/raid1/www/Hosts/bankrupt/TCRLA_Public/190116.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, January 16, 2019, Vol. 20, No. 11
Headlines
A R G E N T I N A
BUENOS AIRES: Moody's Rates 2019 Treasury Note Program (P)B2
B R A Z I L
AVIANCA BRASIL: Lessor Set to Seize 20% of Airline's Fleet
ELDORADO BRASIL: Moody's Assigns Ba3 CFR, Outlook Stable
ST. MARY'S CEMENT: S&P Rates New Senior Unsecured Notes 'BB+'
C O L O M B I A
TERMOCANDELARIA POWER: Fitch Publishes BB+ LT IDRs, Outlook Stable
D O M I N I C A N R E P U B L I C
DOMINICAN REPUBLIC: Wants Venezuela's 49% Stake in Only Refinery
M E X I C O
MEXICO: Caribbean Beaches Face Another Seaweed Invasion
P U E R T O R I C O
DEL MAR ENTERPRISES: Claims Reconciliation Process Delays Plan
SEARS HOLDINGS: ESL Ups Bid to $5 Billion
T R I N I D A D & T O B A G O
TSTT: Gov't. to Cancel CCTV Coverage Arrangement
V E N E Z U E L A
VENEZUELA: Bondholder Group Sends Envoy to Caracas for Debt Talks
- - - - -
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A R G E N T I N A
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BUENOS AIRES: Moody's Rates 2019 Treasury Note Program (P)B2
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Moody's Latin America Agente de Calificacion de Riesgo has
assigned a (P)B2 -Global Scale local currency debt rating- and an
A3.ar --National Scale in local currency- to the 2019 Treasury
Note Program of the Province of Buenos Aires. The ratings are in
line with the province's long term foreign currency issuer
ratings, which carry a stable outlook.
RATINGS RATIONALE
The Treasury Note Program has been authorized by the province's
2019 law Nß15.077 and by the Supplementary Budgetary Law, whereas
Resolution 11/2019 of the provincial General Treasury set the
general issuance conditions of the series within the program and
its maximum amount. The treasury notes to be issued under this
program will be secured by the Province, possibly affecting any
provincial resource without specific allocation and/or any
resource coming from the federal tax-sharing regime.
The assigned debt ratings reflect Moody's view that the
willingness and capacity of the Province of Buenos Aires to honor
these treasury notes is in line with the provincial's long-term
credit quality as reflected in the B2/A3.ar issuer ratings in
local currency.
The maximum issuance amount authorized under the program is
ARS19,862 million or its equivalent in foreign currency, which
represents 2% of the total revenues budgeted for 2019.
The Province of Buenos Aires intends to issue monthly Series of
Treasury Notes in public tenders or in private placements in the
domestic market starting in the current month of January. Each
series of notes could have different issuance terms and
conditions.
The assigned (P)B2/A3.ar ratings to the Treasury Note Program are
based on preliminary documentation received by Moody's as of the
rating assignment date. Moody's does not expect changes to the
documentation reviewed over this period, nor does it anticipate
changes in the main conditions that the Notes will carry. Should
issuance conditions and/or final documentation of the program
deviate from the original ones submitted and reviewed by the
rating agency, Moody's will assess the impact that these
differences may have on the ratings and act accordingly.
WHAT COULD CHANGE THE RATING UP/DOWN
An upgrade of Argentina's sovereign rating or a systemic
improvement, or both, along with lower idiosyncratic risks arising
from this province (that is, for instance, a sustained record of
operating surpluses), could exert upward pressure on the
province's current issuer and debt ratings.
A downgrade of Argentina's bond rating or a deterioration in the
province's liquidity hindering its ability to service its short-
term debt service payments in foreign currency, or both, could
exert downward ratings pressure. In addition, if the province
records a deterioration in its operating and financial results,
leading to higher-than-expected debt levels, its issuer and debt
ratings could be downgraded.
The principal methodology used in this rating was Regional and
Local Governments published in January 2018.
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B R A Z I L
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AVIANCA BRASIL: Lessor Set to Seize 20% of Airline's Fleet
----------------------------------------------------------
Marcelo Rochabrun at Reuters reports that Aircastle is set to
repossess 10 jets from Avianca Brasil, the country's No. 4
airline, after a bankruptcy hearing, a source familiar with the
matter said, potentially disrupting flights for thousands of
passengers.
The 10 Airbus A320 planes represent 20 percent of Avianca Brasil's
current fleet, according to data provided by Brazil's aviation
regulator, raising doubts about the carrier's ability to fly its
full flight schedule if the aircraft are seized, according to
Reuters.
And it could lose more planes in the future. GE Capital Aviation
Services and an affiliate are seeking to repossess 12 Airbus A320s
from Avianca Brasil, according to James Luton, a GE spokesman, the
report notes.
Aircastle, as well as GE Capital Aviation and its affiliate, lease
aircraft to Avianca Brasil, whose whole fleet of 46 aircraft is
leased from other companies, the report relays.
After initially declining comment, Avianca Brasil issued a
statement denying what it called "the speculative content" of
Reuters' story but did not deny any specific statements. The
airline added that it is "completely focused" on keeping
operations going as normal and that it had transported more than 1
million passengers on 9,000 flights since Dec. 1, the report says.
