/raid1/www/Hosts/bankrupt/TCRLA_Public/180725.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, July 25, 2018, Vol. 19, No. 146
Headlines
A R G E N T I N A
ARGENTINA: Macri Discloses "Modernization" of Armed Forces
B R A Z I L
ODEBRECHT ENGENHARIA: Fitch Affirms 'CC' Long-Term IDRs
H O N D U R A S
HONDURAS: Bus, Taxi Drivers to Strike if Fuel Price is Not Cut
M E X I C O
SAN LUIS: Moody's Hikes Issuer Rating to Ba1/A1.mx, Outlook Stable
N I C A R A G U A
NICARAGUA: Ortega Refuses Protest Demands to Step Down
P U E R T O R I C O
LA HABICHUELA: Cash Flow, Future Income to Fund Proposed Plan
TOYS R US: Propco I Debtors Tap Prime Clerk as Admin. Advisor
TOYS R US: Unsecureds to Get Nothing Under New Propco II Plan
TOYS R US: Propco I Debtors Tap Prime Clerk as Claims Agent
V E N E Z U E L A
VENEZUELA: Health Workers Continue to Protest Despite Promises
- - - - -
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A R G E N T I N A
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ARGENTINA: Macri Discloses "Modernization" of Armed Forces
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EFE News reports that Argentina President Mauricio Macri said that
the national defense system is inadequate and announced a
"modernization process" aimed at making the country's armed forces
capable of facing the "challenges of the 21st century."
"I am here because we want to pay off our debt with the armed
forces of democracy," Mr. Macri said in a speech at the Campo de
Mayo military garrison in Buenos Aires, according to EFE News.
"He have an antiquated defense system, the product of years of
underinvestment and a lack of long-term policies," he said, the
report notes.
The "modernization process" is set to begin with a new policy
directive that highlights the main mission of the armed forces to
protect the sovereignty and territorial integrity of the country,
as well as to provide assistance during emergencies and natural
catastrophes, the report relays.
The report discloses that the president also said that supporting
Argentina's foreign policy is a key aspect of the army,
contributing to achieve an "increased presence in United Nations
peace operations," as well as "promoting cooperation" and
restating the "country's presence in Antarctica".
The report relays that Mr. Macri also ratified the government's
proposal for the armed forces to be able to participate in
domestic security, a notion that has been strongly criticized by
human rights organizations citing the crimes of the 1976-1983
military regime, which killed some 30,000 people.
As reported in the Troubled Company Reporter-Latin America on
June 7, 2018, S&P Global Ratings affirmed on June 4, 2018, its
'B+' long-term sovereign credit ratings on the Republic of
Argentina. The outlook on the long-term ratings remains stable.
S&P also affirmed its short-term sovereign credit ratings on
Argentina at 'B', its 'raAA' national-scale ratings, and its
transfer and convertibility assessment of 'BB-'.
S&P said the stable outlook incorporates its expectation that
the Macri Administration will implement additional austerity-based
economic measures in the coming six months to contain and soon
reverse the deterioration in inflation dynamics, reduce the fiscal
deficit, and stabilize the economy. S&P expects the government's
decision to enter into an agreement with the International
Monetary Fund (IMF) will help sustain investor confidence and
maintain its access to capital market funding for its large fiscal
deficits. S&P expects that effective implementation of corrective
economic policies, including revised budgetary targets for this
year and next, will set the stage for better policy predictability
and continuity over the next several years.
Fitch Ratings affirmed on May 8, 2018, Argentina's Long-Term
Foreign-Currency Issuer Default Rating (IDR) at 'B' and revised
the Outlook to Stable from Positive.
On December 4, 2017, Moody's Investors Service upgraded the
Government of Argentina's local and foreign currency issuer and
senior unsecured ratings to B2 from B3. The senior unsecured
shelves were upgraded to (P)B2 from (P)B3. The outlook on the
ratings is stable. At the same time, Argentina's short-term
rating was affirmed at Not Prime (NP). The senior unsecured
ratings for unrestructured debt were affirmed at Ca and the
unrestructured senior unsecured shelf affirmed at (P)Ca.
