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/raid1/www/Hosts/bankrupt/TCRLA_Public/181108.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 Thursday, November 8, 2018, Vol. 19, No. 222 Headlines B R A Z I L CIELO SA: Fitch Affirms BB+ LC & FC IDR, Outlook Stable ODEBRECHT ENGENHARIA: Moody's Cuts Corp. Family Rating to 'C' ODEBRECHT FINANCE: Moody's Cuts Sr. Unsec. Notes Rating to C C H I L E * CHILE: Will Join China's Belt and Road Initiative J A M A I C A UC RUSAL: Appoints New Chief Executive Officer P E R U VOLCAN COMPANIA: Moody's Upgrades CFR to Ba2, Outlook Stable P U E R T O R I C O SEARS HOLDINGS: Weil Serves as Adviser in Chapter 11 Restructuring SEARS HOLDINGS: Seeks Court Approval of Stalking Horse Agreement SEARS HOLDINGS: Taps Lazard Freres as Investment Banker SEARS HOLDINGS: Taps Weil Gotshal & Manges as Legal Counsel S T. L U C I A SANDALS RESORTS: Suspends Construction On Fourth Hotel V E N E Z U E L A VENEZUELA: Wants $550M Worth of Gold Back From the Bank of England X X X X X X X X X LATAM: Turns to Sustainable Ranching in Face of Climate Change - - - - - =========== B R A Z I L =========== CIELO SA: Fitch Affirms BB+ LC & FC IDR, Outlook Stable ------------------------------------------------------- Fitch Ratings has affirmed Cielo S.A.'s Foreign and Local Currency Issuer Default Rating at 'BB+' and its long-term national scale rating at 'AAA(bra). The rating Outlook for the corporate ratings is Stable. At the same time, Fitch has affirmed the senior unsecured notes for Cielo's wholly owned subsidiary, Cielo USA Inc., at 'BB+'. Cielo's ratings reflect the company's solid capital structure and financial flexibility and its proven capacity to generate strong and resilient cash flow in its business in different macroeconomic scenarios and increased competition. Cielo benefits from its leading position in the Brazilian card payment industry, which is supported by the growing and predictable revenue stream from a diversified base of affiliated merchants. The analysis also incorporates the low counterparty risks associated with the Brazilian banking system, as more than 95% of the volume of transactions is concentrated in banks rated 'BB-' and above or that are partially guaranteed by Visa and Mastercard. Cielo has virtually no direct credit exposure to cardholders, as the card-issuing bank guarantees cardholders' payment, while the company's exposure to merchants is limited. Cielo's FC IDR of 'BB+' is one notch higher than Brazil's 'BB' Country Ceiling, as the company's offshore readily available cash easily covers hard currency interest expense. Currently, cash held abroad covers hard currency debt service over the next 24 months by more than 2x. In line with Fitch's "Non-Financial Corporates Exceeding the Country Ceiling Rating Criteria," this could allow the company to be rated up to three notches above the Brazilian Country Ceiling. Cielo's FC IDR is constrained by the company's LC IDR, which is a reflection of the company's underlying credit quality. If Cielo's offshore readily available cash/hard currency interest ratio falls below 1.0x, Cielo's FC IDR would be downgraded and limited to Brazil's Country Ceiling. KEY RATING DRIVERS Leading Position in the Brazilian Card Payment Industry: Cielo is the leading company in Brazil's merchant acquiring and payment processing industry with an estimated market share of 51.1%. Despite the significant increase in competition in recent years, the industry remains highly consolidated with the two largest players representing approximately 84% of the market. Cielo's competitive advantage relies in part on the relationship and distribution network of three important banks in the Brazilian banking system, Banco do Brasil, Bradesco and, to a lesser extent, Caixa. Cielo's affiliation with these leading banks gives it access to their broad customer base to acquire merchant accounts. Important Challenges due to Increased Competition: The market dynamics for the Brazilian payment industry has significantly changed in the last two years and Fitch expects competition to continue to increase and pressure operating margins. In Fitch's opinion, Cielo's market share should remain strong, but will gradually reduce in the medium term. The recent successful IPOs of two smaller players will also contribute to a more aggressive growth strategy and to fierce dispute to gain market share. Cielo has the important challenge to adapt its strategy to the highly competitive business environment and continue to grow its activities and preserve strong cash flow generation capacity. The company's operating results were pressured by the reduction in net interchange fee, in revenues from POS equipment rental and in prepayment revenue, combined with lower growth of the volume of credit transactions. In Fitch's opinion, Cielo's defensive strategy to enter more aggressively in a new business segment, the micro to small merchants, still needs to be tested. This is a more price sensitive segment, in which smaller players, such as PagSeguro (not rated) and Stone (not rated), have gained important market share. The acquisition of Stelo in 2018 should support Cielo's plan to grow more aggressively in this segment, with sale of POS and acquisition of receivables activities. Financial Volume to Continue to Grow: Fitch expects mid-single digit growth of credit and debit transactions in Brazil in 2018 and 2019, supported by low penetration of credit and debit cards and some improvement in consumer spending. However, still uncertain pace of macroeconomic recovery will continue to pressure business growth compared to high historical growth levels. Cielo processed BRL458 billion in credit and debit transactions in the first nine months of 2018 and BRL626 billion in 2017. The volume of credit and debit transactions increased by more than 20% per year from 2007 to 2012 and by an average of 16% in 2013 and 2014. Weak macroeconomic conditions and tough competition resulted in slower growth toward single digits since 2015, and the volume of credit and debit transactions increased by 7.0% in 2016, 6.7% in 2017 and only 0.8% during the first nine months of 2018. Low Risk of Credit Loss: Cielo has virtually no direct credit exposure to cardholders, as the card-issuing bank guarantees cardholders' payment, while the company's exposure to merchants is limited. The company is, however, partially exposed to