When the airline filed for bankruptcy protection last month, the
airline discussed the possible loss of 14 planes, which it said
would affect 77,000 passengers over a three-week period, the
report discloses.
Avianca Brasil filed for bankruptcy last month after years of
mounting losses and late aircraft payments, the report recalls.
Bankruptcy filings, while providing protection from creditors, do
not cover leases, the report says.
Between the end of 2016 and September 2018, Avianca Brasil's
liabilities to aircraft lessors quintupled to BRL415 million ($112
million), according to the carrier's financial statements obtained
by the news agency.
A Brazilian bankruptcy judge stayed a decision that would have
allowed Aircastle to repossess the planes last month, the report
notes. That stay expires on Jan. 14.
Since the stay was issued, the source said, Avianca Brasil has not
made any proposal to Aircastle that would have allowed the carrier
to keep the planes, the report says. Avianca Brasil owes
Aircastle more than $30 million, the source added, the report
relays.
The stakes are also high for Aircastle, as Avianca Brasil is its
largest single customer, representing some 7 percent of its net
book value, according to the lessor's financial disclosures, the
report notes.
Avianca Brasil is separate from the better-known Avianca Holdings
SA, which is based in Colombia. But they share the same owner, a
family company owned in part by Bolivian-born airline entrepreneur
German Efromovich.
United Continental Holdings gave the family company a $500 million
loan last November, the report says.
Neither party has revealed why the loan was needed, but Efromovich
has been sued for failure to repay his debts in the United States
and Brazil in recent years, the report adds.
ELDORADO BRASIL: Moody's Assigns Ba3 CFR, Outlook Stable
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Moody's Investors Service assigned a Ba3 corporate family rating
to Eldorado Brasil Celulose S.A.. The outlook for the rating is
stable. This is the first time that Moody's assigns ratings to
Eldorado.
Rating action:
Issuer: Eldorado Brasil Celulose S.A.
Corporate Family Rating assigned: Ba3
Outlook action:
Issuer: Eldorado Brasil Celulose S.A.
Outlook assigned: stable
RATINGS RATIONALE
Eldorado's Ba3 rating mainly reflects the company's adequate
credit metrics and very strong operational performance, with
average EBITDA margins of 60% since 2015. Eldorado has the lowest-
cost operation in the global pulp industry as a consequence of its
privileged location, forest availability and integrated process
into a state-of the-art plant. The rating also considers its
position as the second largest producer of market pulp in Brazil,
after Suzano, and the fifth largest producer of market bleached
hardwood kraft pulp (BHKP) worldwide.
Eldorado's competitive production cost reflects the quality of its
assets and vertically integrated production process (forest,
industrial and logistics), which includes self-sufficiency in wood
and electricity. Energy comes from cogeneration and the plant has
an installed capacity of 220 MW, making the mill fully self-
sufficient and generating excess energy that is sold in the market
(BRL 95 million in 2017 and BRL 115 million in LTM ended September
2018). Eldorado's operations are concentrated in the state of Mato
Grosso do Sul, in the central part of Brazil, an area well suited
for growing eucalyptus trees. The eucalyptus wood is transported
to the mill by trucks, from average distance of 200 km, lower than
the industry average, which contributes to the low cost basis.
Moody's believes that Eldorado's ability to control input costs
partially compensates for the risk of operating primarily in a
single commodity product and in a single location. However,
Eldorado's single-plant nature and limited operational diversity
makes the company susceptible to high event risk, which constrains
the rating. Accordingly, any material disruptions in wood supply -
caused by fire or forest pests, for example -, in the pulp
production at the mill, or obstacles for the outbound logistics
(from the mill to the port) would materially affect cash flows
from operations and impair Eldorado's ability to meet its debt
maturities and interest. An additional rating constraint is
Eldorado's unbalanced capital structure with a high concentration
of debt due between 2019-2021. The Ba3 rating incorporates the
expectation that Eldorado will extend maturities and reduce debt
levels through liability management during 2019.
Eldorado has a relatively tight liquidity schedule when Moody's
considers cash balances and debt amortizations in the next 2-3
years (72% of total debt). Still, Moody's expects the company to
generate free cash flows of around BRL 1 billion in 2019 and 2020,
which will allow it to address upcoming debt maturities while
rolling over the short-term trade-related lines. Accordingly,
Eldorado has BRL 3 billion of debt related to the Tres Lagoas pulp
mill construction due between 2019-2021, or 36% of total debt
outstanding.
The stable outlook is based on Moody's expectation that Eldorado's
low cost process will allow it to sustain a strong operating
performance in the foreseen horizon. It also incorporates Moody's
expectation that the company's will benefit from positive
fundamentals in the market pulp segment in the next 12 to 18
months and will use excess cash generation to reduce debt, while
extending maturities.
An upward rating movement would require Eldorado to materially
improve its liquidity profile and capital structure by reducing
short term debt and extending maturities, while maintaining its
competitive cost position and further reducing leverage. In
addition, an improvement in its interest coverage, with adjusted
EBITDA/interest expense above 5x and positive free cash flows on a
sustained basis are required for a positive rating action,
together with cash flows diversification by source (different
segments) and/or geography (asset location).