As previously reported by the TCR-LA, Argentina defaulted on some
of its debt late July 30, 2014, after expiration of a 30-day grace
period on a US$539 million interest payment. Earlier that day,
talks with a court-appointed mediator ended without resolving a
standoff between the country and a group of hedge funds seeking
full payment on bonds that the country had defaulted on in 2001.
A U.S. judge had ruled that the interest payment couldn't be made
unless the hedge funds led by Elliott Management Corp., got the
US$1.5 billion they claimed. The country hasn't been able to
access international credit markets since its US$95 billion
default 13 years ago. On March 30, 2016, Argentina's Congress
passed a bill that will allow the government to repay holders of
debt that the South American country defaulted on in 2001,
including a group of litigating hedge funds that won judgments
in a New York court. The bill passed by a vote of 54-16.
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B R A Z I L
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ODEBRECHT ENGENHARIA: Fitch Affirms 'CC' Long-Term IDRs
-------------------------------------------------------
Fitch Ratings has affirmed Odebrecht Engenharia e Construcao's
(OEC) Long-Term Foreign and Local Currency Issuer Default Ratings
(IDR) at 'CC' and Long-Term National Scale Rating at 'CC(bra)'.
Concurrently, Fitch has affirmed the 'CC'/'RR4' rating of
approximately USD3.1 billion of Odebrecht Finance Ltd. (OFL)
issuance, which OEC unconditionally and irrevocably guarantees.
The 'CC'/'RR4' rating of OFL's unsecured debt reflects average
recovery prospects in the event of a default, ranging between 31%-
50% of existing debt.
The ratings reflect OEC's strong vulnerability to stress and weak
liquidity that is not compatible with future principal and coupon
payments and high working capital needs. In Fitch's opinion, OEC
still has several challenges to avoid restructuring its coupon
payments and amortizations in 2019 of USD184 million, at the same
time, it builds cash to support its working capital needs. The
company also has to settle plea bargain agreements with countries
in Latin America; stop the cash burn; collect past-due
receivables; stabilize and improve the quality of its backlog and
rebuild reputation within weak market demand. The recent capital
injection of approximately BRL1 billion from its parent, Odebrecht
S.A. (ODB), allowed for short term cash relief and future group
support is uncertain.
KEY RATING DRIVERS
Relevant Challenges Remain: OEC faces important difficulties to
turnaround its operations and recover backlog in order to improve
the overall quality of its portfolio of contracts worsened by weak
market demand. The BRL2.1 billion memorandum of understanding
signed in early May 2018 to build a port in Espirito Santo State
in Brazil has been credit accretive. OEC still has to settle plea
bargain agreements with seven out of 12 countries it admitted to
have paid briberies and kickbacks to win contracts, and with the
Brazilian investigation board (TCU) on top of being removed from
Petrobras's ban list. OEC needs also to stop cash-burn and collect
past-due receivables to improve its credit profile.
Cash Burn to Continue: Fitch forecasts negative FCF of BRL252
million in 2018 and BRL57 million in 2019 assuming lower
operational cash burn as compared with 2017 due to reduced level
of activities. In 2017, OEC's FCF was negative at BRL1.7 billion,
pressured by relevant operational cash burn due to an increase in
legal and compliance expenses, fine payments, and difficulties to
dilute fixed cost given the slow activities. In the same period,
adjusted revenue dropped 42% to BRL11.1 billion as the company
continues to slow or suspend the execution of projects that are
not paying invoices on a timely basis. As of December 2017, OEC
registered an adjusted EBITDA of BRL1.2 billion (BRL542 million if
provisions are included) and CFFO was negative at BRL1.5 billion,
indicating the cash-burn continues. Fitch expects OEC to generate
BRL853 million of EBITDA in 2018 and BRL1.0 billion in 2019.