card- issuing bank defaults on a payment settlement for Visa and Mastercard transactions. The risk associated with Visa and Mastercard transactions is mitigated by the fact that more than 95% of the volume of transactions is concentrated in banks rated 'BB-' and above. For some non-investment grade banks, Cielo's risk management policy requires the card-issuing bank to pledge collateral. Cash Flow Remains Robust: Cielo has demonstrated recurrent capacity to generate robust and resilient cash flow, even during scenarios of different economic cycles and increased competition. It also benefits from increased revenues diversification, following the acquisition of Merchant e-Solutions, in U.S., and Cateno. Fitch projects adjusted EBITDA to decrease to BRL6.5 billion in 2018 and BRL6.4 billion in 2019. In the LTM ended September 30, 2018, the company reported BRL6.7 billion of adjusted EBITDA, including financial income derived from the acquisition of receivables from merchants of BRL1.8 billion, FFO of BRL5.6 billion and CFFO of BRL5.0 billion. These results compare negatively with BRL7.7 billion, BRL5.3 billion and BRL6.1 billion, respectively, in 2017. The reduction in net interchange fee, in revenues from POS equipment rental and in prepayment revenue, combined with lower growth of the volume of credit transactions, pressured EBITDA generation. Cielo invested BRL563 million and distributed dividends of BRL3.4 billion in the LTM ended September 2018, resulting in FCF of BRL967 million. Fitch expects FCF to remain positive in 2018 to 2020 despite increased pressure on cash flow generation due to highly competitive environment. Strong Capital Structure: Cielo has strong credit metrics and leverage remains low. In the LTM ended September 2018, net debt to adjusted EBITDA, including financial income derived from the acquisition of receivables from merchants, was 0.9x, in line with the average between 2016 and 2017. Fitch's projections indicate net leverage close to 1x in the upcoming years. As of September 30, 2018, Cielo had BRL10.2 billion of total debt, of which about 35% was denominated in foreign currency. DERIVATION SUMMARY Cielo is the leading company in Brazil's merchant acquiring and payment processing industry with an estimated market share of 51.1%. The second largest player is Redecard (controlled by Itau; not rated) with 33.1% market share and the third largest is GetNet (controlled by Santander; not rated) with 13.7%. Compared to small players, like Stone (not rated) and PagSeguro (not rated), the three leaders have a strong competitive advantage due to their controlling shareholders structure, as the affiliation with these leading banks gives them access to a broad customer base to acquire merchant accounts and creates high barriers to entry. As a characteristic of the industry in Brazil, Cielo has no direct credit exposure to cardholders, as the card-issuing bank guarantees cardholders' payment. Cielo's ratings incorporate the counterparty risks associated with the Brazilian banking system. Cielo has predictable revenue stream from a diversified base of affiliated merchants and has consistently reported strong cash flow generation. In general, players with lower scale of operations are more reliant on the financial income from the acquisition of receivables from merchants that could present more volatility, while Cielo has a diversified revenues stream. Cielo is also well positioned in terms of research and development in technology, reducing the risk of obsolete systems and frauds, while small players have higher technology risk. KEY ASSUMPTIONS Fitch's Key Assumptions Within Its Rating Case for the Issuer - Volume of credit and debit to increase by 5.0% in 2018 and 6% in 2019; - Annual investments of BRL500 million; - Lower revenues from point of sale (POS) rental due to higher competition and foreclosures of retail stores; - Acquisition of receivables from merchants between 18% and 19% of total credit value of transactions; - Dividends of 75% of net income. RATING SENSITIVITIES Developments That May, Individually or Collectively, Lead to Positive Rating Action - Ratings upgrades are not likely at this time. Developments That May, Individually or Collectively, Lead to Negative Rating Action - An increase in the volume of credit and debit transactions with banks rated 'BB-' and below without collateral being pledged by the card-issuing bank or not guaranteed by Mastercard; - Weakening credit profile of the main banks that operate with Cielo; - A significant loss due to fraud and charge-backs; - Tougher competition leading to a significant loss of market share and profitability; - Significant changes in regulatory risk; - A negative rating action on Brazil's sovereign ratings that leads to negative rating actions on Banco do Brasil, Bradesco, Caixa and Itau could result in negative rating action for Cielo. LIQUIDITY Strong Liquidity: Cielo's liquidity position is strong and cash flow generation capacity comfortably covers debt maturities. As of September 30, 2018, Cielo had cash and marketable securities of BRL4.3 billion and BRL1.1 billion of short-term debt. About 86% of total cash is invested in Brazil and 14% abroad. At September 30, 2018, the company had BRL1.1 billion of debt maturing up to the end of 2019, BRL2.2 billion in 2020 and BRL22 million in 2021. In 2018, Cielo amortized the last instalment of its debentures, totalling BRL1.6 billion. Fitch expects Cielo to continue to use operating cash flow generation to reduce total debt in the next couple of years. FULL LIST OF RATING ACTIONS Fitch has affirmed the following ratings: Cielo S.A. - Long-Term Foreign Currency IDR at 'BB+'; - Long-Term Local Currency IDR at 'BB+'; - Long Term National Scale at 'AAA(bra)'. The Rating Outlook for the corporate ratings is Stable. Cielo USA Inc. - USD875 million Senior Unsecured Notes due in 2022 at 'BB+'. The notes are fully guaranteed by Cielo S.A. ODEBRECHT ENGENHARIA: Moody's Cuts Corp. Family Rating to 'C' ------------------------------------------------------------- Moody's America Latina Ltda. downgraded to C.br from Caa2.br the corporate family rating assigned on its Brazilian National scale to Odebrecht Engenharia e Construcao S.A. At the same time, Moody's Investors Service downgraded to C from Caa2 the corporate family rating assigned on its global scale to OEC. Ratings downgraded: Issuer: Odebrecht Engenharia