The rating or outlook could suffer negative pressure if Eldorado
is not able to improve its liquidity profile and debt maturities
remain concentrated between 2019-2021, or debt levels increase,
with leverage, measured as total adjusted debt/EBITDA, trending
towards 4x or above, and interest coverage, measured as adjusted
EBITDA/interest expense, remaining below 4x. A significant
deterioration in the company's operating performance, with EBITDA
margins trending towards 20% or lower and negative free cash flow
generation would exert negative pressure on the rating or outlook.
The principal methodology used in this rating was Paper and Forest
Products Industry published in October 2018.
ST. MARY'S CEMENT: S&P Rates New Senior Unsecured Notes 'BB+'
--------------------------------------------------------------
S&P Global Ratings assigned its 'BB+' issue-level rating to St.
Mary's Cement Inc.'s proposed senior unsecured notes for up to
$500 million (subjected to a minimum of $300 million) due April 5,
2041, at an annual rate of 7.25%. The notes will be offered in
exchange for Votorantim Cimentos International S.A.'s (VCI: not
rated) 2041 bonds. S&P also assigned the recovery rating of '3',
indicating its expectation of a meaningful recovery on the notes
(rounded estimate 65%) under a hypothetical default scenario.
The debt rating reflects the credit quality of St. Marys' ultimate
parent, Votorantim Cimentos S.A. (VCSA; BB+/Stable/--), which will
unconditionally guarantee the notes. The guarantee ranks pari
passu to VCSA's other senior unsecured debt.
This transaction is part of VCSA's broader organizational and debt
overhaul in order to pursue a more efficient capital management.
Given its U.S. and Canadian subsidiaries' strong cash flows, S&P
already expected a higher debt allocation at those entities. St.
Mary's new notes will replace part of the outstanding $1.15
billion 2041 notes that VCI issued under the same conditions. In
addition to this exchange offer, VCI is launching a tender offer
for up to $650 million (with a minimum of $500 million) in
aggregate principal amount of its notes due 2041, 2022, and 2021,
following this respective priority level. S&P expects the proposed
tender offer to be funded with the proceeds of a new R$2.0 billion
capitalization of VCSA from its holding company, Votorantim S.A.
(BB+/Stable/--), plus cash on hand from VCSA. The proceeds from
the latter will primarily come from the recent sale of the group's
stake in its pulp and forestry business. In S&P's view, these
actions are clear signs of VCSA's importance to the Votorantim
group and its commitment to support and enhance VCSA's leverage
profile.
Recovery Analysis
Key Analytical Factors
St. Mary's senior unsecured notes receive a recovery rating
relative to the assumed recovery prospects of the bondholders
under a hypothetical default scenario. VCSA guarantees all notes
issued by St. Mary's (the existing notes due 2027 and the new ones
due 2041) and VCI (due 2021, 2022, and 2041), in addition to
several bilateral obligations issued by the group's entities
operating in other countries. Given the exposure to multiple
jurisdictions where the issuers, guarantor of the debts, and
operations are incorporated and organized (Luxembourg, Canada, the
U.S., Europe, Africa, Brazil, and other countries in Latin
America), S&P understands some disputes could arise over which
jurisdiction's laws should apply for a potential insolvency. Given
such uncertainty, and considering that currently most of the debt
is guaranteed by the Brazilian entity (VCSA), which also holds the
majority of the group's cement capacity, it assumes that any
recovery procedure would most likely occur in the Brazilian
jurisdiction.
S&P said, "As such, we believe that a default could occur after
five years of persistently worsening economic conditions in Brazil
and North America, which would pressure the group's revenue and
EBITDA, while limiting the company's access to capital markets to
refinance maturing debt.
"In a default scenario, we expect VCSA to reorganize, rather than
liquidate, because of its leading position in various markets and
its high-quality asset base. We applied a 5.0x EBITDA multiple
(standard approach for the industry) to an estimated distressed
emergence EBITDA of about R$1.5 billion to derive our gross
recovery value of around R$7.2 billion. We don't believe VCSA
could post such a level of EBITDA in the near term, based on the
risks the company is currently subject to and its geographical
diversification. However, under our simulated default scenario,
persistently weak EBITDA would likely stem from further decline in
demand for cement, as well as from management's strategic
missteps.
"We then discount 5% of the gross value to account for
administrative expenses to arrive at a net enterprise value (EV)
of R$6.8 billion, which is finally distributed among each debt
instrument according to the structure of guarantees and
subordination."
Simulated Default Assumptions
-- Simulated year of default: 2024
-- Jurisdiction: Brazil
-- EBITDA at emergence for the group: R$1.5 billion (sum of
assumed maintenance capex, interest, and debt payments at the
year of default).
-- Implied EV multiple: 5.0x
-- Estimated gross EV at default of R$7.2 billion.
-- Pari-passu ranking of the company's existing and future senior
unsecured debt.
-- Most of the debt will be refinanced prior to the default year.
Simplified Waterfall
-- Net value available to creditors: R$6.8 billion
-- Unsecured debt claims totaling around R$9.0 billion*
-- Recovery expectation: 65% ('3' recovery rating)
*All debt amounts include six months of prepetition interest.
RATINGS LIST
Votorantim Cimentos S.A.
Issuer credit rating BB+/Stable/--
Ratings Assigned
St. Mary's Cement Inc.