Aggressive Capital Structure: Fitch expects OEC to maintain an
aggressive capital structure over the next three years, with net
leverage of 10.6x in 2018, as a derivation of an EBITDA of BRL853
million and an adjusted net debt of BRL9.1 billion, and remaining
above 8.0x in the medium term assuming no parent support. In 2017,
the company reported an adjusted net leverage of 5.7x from a
combination of BRL1.7 billion net adjusted debt and an adjusted
EBITDA of BRL1.2 billion. Considering the provisions related with
plea bargain agreements and fines settled in other countries of
BRL703 million, net adjusted leverage is 11.2x.
Backlog Stabilizes in 2019: Fitch's base case scenario assumes
OEC's backlog stabilizing in 2019 given weak demand both
domestically and abroad, with estimated 17% decline in USD terms
for 2018. In 2017, backlog shrank to USD12.1 billion, from USD16.7
billion in 2016, on the back of USD3.3 billion execution and
USD1.3 billion cancelation. These contracts are equivalent to 3.6
years of operation, slightly longer than the 2.9 years of 2016.
Part of the growth stems from the already signed plea bargain
agreements and the ones that are in process of been concluded.
Higher oil prices also tend to strengthen the financial of OEC's
clients, mainly Venezuela and Angola.
DERIVATION SUMMARY
OEC's high credit risk profile reflects Fitch's opinion that a
default appears probable and the uncertainties to its capacity to
access funding and add projects to its backlog. The 'CC' rating
also reflects the expectation that cash burn will continue and
that liquidity is not compatible with future principal and coupon
payments and high working capital needs.
OEC's rating is higher than its local peer Andrade Gutierrez
Engenharia S.A. (AGE; RD) that missed principal payment on its
USD500 million bond due April 30, 2018, and is in the process of
restructuring its debt.
KEY ASSUMPTIONS
Fitch's key assumptions within its rating case for the issuer
include:
-- Backlog of BRL37.3 billion in 2018 and BRL38.3 billion in
2019;
-- Net revenues of BRL9.9 billion in 2018 and BRL10.5 billion in
2019;
-- EBITDA margin of 8.6% in 2018 and 9.6% in 2019;
-- Capex of BRL175 million in 2018 and BRL185 million in 2019;
-- No dividends paid to ODB in 2018 and 2019;
-- Annual payments of BRL130 million in fines for the Latin
American countries.
KEY RECOVERY RATING ASSUMPTIONS
The recovery analysis assumes that OEC would be considered a going
concern (GC) in bankruptcy and that the company would be
reorganized rather than liquidated. Fitch has assumed a 10%
administrative claim.
Going-Concern Approach
-- OEC's going concern EBITDA of BRL1 billion is based on a 15%
discount on the already depressed 2017 adjusted EBITDA. The
agency chose the adjusted figure as the BRL703 million
provisions made in 2017 will be diluted in several upcoming
years;
-- Post-organization EBITDA is already materially lower than the
BRL3.1 billion reported prior to the Lava-Jato scandal;
-- An EV multiple of 5x is used to calculate a post-
reorganization valuation and reflects a mid-cycle multiple for
the sector.
Liquidation Value
Fitch excluded the liquidation value (LV) approach because
Brazilian bankruptcy legislation tends to favor the maintenance of
the business in order to preserve direct and indirect job
positions. Moreover, in extreme cases where LV was necessary, the
recovery of the assets has been proved very difficult and time
consuming for creditors.
RATING SENSITIVITIES
Developments That May, Individually or Collectively, Lead to
Positive Rating Action
-- Stabilization or growth of the portfolio of contracts, i.e.
backlog;
-- Stop the cash burn;
-- More visibility on further parent support.