e Construcao S.A. (OEC) - Corporate Family Rating (National Scale Rating), Downgraded to C.br from Caa2.br Outlook Actions: Issuer: Odebrecht Engenharia e Construcao S.A. (OEC) No outlook assigned RATINGS RATIONALE The downgrade follows OEC's decision to not make the interest payment of approximately $12 million related to its $550 million 4.375% senior unsecured notes due 2025 on time. The company mentioned it will use its 30-day grace period to analyze alternatives for its short and long term financial position amidst a challenging market environment for the engineering and construction industry. Moody's views the missed payment as a signal that the company would likely pursue a deeper debt restructuring in the near term, with severe losses to creditors. OEC has been burning about $150 million in cash per quarter and as of June 2018 had $456 million in cash for a total debt amounting to $3.1 billion. Accordingly, OEC's capital structure is untenable vis-a-vis the company's current small size in terms of revenues, shrinking backlog and challenging industry prospects. Also liquidity is tight to service its debt while meeting its operating requirements. According to OEC, in the end of the second quarter of 2018 project backlog was reduced to about $9.8 billion from $12.1 billion in December 2017. The backlog reductions have been accompanied by large cash outlays, driven by delays in the collection of receivables, lower book-to-bill ratio reducing the volume of cash advances and foreign exchange losses, which jeopardized the company's liquidity position. The ratings could be upgraded if the company is able to strengthen its capital structure, improve its liquidity profile and meet financial obligations on a timely basis. OEC one of the largest engineering and construction company in Latin America, with $2.5 billion in net revenues in the last twelve months ended June 2018 and had an estimated project backlog of around $9.8 billion located in Brazil, other Latin American countries and Africa. OEC is a subsidiary of Odebrecht S.A., a family-owned investment holding company for one of the largest non-financial conglomerates in Brazil that controls Braskem S.A. (Ba1 stable), the largest chemical company in Latin America, along with other investments in the oil & gas, energy sectors, toll roads, water sewage concessions and real estate. The principal methodology used in this rating was Construction Industry published in March 2017. ODEBRECHT FINANCE: Moody's Cuts Sr. Unsec. Notes Rating to C ------------------------------------------------------------ Moody's Investors Service downgraded the foreign currency ratings assigned to the senior unsecured notes issued by Odebrecht Finance Ltd. and guaranteed by Odebrecht Engenharia e Construcao S.A. to C from Caa2. At the same time, Moody's has downgraded the corporate family rating assigned on its global scale to OEC to C from Caa2. Ratings downgraded: Issuer: Odebrecht Engenharia e Construcao S.A. (OEC) - Corporate Family Rating, Downgraded to C From Caa2 Issuer: Odebrecht Finance Ltd. - Backed Senior Unsecured Regular Bond/Debenture (Foreign Currency), Downgraded to C From Caa2 Outlook Actions: Issuer: Odebrecht Engenharia e Construcao S.A. (OEC) Issuer: Odebrecht Finance Ltd. No Outlook assigned RATINGS RATIONALE The downgrade to C follows OEC's decision to not make the interest payment of approximately $12 million related to its $550 million 4.375% senior unsecured notes due 2025 on time. The company mentioned it will use its 30-day grace period to analyze alternatives for its short and long term financial position amidst a challenging market environment for the engineering and construction industry. Moody's views the missed payment as a signal that the company would likely pursue a deeper debt restructuring in the near term, with severe losses to creditors. OEC has been burning about $150 million in cash per quarter and as of June 2018 had $456 million in cash for a total debt amounting to $3.1 billion. Accordingly, OEC's capital structure is untenable vis-a-vis the company's current small size in terms of revenues, shrinking backlog and challenging industry prospects. Also, liquidity is tight to service its debt while meeting its operating requirements. According to OEC, in the end of the second quarter of 2018 project backlog was reduced to about $9.8 billion from $12.1 billion in December 2017. The backlog reductions have been accompanied by large cash outlays, driven by delays in the collection of receivables, lower book-to-bill ratio reducing the volume of cash advances and foreign exchange losses, which jeopardized the company's liquidity position. The ratings could be upgraded if the company is able to strengthen its capital structure, improve its liquidity profile and meet financial obligations on a timely basis. OEC one of the largest engineering and construction company in Latin America, with $2.5 billion in net revenues in the last twelve months ended June 2018 and had an estimated project backlog of around $9.8 billion located in Brazil, other Latin American countries and Africa. OEC is a subsidiary of Odebrecht S.A., a family-owned investment holding company for one of the largest non-financial conglomerates in Brazil that controls Braskem S.A. (Ba1 stable), the largest chemical company in Latin America, along with other investments in the oil & gas, energy sectors, toll roads, water sewage concessions and real estate. The principal methodology used in these ratings was Construction Industry published in March 2017. ========= C H I L E ========= * CHILE: Will Join China's Belt and Road Initiative --------------------------------------------------- Chile is set to join China's mammoth global investment program, the Belt and Road Initiative, the Chilean foreign minister disclosed during a business forum in Beijing before confirming the news to EFE. Roberto Ampuero said Chile is set to sign a memorandum of understanding with the Chinese government to advance and develop the BRI in the context of bilateral relations. "It is a very important decision, also much anticipated by China, which was taken by (Chilean) President Sebastan Pinera," Ampuero told EFE during the inauguration of a "Chilean Week" in China. The minister said that the BRI was an additional element to strengthen comprehensive bilateral relations, which opens tremendous prospects of cooperation, especially