Senior unsecured notes BB+
Recovery rating 3(65%)
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C O L O M B I A
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TERMOCANDELARIA POWER: Fitch Publishes BB+ LT IDRs, Outlook Stable
------------------------------------------------------------------
Fitch Ratings has published TermoCandelaria Power Ltd's (TPL)
Long-Term Foreign and Local Currency Issuer Default Ratings (IDRs)
of 'BB+'/Outlook Stable. Fitch has also assigned a 'BB+(EXP)'
rating to TPL's proposed USD410 million senior unsecured bond
issuance due 2029. The company expects to use the proceeds to
refinance existing debt at its operating companies
Termobarranquilla S.A. E.S.P. (TEBSA) and Termocandelaria S.C.A.
E.S.P. (TECAN), and distributions to shareholders.
TPL's ratings reflect the combined operations of TEBSA and TECAN,
its current relative competitive position in the electricity
generation market in Colombia, as well as its limited geographical
diversification and asset mix. Also factored in the ratings are
the expectations for an increasing consolidated EBITDA performance
in the short to medium term, driven by the strong load factor in
TEBSA, as well as the collection of reliability charge and
regulated revenues not exposed to market dynamics. The ratings
also considers TPL's USD 410 million proposed international bond
issuance that will remove the structural subordination of TPL's
debt to the ones of its subsidiaries. Ratings also incorporate
long-term threats to TPL's consolidated competitive position that
could limit EBITDA generation capacity.
KEY RATING DRIVERS
Credit Profile Linked to Subsidiaries: TPL is a holding company
that combines the operations of Termobarranquilla TEBSA and TECAN
two electricity generator companies (Gencos) located in the
Colombia's Caribbean coast. TPL fully owns and controls TECAN and
has a 57.38% stake in TEBSA. TPL's ratings are mostly related to
TEBSA's credit profile, since TEBSA has concentrated around 80% of
TPL's consolidated EBITDA, and Fitch expects this situation to
continue over the rating horizon.
Limited Operational Diversification: TPL's credit profile is
constrained by the limited diversification of its operations. The
company is exposed to a higher degree of event risk resulting from
unexpected outages or disaster disruptions, compared to local and
regional peers. Although out-of-contract sales eliminate exposure
to spot market volatility as a buyer, TPL's take-or-pay
regasification contracts would put additional pressure on the
OpCos' cost structure in the event of an interruption in
generation. TPL combines the operations of 1,283 MW of thermal
electric assets, which represent around 8% of the Colombian
electricity generation matrix and around 27% of the thermal
electric installed capacity in Colombia.
Positive Near-Term Supply/Demand Dynamics: TPL benefits from the
country's transmission bottleneck to the northern coast, which
results in the persistent dispatch of TEBSA in order to meet
demand, in spite of TEBSA's comparative higher cost relative to
non-coastal generation assets. TPL's ratings incorporate the
medium-term expectation that TEBSA will maintain load factor
around 50%, in line with its historical levels. Demand
characteristics of the Caribbean coast also suggest relatively
high growth through the medium term, supporting TEBSA's continued
dispatch as long as the present transmission and capacity dynamics
continue.
Structure Mitigates Exogenous Market Risks: In the long term, new
investments in the transmission network or the development of non-
conventional renewable energy projects in the coastal region could
displace TEBSA within the dispatch curve, resulting in lower
EBITDA. The government planning unit is coordinating auction
processes to encourage the incorporation of new electricity
installed capacity in 2022-2023. In addition, a new transmission
line that will permit up to 1,000MW of new projects to be
installed in the Guajira region would be available in 2022. These
risks are partially mitigated by TPL's proposed amortizing
structure, and the cash preservation mechanisms established under
the proposed issuance.
Medium-Term EBITDA Upside: TPL is expected to maintain a stable
consolidated EBITDA generation over the rating horizon, given the
stability of electricity generation, coupled with regulatory cost
pass-through mechanism that apply in the market for out-of-merit
generation. When a high hydrology condition prevails in the
market, TEBSA has been maintaining its operations through out-of-
merit electricity generation. In this situation, the company is
remunerated based on its bid price, in which all of its variable
costs are passed through the market, capped by its reported
referential variable costs.
Inverted Hydrology Risk: TPL's EBITDA generation benefits from low
hydrology conditions that cyclically occur in Colombia, since
TEBSA and TECAN could maintain their operations through in-merit
generation as variable costs could be below spot prices, which
translated into a higher profitability in its operations. Fitch's
base case contemplates a 3-year delay in EPM's 2,400MW
Hidroituango hydroelectric project, which could result in higher
spot prices through the medium term. The supply dynamic could
cause TEBSA's to be dispatched as a baseload generator in addition
to its current role as out-of-merit generation.
Stabilizing Cost Structure: Recent changes to capacity
remuneration in the country provide predictability to TPL's
consolidated CFO. Both TEBSA and TECAN will receive reliability
payments until 2025 that reach annual revenues of around USD 160
million in order to be able to dispatch its firm energy
obligations when spot prices surpass the scarcity price as defined
by the regulator. Both companies chose to elect the new scarcity
price according to CREG Resolution 140 2017, which is defined
considering the reported variable costs of the thermal electric
matrix. Consequently, it limits the possibility of being required
to dispatch with a negative gross margin, a situation experienced
by TECAN during the last Nino Phenomenon of 2015-2016.