Developments That May, Individually or Collectively, Lead to
Negative Rating Action
-- Beginning of a default or default-like process, such as
entering in a cure-period or in standstill with banks;
-- The announcement of debt restructuring.
LIQUIDITY
Pressured Liquidity: Fitch expects OEC's liquidity to remain under
pressure as of 2019. On Dec. 31, 2017, OEC had a cash position of
BRL2.4 billion (USD713 million), which unfavorably compares to
BRL4.1 billion (USD1.3 billion) in 2016. The capital injection of
approximately BRL1 billion in the first half of 2018 brought a
temporary relief for OEC as it was used to amortize the principal
amortization of the senior unsecured noted and the coupon payment
of the 2025 senior unsecured bond, in the amount of BRL540
million. OEC still has about BRL570 million (USD154 million) of
coupon payments to be paid in 2018. The capital increase
reinforced its cash position in approximately BRL150 million
(about USD40 million). For 2019 and 2020, Fitch estimates coupons
and principal amortization of USD184 million and USD257 million,
respectively, posing a large pressure on company's liquidity.
FULL LIST OF RATING ACTIONS
Fitch has affirmed the following ratings:
Odebrecht Engenharia e Construcao S.A. (OEC)
-- Long-Term Foreign and Local Currency IDRs at 'CC';
-- National Scale Rating at 'CC(bra)'.
Odebrecht Finance Limited (OFL)
-- USD500 million senior unsecured notes due 2020 at 'CC'/'RR4';
-- USD600 million senior unsecured noted due 2022 at 'CC'/'RR4';
-- USD800 million senior unsecured notes due 2023 at 'CC'/'RR4';
-- USD550 million senior unsecured notes due 2025 at 'CC'/'RR4';
-- USD500 million senior unsecured notes due 2029 at 'CC'/'RR4';
-- USD850 million senior unsecured notes due 2042 at 'CC'/'RR4';
-- USD750 million perpetual bonds at 'CC'/'RR4'.
===============
H O N D U R A S
===============
HONDURAS: Bus, Taxi Drivers to Strike if Fuel Price is Not Cut
--------------------------------------------------------------
Alianza News reports that bus and taxi drivers in Honduras on
warned that if the government refuses to lower fuel prices, they
will go on strike again.
The work stoppage was planned for July 23, according to Alianza
News.
Bus and taxi drivers earlier went on strike for two days, the
report notes.
They are demanding a reduction of 20 lempiras (US$0.82) on a
gallon (3.8 liters) of fuel, the report adds.
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M E X I C O
===========
SAN LUIS: Moody's Hikes Issuer Rating to Ba1/A1.mx, Outlook Stable
------------------------------------------------------------------
Moody's de Mexico upgraded the issuer ratings of the Municipality
of San Luis Rio Colorado to Ba1/A1.mx (Global Scale, local
currency/Mexico National Scale) from Ba2/A2.mx. The outlook
remains stable.
RATINGS RATIONALE
The upgrade reflects the strengthening of San Luis Rio Colorado's
gross operating balance (GOB) over the past two years, very solid
liquidity position and very low debt levels.
From 2015 to 2017, San Luis Rio Colorado's GOB increased to 13.5%
of operating revenues from -3.2% in 2015, which compares favorably
with the median of Mexican municipalities rated at Ba1 (10.1%).
This improvement has been driven by higher own source revenues,
particularly taxes, increased federal participations and lower
growth in operating expenditure. San Luis Rio Colorado will face a
change of administration in September 2018, which may exert
pressure on operating expenditure. However, Moody's estimates that
the GOB will remain at a solid 10% for 2018-19.
Due to operating and financial surpluses, San Luis Rio Colorado's
liquidity has also been very solid, registering an average ratio
of cash to current liabilities of 3.5 times (x) in the last two
years, higher than its Ba1 Mexican rated peers (1.3x). The ratio
of net direct and indirect debt to operating revenues was 16.2% in
2017, similar to the median of Mexican municipalities rated at Ba1
(14.1%). For 2018-19, Moody's estimates that the liquidity
position of the entity will remain between 2.7x to 3x and that net
direct and indirect debt to operating revenues will be 13%.