in infrastructure. Ampuero dismissed the doubts expressed by some countries about joining the BRI -- due to the fear of their interests being dependent on Beijing -- by saying that Chile thoroughly analyzes agreements and only signed when it was convinced that the pact was in the country's interests. He added that China was Chile's main trade ally and said that Santiago was interested in strengthening these ties in different spheres. "One of the areas where we agree with China is defending multilateralism and free, open and transparent markets," the minister said, adding that the BRI will help them work at a better rhythm and within a broader conceptual framework. Chile's annual trade with China is worth nearly $35 billion, which amounts to around 26-27 percent of Chile's total foreign trade. Trade between the two countries has grown 37 percent this year. ============= J A M A I C A ============= UC RUSAL: Appoints New Chief Executive Officer ---------------------------------------------- RJR News reports that Windalco's parent company Russian aluminum giant UC Rusal has appointed a new chief executive officer after reporting a 42 per cent increase in third-quarter recurring net profit on the previous quarter as sanctions imposed by Washington were postponed. UC Rusal named Evgenii Nikitin, who has been acting chief executive officer since May, as CEO, according to RJR News. The report notes that Mr. Nikitin previously headed Rusal's aluminum division. The U.S. Treasury Department in April blacklisted billionaire Oleg Deripaska and eight companies in which he is a large shareholder, including Rusal, citing "malign activities" by Russia, the report says. The sanctions have been postponed several times as the United States considers excluding Rusal from the U.S. blacklist if Deripaska drops his control over the company, the report discloses. The deadline was last extended to December 12, the report adds. As reported in the Troubled Company Reporter-Latin America on April 18, 2018, Fitch Ratings revised the Rating Watch on Russia-based aluminium company United Company Rusal Plc's Long- Term Issuer Default Rating (IDR) of 'BB-', Short-Term IDR of 'B' as well as Rusal Capital D.A.C.'s senior unsecured rating of 'BB- '/'RR4' to Negative from Evolving. Fitch simultaneously withdrew all the ratings. ======= P E R U ======= VOLCAN COMPANIA: Moody's Upgrades CFR to Ba2, Outlook Stable ------------------------------------------------------------ Moody's Investors Service has upgraded to Ba2 from Ba3 the corporate family rating of Volcan Compania Minera S.A.A. y Subsidiarias and the rating of its senior unsecured notes due in February 2022. The outlook is stable. Rating Actions: Issuer: Volcan Compania Minera S.A.A. y Subsidiarias Corporate Family Rating: upgraded to Ba2 from Ba3 Senior unsecured notes due 2022: upgraded to Ba2 from Ba3 RATINGS RATIONALE The upgrade to Ba2 reflects Volcan's improvements in operating and liquidity profile over the past few quarters. Accordingly, the company increased the focus on profitability and cost reduction while investing in brownfield projects that will allow it to expand production and ore grades overtime. Besides, Glencore has become a controlling shareholder in November 2017, with positive implications to Volcan's strategy, operations, corporate governance standards and financial policies. Moody's expects that base metals prices in 2019 will be sustained close to average levels seen in 2017 and 2018, which, combined with ongoing cost reductions, will continue to support gradual deleveraging and a strengthening credit profile. Volcan's Ba2 ratings incorporate the company's competitive cost position, its operational diversity in terms of metals produced and number of mines (12 mines distributed in five operating units), and its position as a leading producer of zinc, silver and lead globally. The ratings continue to be constrained by the company's relative modest scale (revenues of USD 862 million in the 12 months ending June 2018) as compared to global peers and earnings volatility as a result of its exposure to commodity prices. The continued reliance on short term debt, with cash balances not enough to cover short term maturities, also constrains Volcan's ratings. The stable outlook is supported by its view that Volcan will be able to improve its liquidity by reducing the relative reliance on short term debt and sustain adequate credit metrics. The stable outlook also considers that Volcan's growth strategy will focus on brownfield projects, maintaining its discipline regarding costs, capex and dividend distribution. The outlook assumes that should prices retreat, the company will make the necessary adjustments in its operations and capital spending to maintain its financial profile. An upward rating movement would require Volcan to materially improve its liquidity cushion by reducing short-term debt levels, maintain its competitive cost position and continue to invest for growth, achieving higher size and scale, without jeopardizing its liquidity and credit metrics. An upgrade would also be dependent on the company maintaining strong cash flow metrics such as (CFO- Dividends)/debt remains above 30% on a sustained basis. Ratings could be negatively impacted if profitability and cash flow from operations weaken. A marked deterioration in the company's liquidity position could also precipitate a downgrade. Specifically, if EBIT margin falls below 12%, with negative free cash flow, ratings could be downgraded. Negative pressure could also result from increase in debt levels leading to total debt to EBITDA above 3x on a sustained basis. The principal methodology used in these ratings was Mining published in September 2018. Volcan is a Peruvian mining company with exploration, mining, concentrating and commercial operations. It primarily produces zinc and lead concentrate and some copper concentrate, all with high silver content. The company operates through five operational complexes with a total of 12 mines, 7 concentrate plants and one leaching plant for silver oxides production. All of Volcan's operations are located in Peru (A3 stable) and, for the LTM ended June 2018, it reported revenues of USD 862 million. Volcan is a holding company listed in the stock exchanges of Lima and Chile and in Madrid's Latibex. Since November 2017, Glencore plc (Baa2 positive) has a controlling stake of 55% in