Secure Fuel Supply: TPL has reduced its exposure to liquid fuel
price volatility by entering into long-term gas supply contracts
that extend to 2026. TEBSA and TECAN receive around USD30 million
in annual dollar denominated regulated revenues for securing this
LNG access, which represents 50% of the of the fixed payments TPL
has to make to the LNG operator for granting the access to this
natural gas source. Fitch expects that TPL's regulated revenues
along with reliability charges payments will continue to be enough
to cover the company's fixed costs, absent any interruption in the
company's generation capacity.
Proposed Transaction Limits Structural Subordination: TPL's
current debt is structurally subordinated to debt at the operating
companies' level. TPL faces restrictions to access TEBSA and TECAN
cash other than dividends and current intercompany loans. TEBSA's
bank loan subordinates the shareholder loan and lease payments to
debt service. In addition, a shareholder agreement between TPL and
Gecelca S.A., the other TEBSA shareholder, requires four out of
five votes in the Board of Directors to pursue intercompany
transactions. In the case of TECAN, a creditor agreement imposed
annual payments of around COP 30 billion until 2021 that are
guaranteed by TPL, and it does not allow upstreaming of cash to
TPL beyond the scheduled lease payments.
TPL's ratings factor in the company's proposed transaction of
issuing USD 410 million in international bonds at the holding
level, with gradual amortization from 2021 to 2029. Proceeds from
the issuance will refinance all current TPL debt at the holding
and subsidiaries level. The balance will be distributed in
dividends to TPL's shareholders. Fitch's base case projections do
not include additional debt from TPL's subsidiaries over the
rating horizon,. EBITDA generation is expected to cover their
capex requirements as well as dividend and other distributions to
shareholders, so new bonds at TPL would no longer be structurally
subordinated. New TPL debt would be served through current and new
intercompany loans contracted with TEBSA and TECAN, as well as
dividends that these companies are expected to start paying from
2019 onward.
Moderate Leverage Ahead: TPL's proposed transaction is expected to
increase its current consolidated leverage metrics but to a level
Fitch considers conservative for its assigned rating. On a pro
forma basis, once the transaction is completed, TPL's leverage
will reach 2.5x, up from 1.7x at in December 2017. Future leverage
performance will depend on the EBITDA generated by its
subsidiaries, as additional debt on a consolidated basis over the
rating horizon is not expected.
DERIVATION SUMMARY
TPL's ratings are one notch above Nautilus Inkia Holding LLC's
(Inkia; BB/Stable), its closest peer. Although lacking Inkia's
geographical diversification and asset base mix provided by its
key subsidiary Kallpa Generacion S.A. (BBB-/Stable), TPL's capital
structure is more conservative, with leverage levels reaching 2.5x
at its peak, while Fitch expects Inkia's leverage to decrease to
around 5x in 2019 and around 4.5x in the medium term. Also,
Inkia's debt is structurally subordinated to debt at the operating
companies, while TPL's proposed transaction aims to fully replace
debt at the subsidiaries' level. TPL's capital structure also
compares positively with Orazul Energy Egenor S. en C. por A
(BB/Stable). Orazul's high medium-term leverage of above 5.0x
under Fitch's forecast places it at the high end of its rating
level.
Fitch considers TPL's business risk higher than multi-asset energy
regional investment grade peers such as AES Panama S.R.L. (BBB-
/Positive). Kallpa and AES Gener (BBB-/Stable). All of these
companies benefit from a strong contractual position in their
respective markets. These companies' PPAs support their cash flow
stability through USD-linked payments and, in Kallpa's case, pass-
through clauses related to potential increases in fuel costs. This
contributes to a higher EBITDA visibility in the long-term,
compared to TPL, which remains exposed and exogenous supply/demand
dynamics. Although TPL's key subsidiary TEBSA maintains relative
cost efficiency that currently places it within the coastal base
load, future additions to the local renewable energy matrix or
expansion of the national transmission network could potentially
displace the company from its strong competitive position in the
coastal region in the long term.
TPL ratings are one notch below Fenix Power Peru S.A. (BBB-
/Stable). As a single-asset generator with a high proportion of
take-or-pay costs and including its deleverage trajectory of
reaching 5x by 2021, Fitch views Fenix standalone credit quality
in line with a 'BB' rating, Nevertheless, Fenix's ratings are
buoyed by strong support from its parent Colbun S.A. (BBB/Stable).
KEY ASSUMPTIONS
Fitch's Key Assumptions Within Its Rating Case for the Issuer
-- TPL places USD 410 million in an international issuance that
fully replace current TPL's combined financial debt.
-- No additional debt is contemplated at the TPL's holding level
or subsidiaries over the rating horizon.
-- TPL's combined annual generation reaches at least 3,800 Gwh
per year, similar to the level reported in 2017.
-- TEBSA's and TECAN's strong availability factors at above 90%.
RATING SENSITIVITIES
Developments That May, Individually or Collectively, Lead to
Positive Rating Action
A positive rating action is unlikely in the medium term, given
TPL's limited asset diversification and long-term threats to its
competitive position.
Developments That May, Individually or Collectively, Lead to
Negative Rating Action
-- Additional material debt at TEBSA's or TECAN's level that
structurally subordinates debt repayments at TPL's holding level.
