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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, December 13, 2018, Vol. 19, No. 246
Headlines
B R A Z I L
AVIANCA BRASIL: For Bankruptcy, Citing Jet Repossession Threat
D O M I N I C A N R E P U B L I C
DOMINICAN REPUBLIC: One Step Closer to Natural Gas
DOMINICAN REPUBLIC: Aims to Sell 50% of Power Plant in Scandal
M E X I C O
MEXICO: Estimates 1,100 Migrants Crossed Border Into US
P U E R T O R I C O
AQUAMAR POOL: Unsecureds to Receive 100% Over 7 Years
AQUAMAR POOL: Dec. 27 Disclosure Statement Hearing
LUBY'S INC: Bandera Demands Production of Books and Records
V E N E Z U E L A
PETROLEOS DE VENEZUELA: Texan Pleads Guilty to Conspiracy
VENEZUELA: Deals to Shield Citgo From Creditors Now in Doubt
GOODYEAR: Employees Given Tyres as Part of Severance Payment
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B R A Z I L
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AVIANCA BRASIL: For Bankruptcy, Citing Jet Repossession Threat
--------------------------------------------------------------
Ana Mano and Marcelo Rochabrun at Reuters report that Brazil's
fourth-largest airline, Avianca Brasil, filed for bankruptcy
protection, saying its operations had been threatened by potential
repossession of aircraft, which could prevent the carrier from
continuing to operate.
The unlisted airline said in its bankruptcy filing that leasing
companies seeking to take back some 30 percent of its all-Airbus
fleet threatened its ability to fly some 77,000 passengers in
December, according to Reuters.
Avianca said in a statement that the bankruptcy filing resulted
from a failure to reach a "friendly agreement." It also said its
flights would not be affected, the report relays.
The aircraft are still under Avianca Brasil's control for now and
it remains unclear what their fate will be as the carrier is
asking a Brazilian court to allow it to keep the planes for now,
the report notes.
The report discloses that the airline said in the filing it
largely blamed high fuel prices and a strong dollar for its
troubles.
Latin American airlines, which have to pay a large part of their
routine expenses -- including fuel -- in dollars while billing
their customers in more volatile currencies such as Brazil's real
and Argentina's peso, have struggled in general this year, the
report relays.
Avianca Brasil is owned by holding company Synergy Group, which
also controls the better-known Avianca Holdings SA AVT_p.CN, a
publicly listed airline based in Colombia, the report notes.
Still, the fate of one company is linked to the other, the report
says.
Shares in Colombia's Avianca fell as much as 25 percent on the
news before later paring losses to 2 percent, the report says.
Shares in rivals Gol Linhas Aereas Inteligentes SA and Latam
Airlines Group SA closed up 13 percent and 4 percent respectively
on Dec. 12.
The bankruptcy filing did not give information regarding Avianca
Brasil's assets and liabilities. But it did say the carrier faces
three lawsuits from aircraft lessors totaling 14 planes.
One lessor, Aircastle Ltd (AYR.N), which was not mentioned in the
bankruptcy filing, said that it had terminated leases for 11
aircraft Avianca Brasil was flying and had begun "exercising
remedies" to repossess them, the report relays.
"Avianca Brasil has had issues, and many investors were expecting
the company to renegotiate its leases," analysts at Cowen Equity
Research said in a research note about Aircastle, the report
discloses.
The airline added that Brazil's aviation regulator, ANAC, could
force it to stop issuing tickets to passengers while it resolves
its woes, a measure that "would dramatically affect (our) cash
flow," the report notes.
ANAC said in a statement that it had yet to be informed of the
bankruptcy filing and was asking Avianca Brasil for clarifications
about any possible impact on passengers, the report says.
The airline has struggled for years with recurrent losses and it
first publicly faced the prospect of repossession of several of
its aircraft, the report discloses. The airline said at the time
that it was seeking to renegotiate its contracts, the report says.
"The company insists that its operations continue normally and
have not -- and will not -- be impacted," a representative said,
the report relays.