class A voting shares, equivalent to a 23.3% economic interest in Volcan. ====================== P U E R T O R I C O ====================== SEARS HOLDINGS: Weil Serves as Adviser in Chapter 11 Restructuring ------------------------------------------------------------------ Weil is representing Sears Holdings Corporation (Sears Holdings) and certain of its domestic affiliates (the Company) in their chapter 11 cases, which were recently commenced in the United States Bankruptcy Court for the Southern District of New York. Sears Holdings is the parent company of Sears, Roebuck and Co., one of America's most iconic companies. Sears Holdings currently operates approximately 687 stores in 49 states, Guam, Puerto Rico and the U.S. Virgin Islands under the Sears(R) and Kmart(R) banners, and employs almost 70,000 employees. Sears Holdings' balance sheet includes approximately $9 billion of debt. As part of its chapter 11 filing, Weil advised the Company on its entry into an emergency $300 million debtor-in-possession credit facility, and continues to advise the Company on its entry into a second debtor-in-possession credit facility that would provide the Company with an additional $300 million of liquidity. Sears Holdings hopes to sell its viable stores as a going concern pursuant to section 363 of the Bankruptcy Code and to complete its chapter 11 process as efficiently as possible. The Weil team representing Sears Holdings is led by Business Finance & Restructuring Department Co-Chair Ray C. Schrock, P.C., and partners Jacqueline Marcus, Garrett A. Fail, Sunny Singh and Ryan Preston Dahl, and counsel Matthew Goren. The team also includes U.S. Banking & Finance Head Douglas R. Urquhart; Capital Markets partner Corey Chivers; Public Company Advisory Group Co-Head Ellen J. Odoner; Securities Litigation Co-Head Joseph S. Allerhand and Litigation partners Greg A. Danilow, Paul R. Genender and Jared R. Friedmann; Mergers & Acquisitions partner Gavin Westerman and counsel Naomi Munz; Real Estate Co-Head W. Michael Bond and partner David Herman; Tax partners Stuart Goldring and Mark Hoenig; and Technology & IP Transactions Head Michael A. Epstein; Business Finance & Restructuring associates Jessica Liou, Arkady Goldinstein, Natasha Hwangpo, Paloma Van Groll, Bryan R. Podzius, Kyle R. Satterfield, Matthew Skrzynski, Jeri Leigh Miller, Phil DiDonato and Catherine Diktaban; Banking & Finance associates Sasha Shulzhenko, Steven J. LePorin, Anne-Marie Christoffersen-Deb, Phong T. Bui and Theodore Batis; Capital Markets associate Jonathan Goltser; Public Company Advisory Group associate Kaitlin Descovich; Mergers & Acquisition associates Ariel Simon, Hayden Guthrie and Kelsey Ann Pfleger; Tax associate Eric D. Remijan; and Technology & IP Transactions associates Meggin Bednarczyk and Lauren Springer. About Sears Holdings Sears Holdings Corporation (NASDAQ: SHLD) -- http://www.searsholdings.com/-- began as a mail ordering catalog company in 1887 and became the world's largest retailer in the 1960s. At its peak, Sears was present in almost every big mall across the U.S., and sold everything from toys and auto parts to mail-order homes. Sears claims to be is a market leader in the appliance, tool, lawn and garden, fitness equipment, and automotive repair and maintenance retail sectors. Sears and Kmart merged to form Sears Holdings in 2005 when they had 3,500 US stores between them. Kmart emerged in 2005 from its own bankruptcy. Unable to keep up with online stores and other brick-and-mortar retailers, a long series of store closings has left it with 687 retail stores in 49 states, Guam, Puerto Rico, and the U.S. Virgin Islands as of mid-October 2018. The Company employs 68,000 individuals, of whom 32,000 are full-time employees. As of Aug. 4, 2018, Sears Holdings had $6.93 billion in total assets, $11.33 billion in total liabilities and a total deficit of $4.40 billion. Unable to cover a $134 million debt payment due Oct. 15, 2018, Sears Holdings Corporation and 49 subsidiaries sought Chapter 11 protection (Bankr. S.D.N.Y. Lead Case No. 18-23538) on Oct. 15, 2018. The Hon. Robert D. Drain is the case judge. Weil, Gotshal & Manges LLP is serving as legal counsel, M-III Partners is serving as restructuring advisor and Lazard Freres & Co. LLC is serving as investment banker to Holdings. DLA Piper LLP is the real estate advisor. Prime Clerk is the claims and noticing agent. SEARS HOLDINGS: Seeks Court Approval of Stalking Horse Agreement ---------------------------------------------------------------- Sears Holdings Corporation on Nov. 3, 2018, disclosed that it has sought court approval of a "stalking horse" asset purchase agreement with Service.com to acquire the Sears Home Improvement business ("SHIP") in a sale process under Section 363 of the U.S. Bankruptcy Code. SHIP, which is based in Longwood, Florida, is a unit of the Sears Home Services division. "The sale of SHIP is an important step for Sears Holdings as we continue working to achieve a comprehensive restructuring," said Robert A. Riecker, Chief Financial Officer and member of the Office of the Chief Executive. "We look forward to completing this process expeditiously so that we can maximize the value of SHIP and ensure a seamless transition for all of our stakeholders." "Service.com is excited about the possibility of combining with SHIP," said Sandy Kronenberg, Chief Executive Officer of Service.com. "This would not have been feasible without the support of Peter Karmanos' MadDog Ventures." The transaction was approved by the Company's Restructuring Committee, which consists solely of independent directors. Under the agreement, which is subject to higher or better offers, Service.com intends to purchase SHIP for approximately $60 million in cash. Holdings intends to implement bid procedures to allow other qualified bidders the opportunity to submit competing bids through a court-supervised sale process. Interested bidders are encouraged to contact Lazard Frares & Co. LLC. The Company requested that the Court consider the proposed bid procedures on November 15 at 10:00 a.m. ET. The auction process and final agreement will be subject to the approval of the Court. In addition, completion of the transaction remains subject to customary closing conditions and regulatory approvals. Holdings anticipates that a sale will be completed by early January 2019. As previously announced, on October 15, 