-- A material deterioration of TEBSA's or TECAN's EBITDA's
generation capacity, declining to below USD 150 million on a
sustained basis.
-- Consolidated leverage levels above 3.5x on a sustained basis.
LIQUIDITY
Liquidity Improves with Proposed Transaction: TPL's liquidity
levels are explained by stable cash inflows from its subsidiaries
and moderate financial debt at the holding level. As a holding
company without operations, TPL does not maintain material cash
balance on a non-consolidated basis. In absence of execution of
sizable projects as it is currently the case, any excess of funds
is paid in dividends. TPL's pro forma capital structure includes
USD 410 million in an international bond issuance that replace
current debt at TPL, TEBSA and TECAN. The new bond will include
gradual amortization from 2021 that will ease leverage pressure in
2023 when it is likely that TPL's EBITDA capacity will be
pressured because of the expected increased installed capacity.
Although the transaction implies a leverage increase, the debt
maturity profile is more manageable, and it also removes
structural subordination and liquidity constraints from the
current capital structure.
FULL LIST OF RATING ACTIONS
Fitch has published the following ratings:
Termocandelaria Power Ltd
-- Long-Term Foreign Currency IDR 'BB+'; Outlook Stable;
-- Long-Term Local Currency IDR 'BB+'; Outlook Stable.
Fitch has assigned the following rating:
-- USD410 million proposed senior unsecured debt issuance
'BB+(EXP)'.
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D O M I N I C A N R E P U B L I C
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DOMINICAN REPUBLIC: Wants Venezuela's 49% Stake in Only Refinery
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Dominican Today reports that last December the Dominican Govt.
initiated negotiations to buy the 49% stake held by PDV Caribe,
subsidiary of Venezuela's State-owned PDVSA, in the Dominican
Petroleum Refinery (Refidomsa PDV).
Refidomsa PDV Chief Executive Offocer Felix Jimenez told Listin
Diario that they only wait for Venezuela's government to designate
its negotiators after which president Danilo Medina would name the
Dominican counterparts, according to Dominican Today.
He said that although PDV Caribe has yet to agree to sell its
stake, "it's an amicable process" that isn't expected to be
affected by Santo Domingo's decision not to recognize the
legitimacy of Venezuela president Nicolas Maduro, the report
notes.
Nonetheless, Mr. Jimenez said that if the Venezuelan company
doesn't agree to the sale, the Dominican State would be forced
into litigation declaring the country's only refinery eminent
domain and a matter of national security, the report relays.
The official said that president Medina doesn't want to resort to
that route, "but will have to if necessary," the report notes.
"If the Dominican Republic doesn't acquire 100% of the shares,
Refidomsa PDV runs the risk of disappearing . . . it means death
for the company," he added.
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.
===========
M E X I C O
===========
MEXICO: Caribbean Beaches Face Another Seaweed Invasion
-------------------------------------------------------
EFE News reports that the massive invasion of sargassum seaweed on
the beaches of the Mexican Caribbean is set to happen again in
2019, one of the country's leading experts on the issue said.
Should the situation be similar to the one in 2019, damage to the
ecosystem and the tourism industry will be severe, Brigitta Ine
van Tussenbroek, a scientist at the National Autonomous University
of Mexico (UNAM), said, citing data from colleagues at the
University of Florida, according to EFE News.
She said the monthly reports from UF researchers are based on
seaweed masses floating on the open sea, which indicate a
probability they will reach Mexican beaches, but without
specifying where, the report relays.
The main places affected are Cancun, Chetumal and Tulum.
Sargassum makes its way to the Mexican Caribbean from two main
sources: the Sargasso Sea, near Bermuda, and an area north of
Ecuador off the coast of Brazil, the report notes.
Though sargassum seaweed has been coming to Mexico year after
year, it has never been washed onto the beaches in such large
amounts as it was last year, the report says.
Studies indicate that the causes of the increase could be the
rising temperatures in ocean waters and the dumping of organic
trash in the rivers of Central American countries, which
accelerates the life cycle and reproduction of algae.
In fact, sargassum is now able to double its biomass in 11 days,
whereas it used to take 50 days, the report notes.
Nonetheless, the report relates, Van Tussenbroek said the chances
of huge amounts of the seaweed being washed ashore on the Mexican
coast will depend on "local atmospheric conditions, such as trade
winds, which move the sargassum to our beaches.
"We don't know how resilient ecosystems are in such situations,
but they seem vulnerable. We're probably far from any kind of
recovery, and the outlook is anything but encouraging."
======================
P U E R T O R I C O
======================
DEL MAR ENTERPRISES: Claims Reconciliation Process Delays Plan
---------------------------------------------------------------
Del Mar Enterprises Inc. asks the U.S. Bankruptcy Court for the
District of Puerto Rico for an extension of the exclusivity period
to submit its Disclosure Statement and Plan of Reorganization
until Feb. 28, 2019, as well as the deadline to procure the votes
under the plan for a term of 60 days after the order granting the
approval of the Disclosure Statement is entered.
The Debtor claims cause exists to extend the exclusivity period
because it is still in the process of reconciling the Proof of
Claim filed by CRIM and Condado 3, in order to propose an accurate
Plan of Reorganization.