Brazil and Colombia are both signatories to the Capetown
Convention which first took effect for aircraft in 2006 and which
protects the right of leasing companies to recover assets by
asking for aircraft to be delisted from the national register when
an airline is in default, the report discloses.
The treaty facilitates access to cheaper aircraft finance for
countries accepting this regime. Brazil joined up in 2011, the
report says.
Avianca Brasil will have 60 days to present a plan to creditors
and the carrier would remain under court supervision for two
years, said lawyer Laura Bumachar, a partner at Dias Carneiro
Advogados, the report adds.
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D O M I N I C A N R E P U B L I C
===================================
DOMINICAN REPUBLIC: One Step Closer to Natural Gas
--------------------------------------------------
RJR News reports that residents of the village La Guasuma are
stunned by a well which spews a reportedly inflammable mist-
apparently natural gas-in northern Hermanas Mirabal province.
Government technicians arrived at the site to determine what it's
about, though estimate that it has a hydrocarbon component,
according to RJR News.
The gas arises from a well dug by employees on a farm owned by
Julio Cabrera to supply water to a farm of laying hens, the report
relays.
Farm manager, Derlin Paulino told Diario Libre that during the
excavation they noticed an unusual humidity and that someone told
him it was a hydrocarbon, the report relays.
He said when they lit a match and hurled it into the pit it
unleashed a powerful flame, the report notes.
The Energy and Mines Ministry has posted two soldiers at the site
to keep out onlookers, the report says.
The technicians who are taking samples didn't rule out the
presence of natural gas, the report adds.
As reported in the Troubled Company Reporter-Latin America on
Sept. 24, 2018, Fitch Ratings affirmed Dominican Republic's
Long-Term, Foreign-Currency Issuer Default Rating (IDR) at 'BB-'
with a Stable Outlook.
DOMINICAN REPUBLIC: Aims to Sell 50% of Power Plant in Scandal
--------------------------------------------------------------
RJR News reports that Dominican Republic Finance Minister Donald
Guerrero revealed that the Government aims to sell up to a 50
percent stake in the nearly finished Punta Catalina power plant in
Peravia province (south).
The facility being built by the consortium Odebrecht-Technimont-
Estrella forms part of the Odebrecht US$94.0 million graft case,
according to RJR News.
The official said that it wouldn't be in the bill that authorizes
the Executive Branch to issue bonds of debt for up to RD$190.0
billion (US$3.8 billion), the proposal in an article that asks
authorization to sell shares of public companies for funds of up
to 5% of the debt of the non-financial public sector, the report
relays.
"This component, similar to Article 59 of the draft of the 2019
Budget that requested authorization to sell shares of public
companies for up to 10 percent of the debt of the non-financial
public sector, had the purpose of enabling the sale of part of the
shares of the Punta Catalina power plant," the report quoted Mr.
Guerrero as saying.
The official provided the figures during the meetings with the
Bicameral Commission that studied the legislative initiative, the
report relays.
Mr. Guerrero also attended a meeting with the Senate Finance
Committee together with the Budget Director, Luis Reyes.
As reported in the Troubled Company Reporter-Latin America on
Sept. 24, 2018, Fitch Ratings affirmed Dominican Republic's
Long-Term, Foreign-Currency Issuer Default Rating (IDR) at 'BB-'
with a Stable Outlook.
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M E X I C O
===========
MEXICO: Estimates 1,100 Migrants Crossed Border Into US
-------------------------------------------------------
EFE News reports that some 1,100 migrants of the Central American
caravan could have crossed into the United States, according to
Mexican government estimates.
At a press conference, Mexico's Interior Secretariat (Segob)
reported that, of the thousands of migrants who in recent weeks
have entered the country as parts of different contingents, around
6,000 reached the border city of Tijuana and about 1,200 arrived
at Mexicali in the state of Baja California, according to EFE
News.
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P U E R T O R I C O
======================
AQUAMAR POOL: Unsecureds to Receive 100% Over 7 Years
-----------------------------------------------------
Aquamar Pool Supplies, Inc., filed a small business plan of
reorganization and accompanying disclosure statement proposing
that priority unsecured creditors will receive a distribution of
no less than 100% of their allowed claims over a period of five
years while general unsecured creditors will be paid over a period
of seven years after priority claims are paid.