However, Moody's will monitor the debt plans of the upcoming
administration.
The Ba1 rating also takes into account San Luis Rio Colorado's
financial contingencies in relation to pensions and labor
lawsuits, which together represented 74% of total revenues in
2017.
RATIONALE FOR THE STABLE OUTLOOK
The stable outlook reflects its opinion that San Luis Rio Colorado
will maintain strong operating balances and liquidity as well as
low debt levels, even in a scenario where operating revenue
increases at a slower pace than in the last three years and
expenditure increases at a faster rate.
WHAT COULD CHANGE THE RATING UP OR DOWN
Given the stable outlook, an upgrade/downgrade is unlikely in the
medium term. However, upward pressure on the ratings could be
exerted if the municipality shows an improvement in its financial
balances and in its collection of own source revenues, or if it
implemented measures to reduce the contingencies related to
unfunded pensions and labor lawsuits. Conversely, a deterioration
of its financial balance, leading to a weakening of liquidity,
could exert downward pressure on the ratings.
The principal methodology used in these ratings was Regional and
Local Governments published in January 2018.
The period of time covered in the financial information used to
determine Municipality of San Luis Rio Colorado's rating is
between January 1, 2013 and December 31, 2017.
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N I C A R A G U A
=================
NICARAGUA: Ortega Refuses Protest Demands to Step Down
------------------------------------------------------
Rappler News reports that Nicaraguan President Daniel Ortega
insisted on July 23 that he will serve out his term until 2021,
defying protesters demanding his resignation in 3 months of unrest
that have left nearly 300 people dead.
"Our electoral period ends with the elections of 2021, when we
will have our next elections," the former revolutionary leader
told Fox News, adding that he would not countenance opposition
demands for early elections, according to Rappler News.
"To move up the elections would create instability, insecurity and
make things worse," he said, the report notes.
The 72-year-old leader, who has ruled Nicaragua for a total of 22
years since his Sandinista revolution toppled a US-backed dictator
in 1979, declared that the deadly unrest rocking his country since
April has in fact ended, Rappler News discloses.
"It's been a week now that the turmoil has stopped. Matters are
becoming more normal in the country," he said, Rappler News
relays.
Rappler News notes that he acknowledged that peaceful
demonstrations for and against his government were ongoing.
The assertion that Nicaragua's turmoil was over followed lethal
offensives by police and pro-government paramilitaries against
protest hubs earlier this month, the report relays.
The Nicaraguan Center for Human Rights said that 292 people have
been killed in 3 months of protests and repression by police and
paramilitaries using firearms, raising a previous toll, the report
says.
The unrest began as a protest against a pension reform plan that
has since been dropped, the report notes. But that anger
mushroomed into a broad campaign against Ortega and his wife, Vice
President Rosario Murillo, who are accused by critics of running a
corrupt leftwing dictatorship, the report discloses.
The human rights group said authorities have arbitrarily arrested
hundreds of people in a continuing crackdown on the opposition,
the report says.
Many were seized on suspicion of taking part in marches against
Ortega's government, or providing aid to those agitating against
the president, it added, the report notes.
Thousands of students staged dueling marches for and against the
government, the report relays. Those opposed to Ortega carried
crosses with backpacks hanging from them -- symbols of students
killed in the unrest, the report notes.
A pro-government student union voiced support for Ortega and
referred to protesters as terrorists and putschists, the report
relays.
Denials
In the interview, Ortega rejected allegations that he controlled
the pro-government paramilitaries seen acting in concert with the
police, the report relays.
He instead accused Nicaraguan political groups of heading rival
anti-government militias, which he said had sought financing from
drug traffickers and the United States, the report says. He
accused those militias of killing "tens" of police officers in the
unrest, Rappler News notes.