The Debtor believes it will be able to submit, within the extended
period, a Disclosure Statement and Plan of Reorganization that
considers all of its financial information.
About Del Mar Enterprises
Del Mar Enterprises Inc. is a real estate company that owns in fee
simple a commercial real estate located at Aguadilla, Puerto Rico,
consisting of a two-storey commercial building with an appraised
value of $1 million. The company also owns a lot of land located
at Barrio Borinquen Aguadilla, Puerto Rico having an appraised
value of $100,000. Del Mar Enterprises previously filed for
bankruptcy protection on April 9, 2013 (Bankr. D.P.R. Case No.
13-02735).
Del Mar Enterprises sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. D. P.R. Case No. 18-05767) on Oct. 1,
2018.
In the petition signed by Edgardo L. Delgado Colon, president, the
Debtor disclosed $1,102,823 in assets and $2,166,875 in
liabilities. Judge Mildred Caban Flores oversees the case. The
Debtor tapped C. Conde & Assoc. as its legal counsel.
SEARS HOLDINGS: ESL Ups Bid to $5 Billion
-----------------------------------------
It was Edward Lampert's ESL Investments versus Abacus Advisory
Group last Monday.
The bankruptcy auction for Sears Holdings was scheduled for
Jan. 14, 2019. ESL the other week upped its offer to acquire the
retailer's remaining 425 stores to $5 billion.
Transform Holdco LLC, the newly formed entity created by ESL
Investments to acquire Sears, sent a letter dated Jan. 9 to Lazard
Freres & Co. LLC, which is advising the Debtors, to inform of its
Revised Proposal which now "includes the assumption of additional
liabilities that may increase the total purchase price presented
by Buyer's proposal by over $600 million, which, together with the
purchase price set forth in the Going Concern Proposal, would
provide aggregate consideration to the Debtors in excess of $5
billion."
The Revised Proposal includes the following revisions:
1. In addition to the liabilities described in the Going
Concern Proposal, ESL proposes to assume up to $663 million in
additional liabilities identified in consultation with the
Debtors.
This amount consists of the following, to be paid by the Buyer in
accordance with the Revised Asset Purchase Agreement:
a. Up to $166 million of payment obligations with respect
to goods ordered by the Debtors prior to the closing of the
proposed transactions (but as to which goods Debtors have not yet
taken delivery and title prior to closing);
b. Up to $139 million of 11 U.S.C. Sec. 503(b)(9)
administrative priority claims;
c. Up to $43 million of additional severance costs to be
incurred by the Debtors;
d. All cure costs related to contracts to be assumed by
the Buyer (estimated to be up to $180 million); and
e. Up to $135 million of property taxes with respect to
the properties to be acquired by the Buyer.
In the event that the sum of the amounts outstanding under the
Debtors' first lien ABL DIP facility and their junior DIP facility
(net of any cash available to pay down such amounts) is less than
$1.2 billion at the time of closing the proposed transactions, the
Buyer's obligation to assume the foregoing liabilities shall be
reduced dollar-for-dollar to the extent of such shortfall, with
such reduction allocated in accordance with the Revised Asset
Purchase Agreement. In a schedule shared with the Buyer's
representatives on Jan. 6, the Debtors estimated cash available to
pay down such outstanding amounts was $89 million.
ESL's Revised Proposal includes the acquisition by the Buyer of
additional assets that were proposed to be left with the Debtors'
estate, including:
a. Approximately 57 additional real estate properties;
b. Accounts receivable with respect to certain home
warranties sold in FY 2018 with a book value of approximately
$53.6 million;
c. Other accounts receivable with a book value of at least
$256 million, inclusive of netting for allowances for bad debts;
d. Additional inventory with a book value of up to $166
million with respect to which the Buyer shall assume payment
obligations (and as to which inventory the Debtors have not yet
taken delivery and title prior to closing);
e. Prepaid inventory with a book value of at least $147
million as to which the Debtors have not yet taken delivery and
title prior to closing; and
f. All of the Debtors' rights relating to the claims set
forth in the class actions consolidated in the multi-district
litigation In re Payment Card Interchange Fee and Merchant
Discount Antitrust Litigation, No. 1:05-MD-01720 (E.D.N.Y.).
Reuters' Jessica DiNapoli and Mike Spector, citing unnamed
sources, reported that Sears last week chose Closter, New Jersey-
based Abacus Advisory Group LLC to sell the chain's vast
inventories of tools, appliances and store fixtures should
negotiations with ESL over his original $4.4 billion takeover bid
end unsuccessfully.
Sources also told Reuters that aside from Abacus, Sears has turned
to a firm run by retail magnate Jay Schottenstein to help it shed
inventory in the event of a liquidation. Schottenstein is the
chief executive of teen apparel chain American Eagle Outfitters
Inc and chairman of shoe seller DSW Inc.
Alan Cohen is the chairman of Abacus.
Sears had already retained Abacus as a liquidation consultant
after filing for bankruptcy, but decided to take offers from other
liquidators, according to Reuters. The sources told Reuters that
Sears decided to continue working with Abacus after turning down
bids from competitors that have worked on some of the biggest
wind-downs in recent years, including Bon-Ton Stores Inc, Toys "R"
Us Inc and Sears Canada.