General unsecured claims are not secured by property of the estate
and are not entitled to priority.
Payments and distributions under the Plan will be funded by income
generated from the sales of pool supplies And pool maintenance
performed by debtor.
A full-text copy of the Disclosure Statement dated November 26,
2018, is available at:
http://bankrupt.com/misc/prb18-181753-38.pdf
Attorney for Debtor:
Robert Millan, Esq.
Millan Law Offices
Calle San Jose #250
San Juan, PR 00901-0000
Tel: (787) 725-0946
Fax: (787) 579-1533
Email: rmi3183180@aol.com
About Aquamar Pool Supplies
Aquamar Pool Supplies Inc. sought protection under Chapter 11 of
the Bankruptcy Code (Bankr. D.P.R. Case No. 18-01753) on March 30,
2018. At the time of the filing, the Debtor estimated assets of
less than $50,000 and liabilities of less than $500,000. Judge
Enrique S. Lamoutte Inclan presides over the case.
AQUAMAR POOL: Dec. 27 Disclosure Statement Hearing
--------------------------------------------------
Judge Enrique S. Lamoutte of the U.S. Bankruptcy Court for the
District of Puerto Rico conditionally approved the disclosure
statement explaining Aquamar Pool Supplies Inc.'s plan.
A hearing for the consideration of the final approval of the
Disclosure Statement and the confirmation of the Plan and of such
objections as may be made will be held on December 27, 2018, at
9:30 A.M.
The acceptances or rejections of the Plan may be filed in writing
by the holders of all claims on/or before 10 days prior to the
date of the hearing on confirmation of the Plan.
About Aquamar Pool Supplies
Aquamar Pool Supplies Inc. sought protection under Chapter 11 of
the Bankruptcy Code (Bankr. D.P.R. Case No. 18-01753) on March 30,
2018. At the time of the filing, the Debtor estimated assets of
less than $50,000 and liabilities of less than $500,000. Judge
Enrique S. Lamoutte Inclan presides over the case.
LUBY'S INC: Bandera Demands Production of Books and Records
-----------------------------------------------------------
Bandera Master Fund L.P. delivered on Dec. 6, 2018, a letter to
Luby's, Inc., pursuant to Section 220 of the Delaware General
Corporation Law, demanding production of certain of the Company's
books and records to allow Bandera to identify and communicate
with other shareholders of the Issuer for proxy solicitation
purposes. As previously disclosed, Bandera delivered a letter to
the Company's Board of Directors on Nov. 27, 2018, expressing its
intent to nominate up to six candidates for election to Luby's
Board of Directors at the 2019 Annual Meeting of Shareholders.
As of Dec. 10, 2018, Bandera Master Fund L.P. beneficially owned
2,901,000 shares of common stock of Luby's, constituting
approximately 9.8% of the Shares outstanding. By virtue of their
respective relationships with Bandera Master Fund, each of Bandera
Partners LLC, Gregory Bylinsky, and Jefferson Gramm may be deemed
to beneficially own the Shares owned directly by the Master Fund.
As of Dec. 10, 2018, Mr. Gramm beneficially and directly owned
10,000 Shares, constituting less than 1% of the Shares
outstanding.
The aggregate percentage of Shares reported owned by each person
is based upon 29,550,002 shares of Common Stock outstanding, which
is the total number of shares of Common Stock outstanding as of
Nov. 7, 2018 as reported in the Issuer's Annual Report on
Form 10-K/A filed with the SEC on Nov. 30, 2018.
A full-text copy of the regulatory filing is available for free
at https://is.gd/asIWP6
About Luby's
Houston, Texas- based Luby's, Inc. (NYSE: LUB) --
http://www.lubysinc.com/-- operates 142 restaurants nationally as
of Nov. 7, 2018: 82 Luby's Cafeterias, 59 Fuddruckers, and 1
Cheeseburger in Paradise. The Company is also the franchisor for
104 Fuddruckers franchise locations across the United States
(including Puerto Rico), Canada, Mexico, Panama, and Colombia.