"None of the peaceful demonstrations" have been attacked by
police, he said.
Rappler News relays that Mr. Ortega denied reports by protesters
and priests that his forces shot dead two young men holed up in a
Managua church that came under sustained fire on July 13-14.
"No Nicaraguan has died in any church. Not a single Nicaraguan has
died in any church. That's false," the report quoted Ortega as
saying.
It was also wrong to say priests were being targeted, he said, the
repotr relays.
"There's not a single priest that we are persecuting," Mr. Ortega
said, adding that he welcomed efforts by the Catholic Church to
mediate talks between his government and opposition groups, the
report notes.
'Terrible Lies'
The president also dismissed detractors' claims that he was intent
on starting a ruling dynasty by making Murillo his vice president
in 2016, the report relays.
The report relays that Mr. Ortega said he was speaking to Fox News
after years of refusing interviews with foreign media because he
wanted the United States to show Nicaragua "respect."
He also hit out at what he called "a campaign of lies, terrible
lies to try to hurt the image of Nicaragua and of its government,"
the report notes.
The political crisis has hurt the economy of Nicaragua, one of the
poorest countries in the Americas, the report adds.
As reported in the Troubled Company Reporter-Latin America on
June 29, 2018, Fitch Ratings has downgraded Nicaragua's Long-Term
Foreign-Currency Issuer Default Rating (IDR) to 'B' from 'B+'. The
Outlook is Negative.
======================
P U E R T O R I C O
======================
LA HABICHUELA: Cash Flow, Future Income to Fund Proposed Plan
-------------------------------------------------------------
La Habichuela, Inc., filed with the U.S. Bankruptcy Court for the
District of Puerto Rico an amendded plan of reorganization dated
July 2, 2018.
Class 1 under the amended plan is the secured claim of Reliable
Financial Services, which will be continued to be paid, until the
conclusion of the 64 monthly installments of $1,244, including
interest at a rate of 4.65%. On November 2019 a balloon payment is
due.
Class 4 general unsecured creditors will receive prorate payment
of 15 % for a period of 5 years, beginning 90 days after the
effective date of the plan.
The plan proposes to pay the creditors of La Habichuela, Inc. from
the cash flow and the future income generated by the sales made by
the three fast food restaurants that the Debtor owns and
administers.
The previous version of the plan provided that the funding of the
plan will come from the savings since filing the petition for
relief and continuation of operations of the three restaurants.
A full-text copy of the Amended Plan dated July 2, 2018 is
available at http://bankrupt.com/misc/prb15-09171-11-275.pdf
About La Habichuela, Inc.
La Habichuela, Inc, based in Carolina, Puerto Rico, filed a
Chapter 11 petition (Bankr. D.P.R. Case No. 15-09171) on November
19, 2015. Francisco R. Moya Huff, Esq. serves as bankruptcy
counsel. In its petition, the Debtor estimated $164,372 in assets
and $1.23 million in liabilities. The petition was signed by
Francisco Cabello Dominguez, secretary.
TOYS R US: Propco I Debtors Tap Prime Clerk as Admin. Advisor
-------------------------------------------------------------
Toys R Us Property Company I, LLC, received approval from the U.S.
Bankruptcy Court for the Eastern District of Virginia to hire
Prime Clerk LLC as administrative advisor.
The firm will provide bankruptcy administration services, which
include the solicitation, balloting and tabulation of votes; the
preparation of reports in support of a Chapter 11 plan; and
managing and coordinating any distributions pursuant to the plan.
The firm's hourly rates are:
Claim and Noticing Rates:
Analyst $30 - $50
Technology Consultant $35 - $95
Consultant/Senior Consultant $65 - $170
Director $175 - $195
COO/Executive VP No charge
Solicitation, Balloting and Tabulation Rates:
Solicitation Consultant $190
Director of Solicitation $220
Benjamin Steele, vice-president of Prime Clerk, disclosed in a
court filing that his firm is a "disinterested person" as defined
in section 101(14) of the Bankruptcy Code.