Transform Holdco has deposited $120 million in cash to Sears'
escrow agent. The amount is inclusive of the $17.9 million
deposit amount described at the Hearing and the amounts previously
deposited at the time of submitting ESL's Going Concern Proposal.
The amounts deposited represent in excess of 10% of the cash
component of the purchase price.
Transform Holdco says it has received a debt commitment letter
from lenders with regard to a new ABL facility, a debt commitment
letter from ESL and funds managed by Cyrus Capital Partners with
respect to the rollover of certain debt facilities of the Debtors,
a debt commitment letter from ESL and funds managed by Cyrus
Capital Partners with respect to a new secured real estate loan,
and an equity commitment letter from ESL. Upon receipt of the
funds described in the Debt Commitment, the Rollover Commitment,
the Real Estate Commitment and the Equity Commitment, the Buyer
will have sufficient funds available to consummate the
transactions contemplated by its Going Concern Proposal.
A copy of ESL's revised offer is available at https://is.gd/gVg6Hw
ESL also disclosed last week that as of Jan. 9 it may be deemed
the beneficial owner of 156,380,740 shares or roughly 73.4% of
Sears Holdings' common stock. A copy of that disclosure is
available at https://is.gd/5ERKoD
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 and M-III
Partners is serving as restructuring advisor. Aebersold, Managing
Director, and Levi Quaintance, Vice President of Lazard Freres &
Co. LLC serve as investment banker to Holdings. DLA Piper LLP is
the real estate advisor. Prime Clerk is the claims and noticing
agent.
===============================
T R I N I D A D & T O B A G O
===============================
TSTT: Gov't. to Cancel CCTV Coverage Arrangement
------------------------------------------------
Ria Taitt at Trinidad Express reports that Trinidad and Tobago
government plans to cancel its arrangement with TSTT for CCTV
coverage because it is charging too much.
Speaking in the Standing Finance Committee, National Security
Minister Stuart Young said government is not prepared to pay TSTT
the price which it is charging for CCTV coverage, which in some
instances amounts to between $11,000 and $14,000 per camera each
month, according to Trinidad Express. That cost was agreed during
the UNC-led People's Partnership administration, he said, the
report notes.
=================
V E N E Z U E L A
=================
VENEZUELA: Bondholder Group Sends Envoy to Caracas for Debt Talks
-----------------------------------------------------------------
Ben Bartenstein at Bloomberg News reports that creditors holding
defaulted debt issued by Venezuela and its state-run oil company
sent an envoy to Caracas for talks with the government's legal
advisers, according to two people familiar with the matter.
A small U.S. delegation from a group of bondholders advised by
Cleary Gottlieb Steen & Hamilton and Guggenheim Securities met
with lawyers from Dentons, the firm representing Venezuela, and
local creditors to discuss options for getting paid back after the
nation defaulted on some $9 billion in debt payments, said the
people who asked not to be identified because the information was
private, according to Bloomberg News. The group includes large
investors such as T. Rowe Price Group Inc. and Fidelity
Investments.
In a statement, the Venezuela creditor group said it "wishes to
keep communications channels open with all non-sanctioned
stakeholders" but denied that it had sent anyone to Caracas to
hold discussions, the report notes. The group said it considers
the National Assembly, which was stripped of its powers by the
country's authoritarian leader, Nicolas Maduro, in 2017, to be
"the only legitimately elected body in Venezuela" and that it
won't negotiate with the Maduro regime, the report relays.
The people familiar with the matter said the discussions in
Caracas included talks about a deal that would involve a so-called
value recovery instrument in which bond investors could get
compensated through royalties paid to operate oilfields in the
nation, the report notes. Another potential scenario under
discussion was an accord under which creditors would help finance
Petroleos de Venezuela's oil drilling ventures with U.S. companies
such as Erepla Services LLC in return for a chunk of the revenue,
the report discloses.
Officials at PDVSA and the oil ministry declined to comment. The
government's benchmark notes due in 2027 gained for a fifth
straight day, but have been locked in a range between 22 cents and
32 cents on the dollar over the past year, the report relays.
It's a long-shot that the bondholders' efforts will result in any
near-term resolution, absent a political transition in Caracas,
the report notes. Sanctions prevent U.S. investors and banks from
participating in a traditional debt restructuring with Venezuela,
and Erepla would need a license to work in the country from the
Treasury Department's Office of Foreign Assets Control, the report
relays. A revenue-sharing deal may also meet resistance within
Venezuela, where much of the population has long been leery of
handing over control of the oil industry to foreigners, the report
discloses.
Venezuelan officials have expressed interest in working out some
kind of deal, provided that creditors agree to future financing
for the cash-starved state oil company, according to one of the
people, the report says. That also would require an exemption
from OFAC, as sanctions introduced after Maduro's election in May
prohibit U.S. citizens from being involved in the sale or transfer
of equity interest in an entity owned at least 50 percent by the
government, the report relays.
It's unlikely that the Trump administration would give a waiver.
"Anything that makes life easier for Maduro is a non-starter,"
said Francisco Rodriguez, the chief economist at Torino Capital in
New York, the report adds.
As reported in the Troubled Company Reporter-Latin America,
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'.
***********
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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***********
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 2019. All rights reserved. ISSN 1529-2746.
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* * * End of Transmission * * *