, in its 2017 annual report the ministry also
admitted that state and city utilities had fewer resources to tend
to emergencies, The Latin American Heraldsays.
Caracas city utility Hidrocapital for instance only operates four
water trucks for the 5.3 million people cited above, and has to
rely on the Army and the Fire Department to supplement that
service, The Latin American Herald adds.
***********
Monday's edition of the TCR-LA delivers a list of indicative
prices for bond issues that reportedly trade well below par.
Prices are obtained by TCR-LA editors from a variety of outside
sources during the prior week we think are reliable. Those
sources may not, however, be complete or accurate. The Monday
Bond Pricing table is compiled on the Friday prior to publication.
Prices reported are not intended to reflect actual trades. Prices
for actual trades are probably different. Our objective is to
share information, not make markets in publicly traded securities.
Nothing in the TCR-LA constitutes an offer or solicitation to buy
or sell any security of any kind. It is likely that some entity
affiliated with a TCR-LA editor holds some position in the
issuers' public debt and equity securities about which we report.
Tuesday's edition of the TCR-LA features a list of companies with
insolvent balance sheets obtained by our editors based on the
latest balance sheets publicly available a day prior to
publication. At first glance, this list may look like the
definitive compilation of stocks that are ideal to sell short.
Don't be fooled. Assets, for example, reported at historical cost
net of depreciation may understate the true value of a firm's
assets. A company may establish reserves on its balance sheet for
liabilities that may never materialize. The prices at which
equity securities trade in public market are determined by more
than a balance sheet solvency test.
Submissions about insolvency-related conferences are encouraged.
Send announcements to conferences@bankrupt.com
***********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter-Latin America is a daily newsletter
co-published by Bankruptcy Creditors' Service, Inc., Fairless
Hills, Pennsylvania, USA, and Beard Group, Inc., Washington, D.C.,
USA, Marites O. Claro, Joy A. Agravante, Rousel Elaine T.
Fernandez, Julie Anne L. Toledo, Ivy B. Magdadaro, and Peter A.
Chapman, Editors.
Copyright 2018. All rights reserved. ISSN 1529-2746.
This material is copyrighted and any commercial use, resale or
publication in any form (including e-mail forwarding, electronic
re-mailing and photocopying) is strictly prohibited without prior
written permission of the publishers.
Information contained herein is obtained from sources believed to
be reliable, but is not guaranteed.
The TCR Latin America subscription rate is US$775 per half-year,
delivered via e-mail. Additional e-mail subscriptions for members
of the same firm for the term of the initial subscription or
balance thereof are US$25 each. For subscription information,
contact Peter A. Chapman at 215-945-7000.
.
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