Prime Clerk can be reached through:
Benjamin J. Steele
Prime Clerk LLC
830 3rd Avenue, 9th Floor
New York, NY 10022
Tel: 212-257-5490
Email: bsteele@primeclerk.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
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: Unsecureds to Get Nothing Under New Propco II Plan
-------------------------------------------------------------
Toys "R" Us Property Company II, LLC ("Propco II Debtor") and
Giraffe Junior Holdings, LLC, or the Propco II Plan Debtors filed
a disclosure statement for their proposed amended joint chapter 11
plan.
The Plan provides for the sale of the Propco II Debtor's assets
and a liquidation of the Propco II Plan Debtors. A sale of all or
substantially all of the Propco II Debtor's assets may be
accomplished either through the Plan or a sale pursuant to section
363 and 365 of the Bankruptcy Code. The Propco II Plan Debtors
prefer that the sale be accomplished though the Plan, but in
either case, the proceeds of the sale will be used to fund Plan
distributions.
This latest filing provides that Toys Delaware rejected the Master
Lease as of June 30, 2018, which severely constrained the Propco
II Debtor's liquidity. The Master Lease is defined as Properties
leased on a triple-net basis pursuant to the certain Second
Amended and Restated Master Lease Agreement, dated as of November
3, 2016, by and between Propco II, as landlord, and Toys "R" Us -
Delaware, Inc. as tenant. The rental payments made by Toys
Delaware to the Propco II Debtor under the Master Lease were the
sole source of revenue for the Propco II Debtor. With limited cash
on hand, as of June 30, 2018, the Propco II Debtor no longer had
any revenues.
With knowledge that the Master Lease would be rejected or deemed
rejected, on June 11, 2018, the Propco II Plan Debtors filed a
motion seeking the approval of bid procedures to commence an
expeditious sale and marketing process for all or substantially
all of the Propco II Debtor's assets. The Propco II Plan Debtors
and their advisors worked diligently with their stakeholders,
including the Special Servicer to negotiate acceptable bidding
procedures, and a sale timeline, that would result in an
expeditious and cost-effective path forward toward confirmation of
a chapter 11 plan. In connection with the sale and marketing
process, the Propco II Debtor reached an agreement with the
Special Servicer under the Mortgage Loan Documents, documented in
the Amended Adequate Protection Order, for the Trust to fund the
necessary carry costs to maintain and preserve the Properties up
to a certain amount through the end of July 2018, including taxes,
ground rents, utilities, insurance premiums, common charges and
assessments, among other expenses as set forth in the Amended
Adequate Protection Order. The estimated carry costs associated
with the Properties is approximately $2.8 million for the month of
July 2018, plus the cost to insure the Properties.
The Propco II Debtor intends to complete a sale of its assets
pursuant to the Plan, but may also complete the sale pursuant to a
Sale Order under section 363 and 365 of the Bankruptcy Code in
lieu of completion pursuant to a Plan if Administrative Claims
exceed the amount set forth in Schedule 1 of the Plan and the
Purchaser, after good faith negotiations with the Propco II
Debtor, is the successful bidder and elects to consummate the sale
pursuant to section 363 and 365 of the Bankruptcy Code.
Class A4 under the amended plan consists of the general unsecured
claims against Propco II. Allowed General Unsecured Claim against
the Propco II Debtor, including any Mortgage Loan Deficiency
Claim, will receive its Pro Rata share of the Sale Proceeds, if
any, after payment of all senior Claims against the Propco II
Debtor. Projected recovery for this class is 0%.