2018, Holdings and certain of its subsidiaries filed voluntary petitions for relief under Chapter 11 of the Bankruptcy Code in the U.S. Bankruptcy Court for the Southern District of New York. Additional information is available on the Company's restructuring website at restructuring.searsholdings.com. For Court filings and other documents related to the court-supervised process, please visit http://restructuring.primeclerk.com/sears,call (844) 384-4460 (for toll-free domestic calls) and +1 (929) 955-2419 (for tolled international calls), or email searsinfo@primeclerk.com. Advisors Weil, Gotshal & Manges LLP is serving as legal counsel, M-III Partners is serving as restructuring advisor and Lazard Frares & Co. LLC is serving as investment banker to Holdings. Sidley Austin LLP is serving as legal counsel and FINNEA Group LLC is serving as financial advisor to Service.com. About Sears Holdings Sears Holdings Corporation (NASDAQ: SHLD) (otc pink:SHLDQ) -- http://www.searsholdings.com/-- began as a mail ordering catalog company in 1887 and became the world's largest retailer in the 1960s. At its peak, Sears was present in almost every big mall across the U.S., and sold everything from toys and auto parts to mail-order homes. Sears claims to be is a market leader in the appliance, tool, lawn and garden, fitness equipment, and automotive repair and maintenance retail sectors. Sears and Kmart merged to form Sears Holdings in 2005 when they had 3,500 US stores between them. Kmart emerged in 2005 from its own bankruptcy. Unable to keep up with online stores and other brick-and-mortar retailers, a long series of store closings has left it with 687 retail stores in 49 states, Guam, Puerto Rico, and the U.S. Virgin Islands as of mid-October 2018. The Company employs 68,000 individuals, of whom 32,000 are full-time employees. As of Aug. 4, 2018, Sears Holdings had $6.93 billion in total assets, $11.33 billion in total liabilities and a total deficit of $4.40 billion. Unable to cover a $134 million debt payment due Oct. 15, 2018, Sears Holdings Corporation and 49 subsidiaries sought Chapter 11 protection (Bankr. S.D.N.Y. Lead Case No. 18-23538) on Oct. 15, 2018. The Hon. Robert D. Drain is the case judge. Weil, Gotshal & Manges LLP is serving as legal counsel, M-III Partners is serving as restructuring advisor and Lazard Freres & Co. LLC is serving as investment banker to Holdings. DLA Piper LLP is the real estate advisor. Prime Clerk is the claims and noticing agent. SEARS HOLDINGS: Taps Lazard Freres as Investment Banker ------------------------------------------------------- Sears Holdings Corporation and its debtor affiliates seek authority from the United States Bankruptcy Court for the Southern District of New York (White Plains) to hire Lazard Freres & Co. LLC as investment banker. Investment banking services Lazard will render are: (a) review and analyze the Debtors' assets, liabilities, business operations, financial statements, liquidity, financial condition, business plans, forecasts and financial projections; (b) evaluating the Debtors' potential debt capacity in light of its projected cash flows; (c) provide advice and assistance in analyzing and sensitizing the Debtors' financial projections based on alternative scenarios; (d) evaluate options relating to a Restructuring and/or other strategic alternatives for the Debtors; (e) assist in the determination of a capital structure for the Debtors'; (f) assist in the determination of a range of values for the Company on a going concern basis; (g) advise and assist the Debtors' on negotiating with the Stakeholders, including advising on tactics and strategies; (h) render financial advice to the Company and participating in meetings or negotiations with the Stakeholders and/or rating agencies or other appropriate parties in connection with any Restructuring; (i) advise the Company on the timing, nature, and terms of new securities, indebtedness or other consideration or other inducements to be offered pursuant to any Restructuring; (j) advise and assist the Debtors in evaluating any potential Financing by the Company, and, subject to Lazard's agreement to so act and, if requested by Lazard, to execution of appropriate agreements, on behalf of the Company, contacting potential sources of capital as the Company may designate and assisting the Company in implementing such Financing; (k) subject to Lazard's agreement so to act, assist the Debtors in identifying and evaluating candidates for any potential Sale Transaction, advising the Company in connection with negotiations and aiding in the consummation of any Sale Transaction; (l) assist the Company in preparing documentation within its area of expertise that is required with any Restructuring, and, if requested by the Company, any Financing, or Sale Transaction; for the avoidance of doubt, a Sale Transaction includes the process of identifying and evaluating candidates for any potential Sale Transaction, advising the Company in connection with negotiations and aiding in the consummation of any Sale Transaction; (m) attend meetings of the Board of Directors of the Company to discuss matters on which Lazard has been engaged to advise under the Engagement Letter; (n) prepare valuation analysis, if necessary, in connection with any Restructuring, and, if requested by the Company, any Financing or Sale Transaction (for which Lazard agreed to so act); (o) assist the Board of Directors of Sears Holdings Corporation in connection with the evaluation of any Restructuring, Financing or Sale Transaction; (p) provide testimony, as necessary, with respect to matters on which Lazard has been engaged to advise under the Engagement Letter in any proceeding before the Court; and (q) provide the Company with other financial restructuring advice or services as may from time to time be reasonably requested by the Company in connection with the foregoing. Lazard will be paid the following fees: (a) A monthly fee of $200,000 payable on October 15, 2018 and the fifteenth day of each month thereafter until the termination of Lazard's engagement. Fifty percent (50%) of all Monthly Fees paid beginning with the Monthly Fee earned on May 15, 2019 shall be credited once (without duplication) against any Restructuring Fee, Sale Transaction Fee or Financing Fee subsequently payable; provided, however, such credit shall be reduced to the extent such Restructuring