Luby's Culinary Contract Services provides food service management
to 30 sites consisting of healthcare, higher education, sport
stadiums, and corporate dining locations as of Nov. 7, 2018.
Luby's reported a net loss of $33.56 million for the year ended
Aug. 29, 2018, compared to a net loss of $23.26 million for the
year ended Aug. 30, 2017. As of Aug. 29, 2018, Luby's had $199.98
million in total assets, $87.36 million in total liabilities, and
$112.6 million in total shareholders' equity.
Grant Thornton LLP, in Houston, Texas, issued a "going concern"
qualification in its report on the consolidated financial
statements for the year ended Aug. 29, 2018, noting that the
Company sustained a net loss of approximately $33.6 million and
net cash used in operating activities of approximately $8.5
million. The Company's term and revolving debt of approximately
$39.5 million is due May 1, 2019. The Company was in default of
certain debt covenants of its term and revolving credit agreements
maturing on May 1, 2019. On Aug. 24, 2018, the lenders agreed to
waive the existing events of default resulting from any breach of
certain financial covenants or the limitation on maintenance
capital expenditures, in each case that may have occurred during
the period from and including May 9, 2018 until Aug. 24, 2018, and
any related events of default. Additionally, the lenders agreed
to waive the requirements that the Company comply with certain
financial covenants until Dec. 31, 2018, at which time the Company
will be in default without an additional waiver or alternative
financing. These conditions, along with other matters, raise
substantial doubt about the Company's ability to continue as a
going concern.
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V E N E Z U E L A
=================
PETROLEOS DE VENEZUELA: Texan Pleads Guilty to Conspiracy
---------------------------------------------------------
A former procurement officer of Venezuela's state-owned and state-
controlled energy company, Petroleos de Venezuela S.A. (PDVSA),
pleaded guilty for his role in a scheme to obstruct an
investigation relating to bribes paid by the owner of U.S.-based
companies to Venezuelan government officials in exchange for
securing additional business with PDVSA and payment priority on
outstanding invoices.
Alfonso Eliezer Gravina Munoz, 56, of Katy, Texas -- who
previously worked for PDVSA in Houston -- pleaded guilty to one
count of conspiracy to obstruct an official proceeding. Gravina is
scheduled to be sentenced on Feb. 19, 2019.
U.S. Attorney Ryan K. Patrick, Assistant Attorney General Brian A.
Benczkowski of the Justice Department's Criminal Division and
Special Agent in Charge Mark Dawson, U.S. Immigration and Customs
Enforcement's (ICE) Homeland Security Investigations (HSI) Houston
made the announcement.
HSI Houston is conducting the ongoing investigation with
assistance from HSI Boston and HSI Madrid, as well as the IRS -
Criminal Investigation Division. Assistant U.S. Attorneys (AUSAs)
John P. Pearson and Robert S. Johnson of the Southern District of
Texas are prosecuting the case along with Trial Attorneys Sarah E.
Edwards and Sonali D. Patel of the Criminal Division's Fraud
Section. AUSA Kristine Rollinson is handling the forfeiture
aspects of the case.
Gravina pleaded guilty to one count of conspiracy to launder money
and one count of making false statements on his federal income tax
return. Gravina's plea agreement in that case was a cooperation
plea agreement, which contemplated the possibility the United
States would make a motion to reduce his sentence based on his
cooperation. Under the terms of the plea agreement, Gravina agreed
to participate in interviews as requested by the United States and
to provide "truthful, complete and accurate information" to
government agents and attorneys.
According to admissions made in connection with Gravina's plea in
this case, Gravina met periodically with HSI special agents to
provide information regarding corruption at PDVSA. Gravina knew
U.S. government authorities were investigating corruption at PDVSA
and that at the beginning of 2018, the government was focusing on
bribes paid by companies controlled by an individual referred to
as co-conspirator 1. However, Gravina concealed facts about co-
conspirator 1's bribe payments to PDVSA officials in his
interviews with the government. In addition, Gravina informed co-
conspirator 1 that U.S. government authorities were investigating
co-conspirator 1 and provided that person with information about
the investigation, including the topics discussed in Gravina's
meetings with the government. This passing of information led to
co-conspirator 1 and others destroying evidence and co-conspirator
1 attempting to flee the country in July 2018.