Class B4 consists of the general unsecured claims against Giraffe
Junior. Allowed General Unsecured Claim against the Giraffe Junior
Debtor, including any Giraffe Junior Mezzanine Loan Deficiency
Claim, will receive its Pro Rata share of the Sale Proceeds, if
any, after payment of all senior Claims against the Giraffe Junior
Debtor. Projected recovery for this class is 0%.
A full-text copy of the Latest Disclosure Statement is available
at http://bankrupt.com/misc/vaeb17-34665-3650.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: Propco I Debtors Tap Prime Clerk as Claims Agent
-----------------------------------------------------------
Toys R Us Property Company I, LLC received approval from the U.S.
Bankruptcy Court for the Eastern District of Virginia to hire
Prime Clerk LLC as its claims and noticing agent.
The firm will oversee the distribution of notices and the
maintenance, processing and docketing of proofs of claim filed in
the Chapter 11 cases of the company and its affiliates (Propco I
Debtors).
Prime Clerk will charge these hourly rates:
Claim and Noticing Rates:
Analyst $30 - $50
Technology Consultant $35 - $95
Consultant/Senior Consultant $65 - $170
Director $175 - $195
COO/Executive VP No charge
Solicitation, Balloting and Tabulation Rates:
Solicitation Consultant $190
Director of Solicitation $220
Benjamin Steele, vice-president of Prime Clerk, disclosed in a
court filing that his firm is a "disinterested person" as defined
in section 101(14) of the Bankruptcy Code.
Prime Clerk can be reached through:
Benjamin J. Steele
Prime Clerk LLC
830 Third Avenue, 9th Floor
New York, NY 10022
Direct: (212) 257-5490
Mobile: 646-240-7821
Email: bsteele@primeclerk.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
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.
=================
V E N E Z U E L A
=================
VENEZUELA: Health Workers Continue to Protest Despite Promises
--------------------------------------------------------------
Alianza News reports that Venezuelan doctors and nurses took to
the streets throughout the country for the 29th consecutive day
demanding higher salaries and a response to severe problems in the
public health system, despite the investments in healthcare that
President Nicolas Maduro announced over the weekend.
"Today we ratify the continuity of this strike because we have not
received any kind of response," Pablo Zambrano, executive
secretary of the Fetrasalud union, told reporters in Caracas,
according to Alianza News.
More than half a dozen demonstrations were registered throughout
the Caribbean country, as healthcare workers took at least five
public hospitals, the report relays.
Mr. Zambrano said that the protesters' demands will still stand,
as their salaries do not constitute a living wage, especially amid
2.8 percent daily inflation, the report notes.
He also urged the citizenry to support the demonstrations, which
also denounce a shortage of medication, as well as poor conditions
in hospitals, the report relays.
Dozens of doctors and nurses attempted to block traffic on the
Francisco Fajardo motorway, the most important thoroughfare in
Caracas, but their effort was foiled by police, who peacefully
continued to protect demonstrators, the report discloses.
Another group of healthcare workers successfully obstructed
traffic in the western sector of the capital, known to locals as
"The Graveyard," while Catia Peripheral Hospital employees
partially hindered traffic on the Caracas-La Guaira motorway,
which is the only way to reach the country's main airport, the
report relays.
Caracas Nurses Association president Ana Rosario Contreras urged
the government to rise up to "its responsibility" in the
healthcare crisis, the report notes.
Mr. Maduro approved investments in the amount of $344 million to
improve services in the close to 300 public hospitals in the
country, the report adds.
As reported in the Troubled Company Reporter-Latin America on
June 1, 2018, S&P Global Ratings, on May 29, 2018, removed its
long- and short-term local currency sovereign credit ratings on
Venezuela from CreditWatch with negative implications and affirmed
them at 'CCC- /C'. The outlook on the long-term local currency
rating is negative. At the same time, S&P affirmed its 'SD/D'
long- and short-term foreign currency sovereign credit ratings on
Venezuela. S&P's transfer and convertibility assessment remains at
'CC'.
***********
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.
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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
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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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