Fee, Sale Transaction Fee or Financing Fee is not approved in full by the Court. (b) A fee, payable upon the consummation of a Restructuring, equal to 55.0 basis points (0.55%) of the principal amount of the Existing Obligations involved in such Restructuring (Restructuring Fee); provided, however, that the portion of any Existing Obligations owned by members of the Board of Directors of the Company or their controlled affiliates (including ESL) or either or both of the Company's pensions plans shall not be included when calculating the Restructuring Fee payable. (c) A fee, payable upon the consummation of a Financing, equal to 55.0 basis points (0.55%) of the aggregate principal amount of new securities, instruments or obligations of the Company (including the committed amount of any new committed revolving credit facilities) incurred in such Financing (Financing Fee); provided, however, that the portion of any such amount funded or committed by members of the Board of Directors of the Company or their controlled affiliates (including ESL) or either or both of the Company's pension plans shall not be included when calculating the Financing Fee payable; provided further that neither the consensual use of cash collateral not the consummation of a roll-up or roll-over portion of any credit facility shall in and of itself give rise to any Financing Fee; provided, further, that for any proposed "debtor-in-possession" Financing, the Financing Fee shall be earned and shall be payable upon execution of a definitive agreement with respect to the Financing. (d) A fee, payable upon consummation of a Sale Transaction, equal to 55.0 basis points (.55%) of the Aggregate Consideration (as defined on Schedule 2 to the Engagement Letter) paid in such Sale Transaction (Sale Transaction Fee); (e) In addition to any fees that may be payable to Lazard, and regardless of whether any transaction occurs, the Debtors shall promptly reimburse Lazard for all reasonable and reasonably documented or itemized expenses incurred by Lazard (including travel and lodging, data-processing and communications charges, courier services, and other expenditures) and the reasonable and documented fees and expenses of a single primary legal counsel, if any, retained by Lazard; provided that Lazard shall not be reimbursed for out-of-pocket expenses incurred in excess of $50,000 in the aggregate absent express prior written consent of the Debtors, which consent shall not be unreasonably withheld. For the avoidance of any doubt, the expense limitations set forth in this subparagraph shall not apply to the Indemnification Letter. Brandon Aebersold, managing director of Lazard, disclosed in a court filing that the firm is "disinterested" as defined in Section 101(14) of the Bankruptcy Code. The firm can be reached through: Brandon Aebersold LAZARD FRERES & CO. LLC 30 Rockefeller Plaza New York, NY 10020 Phone: +1 212-632-6000 About Sears Holdings Sears Holdings Corporation (NASDAQ: SHLD) -- http://www.searsholdings.com/-- began as a mail ordering catalog company in 1887 and became the world's largest retailer in the 1960s. At its peak, Sears was present in almost every big mall across the U.S., and sold everything from toys and auto parts to mail-order homes. Sears claims to be is a market leader in the appliance, tool, lawn and garden, fitness equipment, and automotive repair and maintenance retail sectors. Sears and Kmart merged to form Sears Holdings in 2005 when they had 3,500 US stores between them. Kmart emerged in 2005 from its own bankruptcy. Unable to keep up with online stores and other brick-and-mortar retailers, a long series of store closings has left it with 687 retail stores in 49 states, Guam, Puerto Rico, and the U.S. Virgin Islands as of mid-October 2018. The Company employs 68,000 individuals, of whom 32,000 are full-time employees. As of Aug. 4, 2018, Sears Holdings had $6.93 billion in total assets, $11.33 billion in total liabilities and a total deficit of $4.40 billion. Unable to cover a $134 million debt payment due Oct. 15, 2018, Sears Holdings Corporation and 49 subsidiaries sought Chapter 11 protection (Bankr. S.D.N.Y. Lead Case No. 18-23538) on Oct. 15, 2018. The Hon. Robert D. Drain is the case judge. Weil, Gotshal & Manges LLP is serving as legal counsel, M-III Partners is serving as restructuring advisor and Lazard Freres & Co. LLC is serving as investment banker to Holdings. DLA Piper LLP is the real estate advisor. Prime Clerk is the claims and noticing agent. SEARS HOLDINGS: Taps Weil Gotshal & Manges as Legal Counsel ----------------------------------------------------------- Sears Holdings Corporation and its debtor affiliates seek authority from the United States Bankruptcy Court for the Southern District of New York (White Plains) to hire Weil, Gotshal & Manges LLP as attorneys. Sears requires Weil Gotshal to: a. take all necessary actions to protect and preserve the Debtors' estates, including the prosecution of actions on the Debtors' behalf, the defense of any actions commenced against the Debtors, the negotiation of disputes in which the Debtors are involved and the preparation of objections to claims filed against the Debtors' estates; b. prepare on behalf of the Debtors, as debtors in possession, all necessary motions, applications, answers, orders, reports and other papers in connection with the administration of the Debtors' estates; c. take all necessary actions in connection with any chapter 11 plan and related disclosure statement and all related documents, and such further actions as may be required in connection with the administration of the Debtors' estates; d. take all necessary actions to protect and preserve the value of the Debtors' estates, including advising with respect to the Debtors' non-debtor subsidiaries and all related matters; and e. perform all other reasonable or necessary legal services in connection with the prosecution of these chapter 11 cases. In accordance with Appendix B-Guidelines for reviewing fee applications filed by attorneys in larger Chapter 11 cases, Mr. Schrock disclosed that his firm has not agreed to any variations from, or alternatives to, its standard or customary billing arrangements; and that no Weil professional varied his rate based on the geographic location of the cases. Weil Gotshal will be paid at these hourly rates: Members & Counsel $1,075 to $1,600 Associates $560 to $995 