Gravina becomes the latest individual to plead guilty as part of a
larger, ongoing investigation by the U.S. government into bribery
at PDVSA. Including Gravina, the Justice Department has announced
the guilty pleas of a total of 15 individuals in connection with
the investigation.
As reported in the Troubled Company Reporter-Latin America on
Aug. 24, 2018, S&P Global Ratings affirmed its 'SD' global scale
issuer credit rating and 'D' issue-level ratings on Petroleos de
Venezuela S.A. (PDVSA).
VENEZUELA: Deals to Shield Citgo From Creditors Now in Doubt
------------------------------------------------------------
Tom Hals at Reuters reports that Venezuela is facing the possible
unraveling of a pair of billion-dollar settlements aimed at
protecting the cash-strapped country's U.S.-based Citgo Petroleum
Corp from seizure by creditors.
A lawyer for Canadian mining company Crystallex International Corp
said Venezuela had breached the $1.4 billion November agreement
that resolved a long-running fight over an expropriated gold mine,
according to Reuters.
Separately, Venezuela's $1.3 billion settlement in October with
Rusoro Mining of Vancouver, also over expropriated mining assets,
has been upended by U.S. sanctions on Caracas, a source told
Reuters.
Both companies had their sights on getting a U.S. court order to
auction the parent company of Citgo, which is indirectly owned by
Venezuela through its state oil company, Petroleos de
Venezuela S.A. (PDVSA), the report relays.
While Venezuela has been crippled by an economic crisis and has
defaulted on tens of billions of dollars of debt, it has struck
deals to protect Citgo's refineries, a key destination for
Venezuela's crude, the report notes.
Crystallex attorney Robert Weigel said in a statement that
Venezuela breached its agreement because PDVSA continued to try to
overturn a court order that allowed Crystallex to seize the stock
in Citgo's parent company, the report relays.
A lawyer for PDVSA disputed that a filing with a federal appeals
court amounted to a breach, the report notes.
"As far as I'm aware, PDVSA is not a party to a settlement with
Crystallex," said Joseph Pizzurro, the Curtis, Mallet-Prevost,
Colt & Mosle, the report says.
Crystallex plans to restart efforts to auction Citgo, according to
Weigel, of Gibson, Dunn & Crutcher, the report notes.
Crystallex also hired the Moelis & Company investment bank to
advise it on a possible sale of Citgo, although that process has
been stayed during the appeal by Venezuela and PDVSA, the report
discloses.
Rusoro's deal in October required Venezuela to pay $100 million by
the end of November, the report relays. Caracas transferred some
of that payment to a Canadian bank which returned the funds to
Venezuela due to concerns about violating U.S. sanctions, a source
familiar with the situation told Reuters.
Sanctions have become a headline concern since Meng Wanzhou, the
chief financial officer of China's telecoms giant Huawei
Technologies Co Ltd, was arrested in Canada on Dec. 1 at the
request of U.S. authorities, Reuters relays.
Ms. Meng, the 46-year-old daughter of Huawei's founder, was
accused of misleading multinational banks about Huawei's business
in Iran, putting the banks at risk of violating U.S. sanctions
against Iran, court documents said, 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'.
GOODYEAR: Employees Given Tyres as Part of Severance Payment
------------------------------------------------------------
RJR News reports that Goodyear employees in Venezuela are each to
be given 10 tires as part of their severance payment, as the US
firm halts operations in the country.
Quality tires are valuable on the black market, in a country where
there is a chronic shortage of all types of goods, according to
RJR News.
The report relays that a number of foreign firms have pulled out
of Venezuela, citing a growing economic crisis and US sanctions.
President Nicolas Maduro has accused his opponents and the US of
waging an "economic war" on his government, 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'.
***********
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***********
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.
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contact Peter A. Chapman at 215-945-7000.
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