Paraprofessionals $240 to $420 Weil Gotshal will also be reimbursed for reasonable out-of-pocket expenses incurred. Ray Schrock, Esq., a Weil, Gotshal & Manges LLP, 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: Ray C. Schrock, P.C. Matthew S. Barr, Esq. Sunny Singh, Esq. WEIL, GOTSHAL & MANGES LLP 767 Fifth Avenue New York, New York 10153 Tel: (212) 310-8000 Fax: (212) 310-8007 E-mail: sunny.singh@weil.com E-mail: ray.schrock@weil.com About Sears Holdings Sears Holdings Corporation (NASDAQ: SHLD) -- http://www.searsholdings.com/-- began as a mail ordering catalog company in 1887 and became the world's largest retailer in the 1960s. At its peak, Sears was present in almost every big mall across the U.S., and sold everything from toys and auto parts to mail-order homes. Sears claims to be is a market leader in the appliance, tool, lawn and garden, fitness equipment, and automotive repair and maintenance retail sectors. Sears and Kmart merged to form Sears Holdings in 2005 when they had 3,500 US stores between them. Kmart emerged in 2005 from its own bankruptcy. Unable to keep up with online stores and other brick-and-mortar retailers, a long series of store closings has left it with 687 retail stores in 49 states, Guam, Puerto Rico, and the U.S. Virgin Islands as of mid-October 2018. The Company employs 68,000 individuals, of whom 32,000 are full-time employees. As of Aug. 4, 2018, Sears Holdings had $6.93 billion in total assets, $11.33 billion in total liabilities and a total deficit of $4.40 billion. Unable to cover a $134 million debt payment due Oct. 15, 2018, Sears Holdings Corporation and 49 subsidiaries sought Chapter 11 protection (Bankr. S.D.N.Y. Lead Case No. 18-23538) on Oct. 15, 2018. The Hon. Robert D. Drain is the case judge. Weil, Gotshal & Manges LLP is serving as legal counsel, M-III Partners is serving as restructuring advisor and Lazard Freres & Co. LLC is serving as investment banker to Holdings. DLA Piper LLP is the real estate advisor. Prime Clerk is the claims and noticing agent. =============== S T. L U C I A =============== SANDALS RESORTS: Suspends Construction On Fourth Hotel ------------------------------------------------------ RJR News reports that Sandals Resorts International has suspended construction on what was to be its fourth hotel in St Lucia. This is pending the outcome of court action taken by The Landings Resort, according to RJR News. The Landings obtained an injunction to settle a dispute with Sandals resorts over a small portion of land that St. Lucia's Tourism Minister Dominic Fedee said may have to do with the encroachment of a drain, the report notes. Legal action was taken shortly after Sandals Resorts broke ground on the Pigeon Island site in May, the report says. Because of delays caused by having to address this legal action, Sandals said it decided to end the employment of its 37-member Projects Management Team and sub-contractors who were already engaged on the site, the report adds. ================= V E N E Z U E L A ================= VENEZUELA: Wants $550M Worth of Gold Back From the Bank of England ------------------------------------------------------------------ Business Insider reports that the deepening economic crisis in Venezuela means the government really wants to repatriate its gold reserves, worth more than $500 million. Reuters reported that Venezuelan authorities had approached the Bank of England about getting back approximately 15 tons of gold bullion held in the bank's vaults, according to Business Insider. It's common for emerging-market governments to store gold within the central banks of more developed economies, the report relays. Citing two sources with direct knowledge of the operation, Reuters said that the plans related to recently announced sanctions by the US aimed at disrupting the South American country's gold exports, the report notes. President Donald Trump signed an executive order to bar US persons from dealing with entities and people involved with "corrupt or deceptive" gold sales from Venezuela, the report adds. As reported in the Troubled Company Reporter-Latin America on June 1, 2018, S&P Global Ratings, in May 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'. ================= X X X X X X X X X ================= LATAM: Turns to Sustainable Ranching in Face of Climate Change -------------------------------------------------------------- Alianza News reports that reducing greenhouse gas emissions and halting deforestation are the principal goals being pursued with sustainable livestock production in Latin America -- that was the takeaway from a meeting held in Asuncion. In the UN-organized forum "Sustainable Livestock and Forests," officials, ranchers and representatives of NGOs from 11 Latin American countries, including Argentina and Brazil, discussed the importance of ranching in a way that respects the environment, according to Alianza News. Linda Maguire, the UN resident coordinator in Paraguay, said that achieving these goals must be based on talks among the different sectors involved, given that in this field there is "no good way or bad way," but rather solutions must be reached by consensus, the report notes. The report relays that Ms. Maguire said one of the subjects discussed was how to deal with the growing global demand for food supplies without damaging the environment, since that will put "greater pressure on developing countries." She advocated "making livestock production more efficient without using more land." The protection of woodlands was the central theme of the discussions, given that the extensive use of land for grazing means more deforestation, which in turn increases the negative effects of climate change, the report says. The Paraguayan minister of Environment and Sustainable Development, Ariel Oviedo, told EFE that, at a local level, the government's goal is to work jointly with organizations and livestock producers so they become the ones who protect the forests. Mr. Oviedo noted that recently "some ranchers in Alto Paraguay province have taken on the ambitious goal of preserving 50 percent" of the woodlands on their properties, the report notes. He said the licenses issued by the Paraguayan government to the sector obliges landowners to keep unspoiled at least 25 percent of their forests, the report 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. . * * * End of Transmission * * *